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Boston Elder Law Blog

Protecting Massachusetts incapacitated adults and minor children

Every day, residents in Massachusetts are faced with making the decision to protect a loved one from himself or herself. Whether they are protecting an incapacitated adult or minor children, family members will need some legal authority to act on one's behalf. Without such authority, a person's health and assets are vulnerable.

If an adult created an estate plan that included powers of attorney for health care and finances, his or her agent has the necessary legal authority to act as soon as that adult is declared incapacitated. Therefore, if an individual wants to maintain control over who will take care of these important issues on his or her behalf in the event that he or she is no longer able to, creating an estate plan is essential. However, if these documents do not exist, a family member can ask the Massachusetts courts to appoint him or her as a guardian and/or conservator to serve the same functions.

A revocable trust can provide for children of a single parent

Massachusetts residents may not realize that it is not only the wealthy who benefit from the use of trusts. In reality, anyone can benefit from using a trust as part of a comprehensive estate plan. One group of people who could benefit from the use of a trust, such as a revocable trust, are single parents.

A revocable trust is created during the life of the grantor. In most cases, he or she retains control of his or her assets. Another person is also named in the trust who will take over the management of the trust if the grantor passes away or becomes incapacitated. This allows a single parent's children to continue to be provided for with little interruption because the assets in the trust do not have to go through probate.

New federal exemption allows people to refocus asset protection

For 2015, the federal estate tax exemption has been raised to $5.43 million per person. This means that a dwindling number of estates will actually exceed the exemption. Here in Massachusetts, however, the exemption is only $1 million. Therefore, asset protection can be refocused toward reducing other types of taxes, including the Massachusetts estate tax.

It is not immediately known whether the Massachusetts Legislature is considering increasing the estate tax exemption for its residents. Therefore, anyone with an estate that exceeds the current exemption still needs to structure his or her estate plan to eliminate -- or at least reduce as much as possible -- his or her taxable estate. Doing so will leave more of an individual's estate to be distributed to his or her heirs and beneficiaries.

Trusts provide asset protection for minor children

Nearly all Massachusetts parents likely expect to live long enough to raise their children and watch them become the adults they are meant to be. However, the reality is that none of us knows how long we will live. As loving, responsible parents, we need to put a plan into place to ensure that minor children will be taken care of in the event of death. Asset protection is a major concern for parents with minor children.

Minor children are not able to own property. Therefore, the property intended for them needs to be somehow safeguarded. Trusts can hold any property or other assets you intend to be used for the benefit of your children. The assets put into the trust are often protected from taxes, creditors and anyone else who may want to get at the assets, including an ex-spouse. As your minor children reach the age of majority, you can specify how and when they will receive distributions from the trust.

How do Massachusetts parents leave assets to minor children?

Massachusetts parents want to be able to provide for their children -- even after death. However, minor children cannot legally inherit property. Therefore, the biggest question involves how to leave assets to them.

Naming a minor child directly as the beneficiary of an asset could result in numerous legal issues upon a parent's death. In dealing with the issue, a Massachusetts court can easily misinterpret the parent's intentions, which could lead to unintentional delays and interference. An account created under the Uniform Transfers to Minors Act would allow its owner to choose a custodian for the account upon his or her death but would not allow control over how it is distributed.

Long-term health care planning is a larger issue for women

Statistics show that men live an average of five years less than women do. As a result, many women will spend more time in long-term care at the end of their lives than men will. Therefore, long-term health care planning is more of an issue for Massachusetts women than men.

Other data indicates that 74 percent of women are concerned about how they will pay for long-term care. A person can spend an average of 835 days in a nursing home, which could cost upward of $200,000. The average stay in an assisted living center is comparable in time, but it may cost only approximately $90,000. Even an assisted living center may be cost prohibitive without some planning.

Setting up a living revocable or irrevocable trust

Massachusetts residents set up living trusts -- which is a trust created during the life of its creator -- for a variety of reasons. For instance, a revocable trust (changeable) or irrevocable trust (unchangeable) can be created to provide for loved ones who are too young or otherwise incapable of dealing with financial affairs on their own. Other people may set up a trust in order to protect their assets if they become incapacitated. Some trusts are created to avoid probate, stave off creditors and avoid hefty estate taxes.

Regardless of the reason, most living trusts are created in the same manner. They can be tailored for your purposes, so long as they are not contrary to public policy or illegal. This means that it is possible to control how and when distributions are made to a beneficiary -- who is the person receiving the assets of the trust -- by the trustee, the trust's administrator. During the life of the trust's creator, or grantor, he or she can serve as the grantor, trustee and beneficiary of the trust.

Wills are just the beginning of stress relief for the future

Retirement may seem years or even decades away for some Massachusetts residents. However, that may not stop concerns about the future over what would happen to an individual and his or her family if one was no longer able to care for him- or herself or family. Fortunately, estate plans with wills at their core can help eliminate the stress of an unplanned future.

However, death is not the only event that needs planning. An illness or accident could render an adult individual unable to conduct his or her affairs at any age. Choosing one or more trusted persons to take care of the financial and health care decisions ahead of time can provide a sense of relief for both the individual and family members. Moreover, a plan needs to be in place to make adjustments to one's estate if long-term care is needed.

Blended families up the stakes in asset protection

A large number of families in Massachusetts are comprised of children from a previous marriage and couples who are getting married for the first or second time later in life. This often means that both parties are coming into the marriage with their own wealth and assets. Asset protection takes on a new meaning for these families when it comes to estate planning.

A surviving spouse is entitled to at least a portion of his or her deceased spouse's estate by law despite what a will may say. Therefore, in order to ensure that children from a prior relationship receive certain assets of the estate, creating or updating each party's estate plan is a necessity. In most instances, any property that an individual wishes to leave to his or her children needs to be spelled out in a will. Some individuals choose to put their assets into trust for loved ones, which is also considered a viable way to protect their inheritances.

Adult children need to discuss estate planning with parents

Massachusetts residents are living longer now than ever before. This could mean that the possibility of some older people becoming incapacitated is a real concern. Adult children may want to discuss estate planning with their parents in order to ensure that a plan is in place just in case.

Once an elderly parent's health is on the decline, it might be too late to prepare for an easy transition for an adult child to take over making financial and healthcare decisions on behalf of his or her parent or parents. It may be difficult to bring up money and the possibility of incapacitation with a parent. However, it is the first step toward ensuring that a parent is taken care of as he or she ages.

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