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.
- 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.
- 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.
- 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.
- 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.
- 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.
© 2021 Samuel, Sayward & Baler LLC