Estate Planning

Wills:

A Will is the basic necessity of any Estate Plan. A Will, simply put, is a document that outlines who you want to handle your estate and what you want to happen to your possessions (Assets) after you pass. The Will does not pass your assets to your beneficiaries automatically. A personal representative will likely have to hire an attorney, go to court to probate your estate and wait for the court's permission, before your assets may be disbursed to your beneficiaries. The Will may be challenged by any heir.

Trusts:

Trusts are the preferred method of estate planning. When you create a trust you can convey whatever you want to whoever you want and the transfer is immediate upon your death. There is no need for expensive attorneys and a long probate court process. There are 2 main types of Trusts, Revocable and Irrevocable.

The Revocable Trust:

The Revocable Trust, also known as a living trust or inter vivos trust, is a legal arrangement where a person, referred to as the grantor or settlor, transfers their assets into a trust during their lifetime. The grantor retains control over the trust and has the ability to modify or revoke it at any time while they are alive and mentally competent.

In Massachusetts, a revocable trust offers several benefits that may make it a desirable option for individuals. Here are some reasons why you might consider having a revocable trust in Massachusetts:

Probate avoidance: One of the primary advantages of a revocable trust is the ability to avoid probate, the legal process through which a court oversees the distribution of a deceased person's assets. By placing assets in a revocable trust, they can pass directly to the designated beneficiaries without the need for probate. This can save time, money, and provide privacy for your estate.
Incapacity planning: A revocable trust allows you to plan for the possibility of incapacity. If you become unable to manage your financial affairs due to physical or mental incapacity, the successor trustee named in the trust document can step in and manage the trust assets on your behalf, ensuring continuity and avoiding the need for court-appointed guardianship or conservatorship.
Flexibility and control: Since you retain the power to modify or revoke the trust during your lifetime, a revocable trust provides flexibility and control over your assets. You can add or remove assets from the trust, change beneficiaries, and amend the terms of the trust as your circumstances or preferences change.
Privacy: Probate proceedings are typically public, which means the details of your estate, assets, and beneficiaries become part of the public record. With a revocable trust, asset transfers and beneficiary information can remain private since the trust administration occurs outside of the probate process.
Estate planning: A revocable trust can be a valuable tool in comprehensive estate planning. It allows you to plan for the distribution of your assets, minimize estate taxes, provide for your loved ones, and establish specific instructions for asset management and distribution after your passing.

The Irrevocable Trust:

The Irrevocable Trust is a legal arrangement in which the person creating the trust, known as the grantor or settlor, transfers assets into a trust and relinquishes control and ownership over those assets. Once established, the terms of an irrevocable trust generally cannot be altered or revoked without the consent of the beneficiaries named in the trust agreement.

In Massachusetts, as in other jurisdictions, there are several reasons why you might choose to establish an irrevocable trust:

Asset protection: One of the primary benefits of an irrevocable trust is asset protection. Once assets are transferred into the trust, they are no longer considered part of the grantor's personal estate and are shielded from creditors, lawsuits, and other potential financial liabilities. This can be particularly valuable in protecting assets from potential future long-term care costs or legal claims.
Estate planning and probate avoidance: Irrevocable trusts can be effective tools for estate planning, allowing individuals to control the distribution of their assets after their passing. By placing assets in an irrevocable trust, they are typically not subject to probate, which can be a time-consuming and expensive legal process. This can help ensure a smoother transfer of wealth to the intended beneficiaries.
Tax planning: Irrevocable trusts can also offer tax advantages. Depending on the specific trust structure and the assets involved, it may be possible to reduce or eliminate certain estate taxes, gift taxes, or generation-skipping transfer taxes. It is important to consult with a qualified estate planning attorney or tax professional to understand the specific tax implications and benefits in your situation.
Medicaid and long-term care planning: In Massachusetts, as in many other states, an irrevocable trust can be utilized as part of Medicaid and long-term care planning. By transferring assets into an irrevocable trust well in advance of needing long-term care services, you may be able to protect your assets and still qualify for Medicaid benefits to cover their care expenses.