Wills

From Summer Fling to Forever: 5 Estate Planning Considerations for Couples

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Summer is approaching. The warm air, the sunshine boosting our serotonin, and those summer nights spark summer romance which can be just a fling, or it can be the start of a deep, transformative relationship. June also marks the beginning of wedding season and, of course, Pride Month, where we celebrate the LGBTQ+ community and all forms of love.

Whether you are married or not, estate planning is critical in providing for your special someone when you are gone. It is also important to plan for your incapacity to ensure that your partner can take care of you and your well-being. Here are 5 things every couple should consider when planning their forever.

1.Don’t assume that everything will go to your spouse or significant other at your death.

A lot of couples assume that when one of them dies, all of their property goes to their spouse or significant other. Sometimes this is true, and sometimes it isn’t.

If you don’t have a Will, the intestate laws of Massachusetts will determine who will inherit your estate. If you are married and all of your children are children of the marriage, then your estate will pass to your spouse. But if either you or your spouse have children from another relationship, then your spouse will only receive the first $100,000 plus 50% of the remaining estate.

If you are married and don’t have children, and you have at least one surviving parent, then your estate will be divided between your spouse and your parent(s). Also, if you are not married to your partner, regardless of how long you have been together, your partner does not automatically inherit your estate. Don’t put off creating an estate plan on the assumption that everything will pass to your spouse or partner anyway, because that may not always be the case.

2.Don’t assume that your spouse or significant other will be able to do everything for you if something happens to you.

Planning for you and your partner’s incapacity is just as important as planning for after your death. If you become incapacitated, your medical provider will typically look to your next of kin to make healthcare decisions on your behalf. Unfortunately, if you are not married to your partner, your partner is not considered your next of kin, so they won’t be able to make healthcare decisions on your behalf, when your partner is probably the one person who best knows your wishes. Executing a Health Care Proxy can fix this issue by designating your partner as your healthcare agent to make decisions for you should you become incapacitated.

This issue also arises with handling your finances. Without a Power of Attorney, your partner will not have the authority to act on your behalf with your finances if you become disabled or incapacitated. This is especially important when you rely on both of your incomes to maintain your household and pay expenses.

3.Strategies to reduce estate tax liability.

Married couples can utilize different estate planning strategies to minimize tax liabilities after their deaths and maximize the inheritance for their beneficiaries.

Property passing to a U.S. citizen spouse at the death of the first spouse passes free of federal and Massachusetts estate tax, regardless of the amount. The federal estate tax exemption is the amount that each person is permitted to pass on free of any federal estate tax, which is currently $13.61 million per person for 2024. This translates into $27.22 million for a married couple.

Massachusetts has its own estate tax system, and the exemption is $2 million per person; but, it is a “use it or lose it” exemption, meaning that if a married couple has a $4 million estate and they own all of their assets jointly or have each other named as beneficiary, when the second, surviving spouse dies with a $4 million estate, there will be Massachusetts estate tax of $180,800 due. If you “use” the $2 million exemption on the first spouse’s death through a credit shelter trust, you could reduce or even eliminate the Massachusetts estate tax liability when the second spouse dies.

Couples should be aware of these thresholds and talk to an estate planning attorney about estate planning strategies such as gifting or setting up trusts to minimize their tax liability.

4.Advanced planning for long-term care (nursing home) costs.

If you and your spouse have the gift of time, then you need to think about how you will pay for long-term care costs in the future. Long-term care planning involves preparing for the potential need for nursing home care. Although long-term care is primarily associated with older adults, it can be necessary for anyone with chronic illnesses, disabilities, or injuries that limit their ability to perform daily activities. According to the U.S. Department of Health and Human Services, 70% of Americans aged 65 and over can expect to use some form of long-term care during their remaining years.

There are different estate planning strategies that married couples can use to ease the cost of long-term care and preserve assets in the event they need to apply for Medicaid.

Growing old together also means planning on taking care of each other financially if one of you needs care.

5.Don’t be scared to discuss a prenuptial agreement.

Before you say “I do”, consider a prenuptial agreement to protect your assets in the event of divorce. Many couples don’t want to talk about a prenuptial agreement because no one wants to talk about divorce before you’re even married. But you can protect your wealth, your family business, and even children from a prior marriage from losing out on an inheritance by entering into a prenuptial agreement. Consider a prenuptial agreement if your assets or circumstances are such that you want added assurance that no matter how matters of the heart may go, your assets and your children will be protected.

Knowing these aspects of estate planning can help couples protect their assets, ensure their wishes are carried out, and provide for their loved ones. There is nothing more romantic than presenting a well-thought-out estate plan to your partner (said the estate planning attorney).

 

Attorney Brittany Hinojosa Citron is an associate attorney with Samuel, Sayward & Baler LLC, which focuses on advising its clients in the areas of trust and estate planning, estate settlement, and elder law matters. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information, visit ssbllc.com or call 781-461-1020.

June 2024
© 2024 Samuel, Sayward & Baler LLC

 

Five Things To Do When a Loved One Passes Away

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Dealing with the death of a loved one is a challenging and emotional process. Whether the passing was expected or unexpected, managing his or her affairs can be difficult to think about while dealing with the grief and loss of a loved one, and you may need guidance throughout the process. Here are five things you should consider doing after a loved one’s death:

1. Arrange Burial and Memorial Services According to the Loved One’s Wishes

If the deceased was forward-thinking enough to pre-arrange and/or pre-pay his or her funeral when also preparing his or her estate plan, then contact the funeral home with which these arrangements were made. If no plan was put in place before death, contact a reputable funeral home to guide you through the burial and memorial service process.

As part of an estate plan, the deceased may have prepared a Directive as to Remains. A Directive as to Remains is a document that instructs the deceased’s Personal Representative (the person named in the Will who is responsible for administering the estate) to arrange the deceased’s burial or cremation and funeral/memorial services as directed in that document. Your loved one alternatively may have written down similar wishes in a letter of instruction. Carefully review your loved one’s estate planning documents to learn if the deceased left such instructions so that his or her wishes are carried out.

2. Find and Organize Important Documents

Hopefully your loved one showed you where he or she keeps important documents like his or her Will, income tax returns, financial account statements, and bills that are regularly paid. This information will be necessary for settling and administering the deceased’s estate. Look for these documents and gather as much information as you can.

If the deceased named you as the Personal Representative of his or her estate, then you will need death certificates for the deceased. You should obtain about 5 to 10 death certificates to provide to financial institutions, life insurance companies, and the court if probate is necessary.

Locate a safe but easily accessible place where you can store this information as you will refer to and use it often. Do not throw away any financial records or legal documents until you know you will not need them for tax filings, asset valuation, or other purposes.

3. Secure Property of the Estate

Your loved one may have several different types of assets in his or her estate at death. In every case, the Personal Representative (or Trustee if there is a Trust) is responsible for ensuring the deceased’s property is secure and protected for the beneficiaries of the estate. For example, it is important to safely store valuable jewelry and artwork. Similarly, any real estate should be securely locked (perhaps even change the locks) and regularly visited to ensure the real estate and the deceased’s personal belongings are secure. In fact, it is an obligation of the Personal Representative to do so, and he or she may be liable if such measures are not taken and damage occurs to the property. The Personal Representative should also maintain or obtain insurance in connection with the deceased’s assets, as necessary, and may need to have some or all of them appraised for estate administration and/or estate tax purposes.

4. Contact an Estate Planning and Administration Attorney

The settlement of an estate can be incredibly complex depending on the assets and beneficiaries involved, and the provisions of the deceased’s estate plan. The Personal Representative should contact an attorney to guide and assist him or her through the process of completing and filing the required documents to be appointed as Personal Representative by the probate court, gathering assets, paying appropriate expenses, and making distributions, to avoid failing to fulfill his or her obligations. This is especially important if the estate assets are valued at over $2 million and a Massachusetts estate tax will be payable, or if it is anticipated that MassHealth (Medicaid) may file a claim against the estate to be reimbursed for any MassHealth benefits (for home care or nursing home care) received by the deceased during his or her lifetime.

Keep in mind that the administration of an estate typically takes at least one year, so you may want to take the tortoise’s point of view – slow and steady wins the race. You want to be thorough and properly navigate the legal and financial aspects associated with administering the estate.

5. Communicate and Work Together

On top of the issues mentioned above, estate administration can be made more difficult if there are strained relationships between the beneficiaries, which often also includes the person who is serving as Personal Representative. Perhaps there is a history of family disharmony. Perhaps multiple beneficiaries are sentimentally attached to mom’s diamond engagement ring and they must decide who gets to keep it. The only person who wins when there are disagreements between beneficiaries that cannot be resolved is the attorney who gets paid to resolve them via negotiation or court action. Instead, consider embracing the three C’s as much as possible when working with each other: Communication, Cooperation and Compromise. Try offering support to each other during this difficult time.

Estate administration can be a juggling act where the Personal Representative is managing several different responsibilities all at once, including fulfilling the wishes of the deceased and the Personal Representative’s obligations to the beneficiaries. An estate planning attorney knowledgeable in the process of estate administration can guide you through that process in a correct and efficient manner so that you have peace of mind when all is complete—hopefully with family relationships intact, which is most likely what your loved one would have wanted when setting up his or her estate plan.

Attorney Brittany Hinojosa Citron is an associate attorney with the Dedham firm of Samuel, Sayward & Baler LLC which focuses on advising its clients in the areas of estate planning, estate settlement and elder law matters. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information or to schedule a consultation with one of our attorneys, please call 781-461-1020.

February 2024

© 2024 Samuel, Sayward & Baler LLC

 

 

From Heirlooms to Hurdles: What is Ademption by Extinction and How Does it Affect My Stuff?

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When you are contemplating your estate and how you would like your property distributed to your loved ones after your death, the first thoughts that may come to your mind are “I want my jewelry to go to my daughter and stay in the family,” or “my classic car should go to my brother.” 

Ensuring the smooth transfer of your cherished possessions is a significant consideration when creating your estate plan, especially if you want to pass on special family heirlooms. What if you give some of your jewelry to your niece while you are alive, but your daughter expects to receive it after your death? Your actions while alive can significantly impact the distribution of your tangible personal property at your death if you do not give proper direction in your Will.

Understanding Ademption by Extinction

In Massachusetts and in many other states, the legal doctrine of “ademption by extinction” arises when a specific distribution of an asset in a Will cannot be fulfilled because the property no longer exists in the deceased’s estate at the time of death. In other words, if you state in your Will that a particular item goes to a specific person, and that item is no longer owned by your estate at the time you pass away, that person does not receive the item.

For example, if your Will states that your diamond ring will be distributed to your daughter when you pass away, and you sell the ring before your death and do not purchase another one, then your diamond ring is not held in your estate at death and, therefore, it cannot be distributed to your daughter. Under Massachusetts law, this further means she will not receive compensation or replacement for the lost property (the diamond ring), unless the Will specifically provides for an alternative arrangement. In other words, your daughter will be out of luck with receiving a diamond ring or its equivalent from your estate after your death, although there are a few limited exceptions to this rule.

Solutions to Ademption by Extinction

Given the potential complications of ademption by extinction, you should think carefully about how you distribute your tangible personal property in your estate plan. Here are some things to consider:

1. Regularly review and update your Will.

It is important to periodically review the specific distributions you made in your Will to reflect changes in your assets. When you sell your car or notice your aunt’s pearl necklace gathering dust in the jewelry box, you should review your estate plan to make sure it still aligns with your wishes to distribute that tangible personal property after your death. If you acquire valuable items, such as artwork or antiques, make sure to update your Will to specify who should receive them.

2. Provide detailed descriptions.

When distributing specific items, you should provide detailed descriptions that uniquely identify each item. For example, instead of describing an item as “my car,” you may describe it as “my red 2023 Lamborghini.” This can help prevent confusion and disputes among beneficiaries in case you have multiple Lamborghinis.

3. Create a Tangible Personal Property Memorandum.

In Massachusetts, you can create a separate document called a Tangible Personal Property Memorandum that accompanies your Will. This document allows you to specify in detail the distribution of your tangible personal property and can provide guidance to your Personal Representative when it is time to distribute items to specific beneficiaries. This memorandum is typically referenced in your Will and can include provisions that allow the memorandum to be legally binding on your Personal Representative. It is a good idea to work with an experienced estate planning attorney to make sure your distribution wishes are properly expressed in the memorandum.

You can also easily change the memorandum from time to time as you acquire and sell personal property without the need to visit your estate planning attorney every time. Keep in mind that your tangible personal property consists of items such as furniture, clothing, cars, collectibles, artwork and jewelry, and the memorandum does not distribute other assets, such as bonds, cash, treasury certificates, bank accounts, real estate, or retirement accounts.

4. Discuss your intentions.

Communication is key. Have a conversation with your loved ones and Personal Representative to ensure that they are aware of your wishes regarding the distribution of your tangible personal property.

5. Work with an experienced Estate Planning Attorney.

Estate planning laws can be complex. A qualified estate planning attorney can provide valuable guidance to help you navigate the nuances of ademption by extinction and ensure that your distribution wishes are carried out effectively.

It is important to us at Samuel, Sayward & Baler to assist you with preserving your legacy and providing you with peace of mind that your cherished possessions are passed on to your loved ones in accordance with your wishes. We can help you create an estate plan that minimizes the risk of ademption by extinction and other issues that may arise after your death by offering guidance tailored to your specific tangible personal property and how to best distribute it through your Will or otherwise.

Attorney Brittany Hinojosa Citron is an associate attorney with the Dedham firm of Samuel, Sayward & Baler LLC, which focuses on advising its clients in the areas of trust and estate planning, estate settlement, and elder law matters. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney. For more information visit ssbllc.com or call 781/461-1020. 

August, 2023

© 2023 Samuel, Sayward & Baler LLC

Five Thoughts About Planning for your Vacation Home

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It’s officially summer, and our thoughts turn to summer fun, perhaps at a vacation home of a friend or family member or, if you are lucky enough, yours! If you are the owner of a vacation home, it’s never too early to think about planning for this unique asset. Is this a property you wish to pass on to your children and grandchildren so the good times can continue long after you’re gone? In many cases, the property holds a special place in your family’s hearts and memories, so it is especially important to make sure the property will be there for them to enjoy. Here are five things to consider when planning for your vacation property:

1.  Do Your Children Share Your Hopes and Dreams?
It’s important to determine if you and your family share the same vision for the future of your vacation home. You may intend to leave your vacation home to all of your children to use and enjoy for their lifetimes, but it is important to consider whether your plan is realistic. Take a hard look at how the property is used and by whom. Do all of your children enjoy the property and will they continue to do so in the future, taking into account their busy lives and where they live? Or is the home primarily used by one or two children who live close enough to visit often? When planning for the future of your vacation home, talk to your children about your thoughts and encourage them to be honest with you. Knowing who wants to keep the property and who has no interest in owning a second home is vital information before you begin your planning. If the home will be left to some but not all of your children, you should consider whether it is important to equalize the inheritance each will receive, and whether that is possible considering the other assets you own.

2.  How Will the Bills Get Paid?
Acquiring a second home is only half the battle. Maintaining a second property requires time and resources. If you are leaving vacation property to family members, consider whether they will be able to maintain it taking into account the carrying costs of the particular property, its age, and anticipated future expenses. If you intend for the owners to contribute to the cost of maintaining the property after your death, consider whether all of them can afford to do this, or whether it makes sense to leave the property (and the financial burdens of its maintenance) to those who can afford the expenses that go along with owning such a property. If you are financially able to do so, you may want to leave extra money to support the property which can be used to pay ongoing expenses and make repairs as needed, and take the burden of those expenses off of your family members. If this is the route you choose to go, don’t underestimate the funds that may be needed, and err on the generous side if you are unsure.

3.  How Will Decisions be Made?
No matter how smart your children are or how well they get along, it is always helpful to have a plan for how decisions will be made about who can use the property and when, what improvements will be made to the property, and when and if the property should be sold. It is helpful, whether in a Trust or other written agreement, to set out rules that clearly govern how these matters are decided, and how disputes are resolved. If a child cannot contribute to his share of the expenses, or wants to sell his interest in the property, a structured plan will allow for such transitions, including the opportunity for siblings to buy out one another. If disagreements arise and there is no clear path to resolution, this will ultimately lead to the sale of the property, which is not a good result unless it is one that is agreed on by all involved.

4.  Don’t Forget the Tax Planning.
Vacation homes are often a beloved asset, but they are an asset nonetheless, subject to estate tax like the other assets in your estate. If you have a taxable estate (which means the total value of all of your assets exceeds $1 million if you are a Massachusetts resident), it is crucial to consider how estate taxes will be paid when planning for a vacation home that will not be sold following your death. In some sad situations, the next generation would love to keep the vacation property, but the estate taxes payable at the parents’ deaths are so steep that they cannot afford to do so. Consider undertaking planning to reduce the tax bite at your death. This type of planning may include gifting the property or an interest in the property during your lifetime. Consider whether owning vacation property in an LLC may be appropriate if the owner lives out of state and the vacation home is located in Massachusetts. Consider using life insurance to provide a resource from which estate taxes can be paid, reducing the possibility that the property will need to be sold to satisfy a tax obligation. And consider incorporating generation-skipping tax planning into your estate plan to reduce or eliminate estate tax that would otherwise be payable in your children’s estates

5.  Transfer during lifetime or at death?
Many vacation homeowners intend to continue to own their property during their lifetimes and leave the property to their heirs at their deaths. By doing so, they remain the sole decision-makers and keep their options open: they could sell the property, rent it out, change their minds about who will inherit it, etc. However, transferring ownership to the next generation during the parents’ lifetimes can make sense for tax planning or long-term care planning reasons. Lifetime gifts of vacation homes are something that should be considered, balancing the capital gain tax and control implications of such a gift against the estate tax cost of retaining ownership until death. However, keep in mind that if you intend to use your vacation home after giving it away, rent will need to be paid to the new owners to avoid inclusion in your estate for estate tax purposes.

Thoughtful and timely planning for a vacation property can ensure the property will pass to future generations in a way that will minimize issues and maximize the chances the property will be enjoyed by your family for generations to come. If you have a vision of your descendants enjoying your beloved cottage and building memories there, take the necessary steps now to make your wishes a reality.

Maria Baler, Esq. is an estate planning and elder law attorney and partner at Samuel, Sayward & Baler LLC, a law firm based in Dedham. She is also a former director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA), and the former President of the Board of Directors of the Massachusetts Forum of Estate Planning Attorneys. For more information, visit www.ssbllc.com or call (781) 461-1020. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.

July 2023
© 2023 Samuel, Sayward & Baler LLC

Five COVID-Inspired Estate Planning Resolutions

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Looking ahead to this year’s resolutions, here are five estate planning resolutions that the COVID-19 pandemic has shown us to be more important than ever.

  1. Resolve to Have an Estate Plan

Most of the clients I meet who do not have a Will, Power of Attorney or other estate plan documents know they should have them, they have just put off this task – sometimes for much longer than they should, especially when faced with a global pandemic.  I met many people in 2020 who had put off estate planning and were suddenly in a panic to get it done given what was happening all around them.  If you are similarly situated, make it one of your goals for 2021 to get an estate plan in place.  A simple plan (Will, Power of Attorney, Health Care documents) is better than nothing at all.  If you have young children or assets in excess of $1 million, a Trust may be advisable to meet your planning goals.  An experienced attorney who prepares Wills and Trusts as the primary focus of their practice will give you options and let you decide which plan is best for you at the moment.  

If you already have an estate plan in place (good job!) resolve to review it this year to make sure the provisions of your plan still reflect your wishes.  If it has been more than five years since the documents were signed or you have had changes in your personal or financial situation, meet with an estate planning attorney (virtually of course!) to identify any changes that should be made.

  1. Resolve to Get it Done Right

The advice of an experienced attorney is not cheap and estate planning attorneys are no exception.  However, making sure decisions can be made for you if you are ill, making sure your assets go where you want them to go at your death, managing inherited assets properly for young beneficiaries, protecting assets for your family, avoiding probate and saving your beneficiaries as much income and estate tax as possible are important goals.  The way your estate plan is carried out will have a significant financial and emotional impact – positive or negative – on you and your family.  When something is this important, make sure it’s done right. The temptation to draft your own Will or other legal documents is there and is frankly a poor planning option.  In my 33 years of practice, I have yet to see a Will drafted by a client that will accomplish what the client thinks it will.  In fact, most self-drafted Wills create more problems than they solve.  Proper estate planning is not something that can be done cost-effectively on your own. Seek the advice of an experienced estate planning attorney, not a general practitioner who prepares Wills along with divorce and personal injury law.  Get it done right, and you will have the peace of mind that crossing this task off your list will bring.

  1. Resolve to make sure your Beneficiary Designations are Up-to-Date

Many of your most significant assets – life insurance, retirement accounts, annuities – will be paid to a designated beneficiary at your death.  Properly designating those beneficiaries is more complicated than it may appear, and understanding the implications of certain beneficiary designations is crucial. Designating a trust as beneficiary for the benefit of a young or disabled beneficiary can be instrumental in avoiding a lengthy and costly court proceeding to appoint a guardian, or avoiding the loss of public benefits a disabled beneficiary may be receiving. Understanding how distributions from retirement accounts work after the death of the account owner, and how different beneficiary designations will impact the income tax payable on those distributions is critical to making appropriate designations, and is something that changed significantly when the SECURE Act became law on January 1, 2020. Ensuring your beneficiary designations are consistent with your overall estate plan is vital to accomplishing your estate planning goals.

  1. Resolve to have Health Care Documents in Place

Much of the estate planning you do is for the benefit of your family or other heirs and will never impact you.  Creating health care documents that reflect your wishes is one area of estate planning that will directly and significantly impact you if you experience a period of illness prior to death.  This has never been more apparent than this past year, when so many people became incapacitated, and so quickly, by the COVID-19 virus.  Designating Health Care Agents to make health care decisions for you if you are unable to do so, making sure the people you want to be able to get information from your physicians can do so and will not be obstructed by privacy laws, and determining your care preferences and communicating them to your Health Care Agents and physicians are all crucial to making sure your health care wishes are carried out.  In Massachusetts, the legal document that we use to make sure these things happen are Health Care Proxies, HIPAA Authorizations and Living Wills. The person you name to make health care decisions for you is called your Health Care Agent. These documents are all part of a complete estate plan, and arguably the most important part from your perspective.

  1. Resolve to Make Sure People You Care About Have a Plan Too. 

Estate Planning is important for anyone over the age of 18. College-age children and elderly parents should have Durable Powers of Attorney and health care documents that will allow someone to make financial and health care decisions for them, and have access to information if they are ill or incapacitated.  This year underscored this need, as some college students fell ill far from home, and elderly parents were too sick to make decisions regarding their own care.   Parents of young children should name guardians for their children and create a trust to manage assets for young beneficiaries to avoid a child receiving control of an inheritance at age 18.  Parents who will leave a significant inheritance to their children should consider asset protection planning to protect inherited assets from a child’s creditors, divorcing spouse, etc.  Older couples or others with large estates can save their heirs significant estate taxes in Massachusetts with proper planning.  Elderly parents may want to plan to protect assets from long-term care liability.  

Now that 2020 is behind us and a COVID vaccine is here, we look back on 2020 grateful that we were able to continue to do our work, happy to be able to provide some peace of mind to our clients in these uncertain times, and hopeful that there are better days ahead.  For those of you who are fortunate enough to be alive and well in these challenging times, we recommend you take these resolutions to heart, and create or update your estate plan today.  If a friend or family member needs some inspiration to make estate planning a 2021 resolution, share this article with them.  Wishing you a Happy and Healthy New Year!

Maria Baler, Esq. is an estate planning and elder law attorney and partner at Samuel, Sayward & Baler LLC, a law firm based in Dedham. She is also a former director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA), and the current President of the Board of Directors of the Massachusetts Forum of Estate Planning Attorneys. For more information, visit www.ssbllc.com or call (781) 461-1020. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.

January, 2021

© 2021 Samuel, Sayward & Baler LLC

Thirteen Estate Planning Terms You Need to Know

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We recently celebrated National Estate Planning Awareness Week during the week of October 19-25, 2020.  Although it is nice to have an entire week each year devoted to raising awareness of the importance of estate planning, I would argue that 2020 has been National Estate Planning Awareness Year, as the COVID-19 pandemic has brought the importance of estate planning to the forefront of everyone’s mind.  Here at SSB we have had a busy year making sure our clients’ plans are up-to-date, and helping new clients put a plan in place so that they, too, can have the peace of mind an estate plan brings in these uncertain times.

As Estate Planning Attorneys, we know Estate planning is incredibly important and not just for the wealthy.  Estate planning is something every adult should do. Estate planning can help you accomplish any number of goals, including appointing guardians for minor children, choosing a health care agent to make decisions for you should you become ill, appointing an agent to handle your financial and legal matters if you become incapacitated, minimizing taxes so you can pass more wealth on to your family members, and stating how and to whom you would like to receive your assets when you pass away. 

While it should be at the top of everyone’s to-do list, estate planning can often feel overwhelming, and estate plan documents can sometimes seem to be written in their own language.  Here are some important estate planning terms you should know as you think about your own estate plan. 

Assets

Generally, anything a person owns, including a home and other real estate, bank accounts, life insurance, investments, retirement accounts (IRAs, 401ks), annuities, furniture, jewelry, art, clothing, and collectibles.

Beneficiary

A person or entity (such as a charity) that is designated to receive assets from an estate, trust, account, or insurance policy. 

Distribution

A payment in cash or assets to a beneficiary who is entitled to receive it.

Estate

All assets and debts left by an individual at death.

Fiduciary

A person with a legal obligation (duty) to act primarily for another person’s benefit, e.g., a trustee or agent under a power of attorney. “Fiduciary” implies great confidence and trust, and a high degree of good faith. 

Funding

The process of transferring (re-titling) assets to a living trust (a trust created during the creator’s lifetime). A living trust will only avoid probate at the trust creator’s death with assets that are funded into the trust during the trust creator’s lifetime, or that will be automatically payable to the trust (i.e. by beneficiary designation) at the trust creator’s death.

Incapacitated/Incompetent

Unable to manage one’s own affairs, either temporarily or permanently; often involves a lack of mental capacity.

Inheritance

The assets received from someone who has died.

Guardianship / Conservatorship

The court-supervised process of appointing a guardian / conservator to make decisions on behalf of an incapacitated or incompetent person, including health care and financial decisions. 

Marital deduction

A deduction that may be taken on the federal and Massachusetts estate tax returns, it lets the first spouse to die leave an unlimited amount of assets to the surviving spouse free of estate taxes. However, if no other tax planning is used and the surviving spouse’s estate is more than the amount of the federal and/or state estate tax exemption in effect at the time of the surviving spouse’s death, estate taxes will be due at that time.

Settle an estate

The process of winding down the affairs of a deceased person, and includes identifying and valuing of assets, paying debts and taxes, and distributing assets to beneficiaries.

Trust

A fiduciary relationship in which one party, known as the trust creator, settlor or grantor, gives another party, known as the trustee, the responsibility to hold property or assets for the benefit of another party, the beneficiary. The trust should be memorialized by a written trust agreement which specifies the trustee’s duties and powers, the trustee’s obligation to the beneficiary, and the beneficiary’s rights to income or principal from the trust.

Will

A written document with instructions for disposing of probate assets after death. A Will can only be enforced through a probate court. A Will may also include the nomination of guardian for minor children.

If you have any additional questions about estate planning, or would like to consult with an experienced estate planning attorney about your own estate plan, please contact our office. We will be happy to assist you in creating a comprehensive plan that is tailored to your unique needs and goals, so that next year when National Estate Planning Week rolls around, you will have something to celebrate!

November, 2020

© 2020 Samuel, Sayward & Baler LLC

Five Requirements of a Valid Will

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On June 8, 1948, a Canadian farmer was pinned beneath his tractor.  He was discovered 9 hours after the accident and rushed to the hospital, where he later died.

A few days later, it was discovered that the farmer had scratched his Will into the fender of the tractor using his pocket knife. He had written, “In case I die in this mess, I leave all to the wife.” The fender was later removed and submitted to the Canadian court as a valid holographic Last Will and Testament.

What is a holographic will? The definition of a holographic Will, is a will and testament which has been entirely handwritten and signed by the testator.  In the document, the testator (the author of the Will) must be expressing a wish to direct the distribution of his or her estate to beneficiaries.

Although the law in Massachusetts does allow handwritten wills, the Will etched by the farmer onto his tractor fender would not have been valid in Massachusetts as it was not executed with the legal formalities required by Massachusetts statutes.

Normally the task of drafting a will is best accomplished by a lawyer for wills and trusts, but when it is not, certain requirements must be met for a will to be legal in Massachusetts. A Last Will and Testament is a document that allows you to determine who will manage your estate at your death, who will inherit your assets, how and when your assets will be distributed, whether assets will be placed in trust, and who will care for your minor children. It is important to draft a will to ensure that your wishes are known and legally acknowledged. Without a Will, the laws of your state will decide who may manage your estate, who will inherit your assets, and how and when your assets will be distributed.  This may not align with your intentions so we do not recommend relying on what is called the “Intestacy Statute” of your state.

In Massachusetts, there are several requirements for a Will to be valid:

1. The will must be in writing. This could include handwriting, but generally they are typed.  Massachusetts does recognize nuncupative (oral) wills but only if made by a person who is in active military service or a mariner at sea.  The oral Will may only be created in order to dispose of personal property.  Real property cannot be transferred through a nuncupative will.

2. The will must be signed and dated by the Testator (the person making the will).  If the Testator is not able to sign, someone else can sign on the testator’s behalf at the direction of the Testator and in his presence.  This person cannot be one of the witnesses.

3. The will must be signed by two disinterested witnesses. Disinterested means they are not beneficiaries or potential beneficiaries of the will.  In Massachusetts, a person of “sufficient understanding” shall be deemed competent to be a witness to a Will. If a witness to a will is competent at the time of his attestation, his subsequent incompetency shall not prevent the probate and allowance of such will.

If a Will is witnessed by an “interested person” the Will itself is not deemed to be invalid but the gift/bequest to the interested party and/or his or her spouse is deemed to be void.

4. The person making the will must have the mental capacity to do so. This is often called “testamentary capacity.”  More specifically, the following must be true:

    • The testator must be at least 18 years old;
    • The testator must be free of undue influence or duress;
    • The testator must know he is signing his will and intends to do so;
    • The testator must have read, or have an understanding of the provisions of the will; and,
    • The testator must be of “sound mind” which generally means he knows ‘the natural objects of his bounty’ (i.e. who his family is) and has a general understanding of the nature of his assets.

5. A handwritten will signed by the testator that meets all of the above requirements can be valid under Massachusetts law. So, in a sense, one might say that Massachusetts does permit handwritten wills or holographic wills but only if the Will was executed with the formalities outlined above.

Although a fender of a tractor might be a unique place to inscribe your final wishes, we would prefer that you work with your estate planning attorney to draft your will and reduce your wishes to plain old paper, and to ensure that the writing of your will is executed properly and in accordance with the legal formalities of the Massachusetts statutes.

This article is from the estate planning and elder law firm of Samuel, Sayward & Baler LLC, based in Dedham.  For more information, visit www.ssbllc.com or call (781) 461-1020. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.

June 2020

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