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Boston Elder Law Blog

Health care planning can help to avoid a financial disaster

Although people throughout the country and in Massachusetts view Medicare as a trusted program, it does not pay for all medical expenses that one may encounter after age 65. Services that were covered under employer-sponsored plans, such as vision, hearing and dental care are not covered. Long-term care coverage is also not covered, and Medicare has substantial deductibles and co-pays. That is why health care planning for one's retirement years is vital.

There is a maze of rules, regulations and options relevant to setting up such a plan for health care needs. Thus, it is always best to encounter such complex issues under the guidance of an experienced estate planning attorney. The long-term care planning is especially critical because the cost of staying in a nursing home is exorbitant and can easily wipe out the nest egg of an elderly couple when they least expect it.

A revocable trust cannot serve its purpose until it is funded

Whether in Massachusetts or elsewhere, a basic fact to remember is that trusts must be funded before they can do anything. However, an unfunded trust is not void. For example, a revocable trust that is unfunded will remain valid but inoperative until it is funded. This sometimes does not happen until the settlor dies and his/her pour over provision in the will kicks in and sends specified assets to the trust. That is an ironic result because one of the purposes of creating the revocable trust is to avoid probate.

The point is that people forget or neglect to fund their trust after it is established. Without funding, it will not do what was intended. It is true, however, that some trusts must wait for certain events prior to being funded. An irrevocable life insurance trust will not be funded until the insured's death.

Different options provided by a revocable vs. irrevocable trust

A trust is an often-underutilized estate planning tool that allows for clear and specific stipulations regarding the handling of a Massachusetts individual's estate and asset distribution, while often minimizing taxes and administrative expenses. With terms like living trust, revocable and irrevocable trust and more, though, the vast array of options and legal phrases may feel overwhelming. An estate planning attorney can offer more detailed information, but here are some quick summaries that may help clarify the basics. 

Living trusts and revocable trusts are different terms for the same thing. These trusts -- when properly funded --help individuals avoid the probate process. Revocable living trusts are often designed to protect an inheritance from things like bankruptcy, creditors and divorce, as well as to save estate taxes. An AB trust is a specific type of revocable trust; an attorney can help explain more fully, but these are funded by a deceased spouse's interest in trust assets as well as the surviving spouse's share, and that surviving spouse decides upon the distribution.

How a wealth advisor can oversee the distribution of assets

For those Massachusetts families who have been fortunate enough to amass significant wealth, managing that wealth can seem like a full-time job. In fact, many wealthy families hire the services of multiple financial professionals to handle money matters. When it comes to estate planning, it may make sense to hire a wealth advisor who is specifically tasked with creating a plan for the distribution of assets.

For example, some families have a trusted insurance broker who handles matters related to personal and business insurance. Another professional may focus on the family's investments, while a third is solely responsible for business dealings. If all three of those financial professionals are functioning independently of one another, there is a great risk of loss when creating an estate plan.

What are the upsides to an incentive trust?

You're thinking of drafting an incentive-based trust. You've even taken the wise step of talking it over with your heirs -- a son and a daughter -- in advance. You know that having the conversation early often staves off disputes and disagreements in the future.

The problem is simple: Your kids hate it. They just want the money with no strings attached. They see the incentive trust as a way for you to manipulate them.

Estate planning applies to lifetime as well as after-death needs

There are several legal instruments that the Massachusetts estates attorney will consider when evaluating an individual or married couple for planning purposes. These documents go beyond simple wills when one is charting a full estate plan. The fact is that estate planning does not just prepare for what happens after one dies. It also has a lot to do with taking care of the person's needs while still alive.

This can run the gamut from asset protection, retirement planning, powers of attorney and advance directives that may be necessary to respond to the person's lifetime needs. For example, in the health care area, estate planning generally provides a health care directive for the client so that a trusted friend or family member will have legal authority to make health care decisions when necessary. A living will is another kind of health care directive that specifies what kind of treatment and maintenance protocols, if any, that the individual wants to authorize if he/she is close to death. However, living wills are not recognized in Massachusetts, which makes the health care directive all the more important.

Massachusetts residents may consider revocable trust options

The idea of estate planning may have some Massachusetts residents feeling wary, but other individuals may be excited about the prospect. By creating a plan, parties can decide who should receive which assets and ensure that their other wishes are also known. Of course, individuals have various planning options to consider, and one tool that may seem appealing is a revocable trust.

With a revocable trust, individuals can maintain a sense of privacy while also bequeathing assets to their loved ones. Though a will can be used in a similar manner, this document goes into the public record. This means that anyone who wishes can view the contents of the will. On the other hand, with a trust, the document can only be viewed by parties given specific access.

Need for guardianships may befall some Massachusetts residents

Many Massachusetts residents likely pride themselves on being independent and making their own decisions for their lives. While this ability is often cherished, it is not always one that individuals are able to maintain for the entirety of their lives. In many cases, elderly individuals or other adults become incapacitated, and guardianships become needed in order for decisions to be made.

Elderly parties who develop dementia or other mental incapacities may often first come to mind when thinking of adult guardianship. However, any individual over the age of 18 who cannot make sound decisions for him or herself may need a guardian. Intellectual or developmental disabilities can present such a need as well as mental illnesses or incapacitating accidents. 

Top reasons you should create a trust

Many people think that once they create a will, they have done everything they need in order to ensure their legacy passes on according to their wishes. Unfortunately, a will may not protect your final wishes as much as you would like. In order to protect the wealth you have built for the next generation, it is time to consider creating a trust.

When you are working on creating a solid estate plan, it is important to remember that a trust can be one of the most powerful tools available. While a will may divide your estate into percentages for your beneficiaries, a trust provides very specific instructions to distribute a portion of your wealth to them. It can go so far as to dictate the timing and frequency of distributions to each person you name in the trust. Read further to find out more about the benefits of creating a trust in Massachusetts.

Health care planning may concern the wealthy in Massachusetts

Getting to retirement age is often a time that many older individuals look forward to. However, some parties may feel concerned when it comes to the amount of money in their retirement accounts and other savings and what may happen if they face health-related concerns. In fact, even parties with a considerable amount of money saved for retirement feel insecure about their health care planning and the ability to meet their health-related needs.

Massachusetts residents may be interested to know that 73 percent of wealthy retirement-age individuals indicated that suffering ill health was their biggest fear in relation to retirement. This insecurity is understandable as health care costs continue to increase. Parties may expect to spend approximately $400,000 to attend to their health during retirement, which does not include long-term care needs.