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Boston Elder Law Blog

Using a revocable trust to pass an estate to children

Many Massachusetts residents struggle with how to provide for their children after their deaths. One estate planning tool that many people use is the revocable trust. This versatile document allows parents the freedom to create a trust that works best for them and their children.

Distributions from the trust do not have to be made all at once. Parents can decide to give a specified portion of the trust to each child at a certain age. The trust can also provide a stipend for the person appointed as the children's guardian to help cover the extra expenses incurred when he or she agreed to care for the children.

Study says full guardianships recommended most often

Massachusetts parents who have special needs children typically reach a point where that child will reach the age of majority. At that point, parents can lose the right to make decisions on their behalf. Many of those parents look into the possibility of obtaining guardianships in order to continue caring for their children.

Guardianships can be either full or limited, depending on the needs of the individual. The issue of capacity of the disabled person takes center stage in any such proceeding. Not surprisingly, courts are often careful to appoint a guardian since the ability to make decisions for oneself are taken away when an individual is appointed. A full guardianship puts all of the decision-making authority in the hands of the guardian. By contrast, a limited guardianship leaves some of that authority with the person needing assistance.

Use a revocable or irrevocable trust for life insurance proceeds

Many Massachusetts families purchase life insurance policies to provide for their minor children if they pass away. However, a minor child cannot inherit the proceeds. Without a revocable or irrevocable trust to hold the proceeds upon death, family members will have to spend additional time and money to be appointed as the guardian of the minor child in order for the funds to be distributed.

Some would argue that creating a trust is unnecessary because under the Uniform Transfers to Minors Act (UTMA), an adult can be named custodian of the property until the minor child reaches the age of maturity, at which point all of the money is given to the child. The problem with relying on this act is that an 18 or 21 year old may not possess the self-discipline or maturity to manage the money in the way his or her parents would prefer. With a trust, Massachusetts parents can control when and how much of the proceeds are distributed to the child.

Family members benefit from a loved one's estate planning

Most Massachusetts residents are already aware of the benefits they receive by creating an estate plan. The benefits are not only for the person doing the estate planning but also for that person's family members. The more comprehensive the plan, the less work family members may have to do if a relative becomes incapacitated or passes away.

Serious accidents and illnesses do not discriminate by age or gender. If either of these events should happen, family members will need to be able to take care of a relative's assets and make health care decisions on his or her behalf. If the appropriate documents are not in place, it will be necessary to go to the courts to obtain permission to act, which many would consider a waste of time and resources.

What is the probate process?

Most Massachusetts residents have been told at one time or another that they should create an estate plan in order to avoid probate. Some residents, however, are not quite sure what the probate process entails and why it should be avoided. Two of the biggest reasons are that it can be time consuming and costly.

When an individual dies, his or her will is filed with the court. Under court supervision, any assets that a person owned at the time of death are gathered and ultimately distributed to heirs. The probate is filed in the state in which the person died. If property was owned in another state as well, an ancillary (secondary) probate is filed in that state in order to distribute it.

Wedding bells, wills and other estate planning documents

When the gifts are all unwrapped and the honeymoon is over, a Massachusetts newlywed couple's life begins. Thinking about how that life could end may not be at the top of the couple's list, but many would argue that it should be. It is important that they execute wills and other estate planning documents in order to provide each other with the peace of mind that if something happens, a plan is in place.

Without a will, the state of Massachusetts will determine who receives an individual's assets upon death. No one should assume that it will be the person or persons intended. Therefore, a will is often considered the core of every estate plan. After this document is created, the unique circumstances of each individual dictate what other documents may be needed in order to ensure that the assets are distributed in the manner desired. If the parties executed a prenuptial agreement, it should also be integrated into the estate plans of each spouse.

Will a revocable trust help meet estate planning goals?

The old saying, "you can't take it with you," is true. However, that does not mean that Massachusetts residents cannot retain control over with happens to it. For instance, some people may need nothing more than a will to meet their goals, but others will need something else -- such as a revocable trust -- in order to ensure that their assets are protected and distributed in accordance with their wishes.

Either approach will work, depending on an individual's preference. Some people are content with their assets being directly distributed after their death, and that is the case for numerous individuals. However, for people with more complex family dynamics and holdings, trusts can be invaluable.

Estate planning can help pay for long-term care

Health care costs are not the only expenses that continue to rise. The cost of long-term health care is also increasing. Massachusetts residents who include the possibility of needing extended care during estate planning could have the funds available when the time comes.

Current estimates put the average yearly cost of sharing a room in a nursing home at approximately $77,380. However, here in Massachusetts, that average can go as high as $120,000. Assisted living can be less expensive, but it can still average around $42,000 per year.

The basics of the Massachusetts probate process

If you agreed to be the executor of a family member's will, you may not have truly understood what duties you are expected to perform upon his or her death. The Massachusetts probate process requires that certain steps be taken before the estate can be distributed and considered closed. Below are the basic steps that must be taken during the administration of an estate.

Even though you are named as the executor in the will, the court still needs to officially appoint you. This is done through the filing of a probate petition. Once the will is declared valid, you will be given the authority to act on behalf of the estate. The process from start to finish can take up to a year if there are no complications.

Single people also need wills and other estate planning documents

Data gathered over the last few years indicates that more people in the United States are single, and undoubtedly, many of those people are here in Massachusetts. Unmarried individuals may unknowingly face certain challenges when it comes to estate planning that married people do not. Potentially, wills and powers of attorney can be more critical for single people.

Married Massachusetts residents often rely on their spouse to make financial and health care decisions for them if they are unable to do so. This is obviously not an option for a single person. Executing a durable power of attorney for financial decisions and a health care power of attorney are needed to allow a trusted friend or family member to step in under these circumstances. Otherwise, court intervention will be necessary.

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