By Attorney Susan M. Mooney
An individual does not have to establish an elaborate or an expensive Estate plan in order to legally protect them during lifetime and to accomplish their goals and objectives with regard to disposition of their assets after their death. The following are some simple suggestions that every individual should consider and put into place for their own personal protection:
Plan for possible future disability, illness or incompetence, while healthy and competent.
Every individual, while healthy and competent, should seriously consider establishing a Durable Power of Attorney and Health Care Proxy in order to appoint the person(s) they would personally select to make financial and medical decisions for them in the event of their future incompetence. These are simple, inexpensive legal documents that protect an individual during their lifetime. A failure to execute these legal documents, while healthy and competent, could result in the Court appointing a Guardian or Conservator for you, in the event you were to become incompetent in the future. The Guardianship/Conservatorship process is a legal process requiring Court appearances, and public notices, that is costly, both financially and emotionally, as well as time consuming. The Guardianship/Conservatorship process, in most cases, may be totally avoided by some simple lifetime planning accomplished while you are legally competent. Furthermore, a Court appointed Guardian or Conservator could be someone you would not have personally selected and could be a complete stranger, appointed by the Court.
Establish a simple Will that states your wishes and intentions regarding how your Estate will be distributed upon death and names the Personal Representative (a/k/a Executor) of your choice to carry out your intentions.
The only way to assure that your intentions will be followed with regard to how your assets will be distributed after your death is to state your intentions in a Will, which is properly drafted, executed and witnessed in accordance with the law, while you are legally competent to do so. I find there is a common misconception that if you do not have a Will, the State will take your assets upon death. If you do leave behind any heirs at all (spouses, children, grandchildren, parents, siblings, aunts, uncles, cousins) it is not true that the State will take your assets upon your death. However, it is true that the laws of the State where you reside at the time of your death will control to whom and in what shares your assets will be distributed, if you should die without a Will. The State law may not reflect your personal intentions. For example, I find most folks commonly think that if they were to die without a Will and leave behind a spouse and children, that their spouse would automatically inherit all the assets of the deceased spouse. This is not necessarily true. If you do not have a Will, your spouse may inherit only a portion of your Estate and your children may inherit a share as well. While most parents do want to provide for their children, I find that they commonly wish to do so only after their surviving spouse is properly protected and financially secure. Further, if you do not have a Will naming your own personal choice of Personal Representative (Executor), any legally interested person, including a creditor, can petition the Court to be appointed to manage your Estate and this may not be the person you would have chosen to handle your affairs after your death.
In most cases a simple Will is sufficient to accomplish your objectives. On larger Estates more elaborate Estate planning may be required to avoid or minimize Estate tax on Estates valued above the Estate taxable level (for dates of death in Year 2020, Federal Estate tax will be imposed on Estates valued over $11.58 million dollars; for Massachusetts residents’ Estates exceeding $1.0 million dollars are Estate taxable). Estate plans, including Marital Trusts, can minimize or avoid Estate Tax exposures for a couple’s Estate that exceeds Estate taxable limits.
Also, sometimes more specific planning is necessary to protect a disabled spouse, child or grandchild during your lifetime, and/or after your death. For example, perhaps a disabled child is receiving social security disability benefits that would be lost if that child received even a small or insignificant inheritance. With proper planning, the child could be left the same assets, without risking loss of the benefits that they receive and that are necessary for their support.
Perhaps one spouse requires long term medical care, while the spouse remaining at home and in the community needs to preserve the couple’s income and assets for their own financial security. With proper planning these issues can be addressed and a plan implemented to meet your personal needs.
Protect the real estate that you own as your personal residence from creditors.
Effective March 16, 2011, the Massachusetts Homestead law provides that all homeowners shall receive $125,000.00 in automatic Homestead protection on their personal residence without any recording requirement at the Registry of Deeds. However, additional Homestead protection may be obtained by recording of a Homestead Declaration at the Registry of Deeds. A recorded Homestead Declaration provides you with protection against creditors of up to $500,000.00 in equity in your home for individuals or joint owners under age sixty-two (62). In the event of a lawsuit against you, the Homestead prevents an attachment and possible forced sale and loss of your home to a creditor. After age sixty-two (62), you are eligible to execute an elderly Homestead Declaration which provides $500,000.00 of protection for each over sixty-two (62) owner of the real estate. Thus, a joint Homestead for two (2) owners over age sixty-two (62) provides $1.0 million dollars of protection. A joint Homestead is not permitted for persons under age sixty-two (62). The Homestead will not protect your home for purposes of Medicaid planning, or nursing home obligations.
In summary, the simple legal documents discussed above provide valuable protection for all individuals. Remember each person’s situation and objectives are personal and unique to that person. The facts and family issues that apply to your situation are unlikely to be identical to that of your friends and neighbors. In more than thirty-four (34) years of practicing law in the area of Estate planning and Elder law, I have found that a simple Estate plan accomplishes the goals and objectives of most of my clients who require legal services in this area. The importance of obtaining competent legal advice for your own personal situation before establishing a personal Estate plan cannot be overstated.