Frequently Asked Questions
We’re happy to answer any questions you might have about our firm or about our services. Below are answers that we give to a few questions we receive often, including questions like “what is estate planning” and “things to consider before meeting with your estate attorney.” If you have questions that weren’t answered here, feel free to contact us here.
FAQ About Terms
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Estate Planning is a term for making a plan for the disposition and management of your assets upon your death. Estate Planning also includes making plans about who will handle your financial affairs and who will make medical decisions in the event you become incapacitated and are unable to do so on your own.
Believe it or not, everyone has an estate, not just the super-wealthy. Your estate consists of real estate, personal property, bank accounts, cars, investments, and life insurance policies among other things. So that means estate planning is something to consider for everyone. Having an estate plan in place can ease the burden on your family during the most difficult times.
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Probate is a process that requires the filing of a petition with the Probate Court in your county after you die in order to settle your affairs.
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A Last Will and Testament is a written document in which you:
designate a Personal Representative (also known as Executor) to carry out your final wishes;
choose who will inherit your assets including real estate;
designate guardians for any minor children.
Aside from these three main components of a Will, you also have the ability to waive a bond/surety and ask the Court to allow your Personal Representative to act in an unsupervised capacity, meaning that your Personal Representative will not have to post a personal bond with the Court.
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A Power of Attorney is a written document in which you:
designate someone to act as your attorney-in-fact for your financial decisions;
designate a guardian and/or conservator in the event protective proceedings are brought in probate court against your person or property.
Essentially, when you designate a power of attorney, you are giving that person the authority to manage, care for and conduct your personal, business and financial affairs, with the same power and authority to act as you would do.
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A Health Care Proxy is a written document in which you:
designate an agent to act on your behalf in the event you become incapacitated and are unable to make informed medical decisions on your own.
This document includes an option to authorize your agent to make decisions to withhold or withdraw life-prolonging procedures as well as an option to authorize your agent to make decisions to withhold or withdraw artificially administered food and water.
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A trust is a legal entity created by a written document. There are three parties to a trust: the grantors, the trustees and the beneficiaries. The grantors create the trust and fund the trust with property. The trustees hold the property in legal title for the benefit of the beneficiaries.
Broadly, there are two types of trusts: Revocable and Irrevocable.
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A Revocable Living Trust is a trust that can be amended or revoked during the grantor’s (creator’s) lifetime. Benefits include:
retaining control of assets during your lifetime;
estate tax minimization;
privacy;
avoidance of probate.
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An irrevocable trust is a type of trust that cannot be amended or revoked during the grantor’s (creator’s) lifetime without the permission of the beneficiaries. Examples of irrevocable trusts include an Irrevocable Life Insurance Trust and a Medicaid Asset Protection Trust.
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By placing a life insurance policy into an irrevocable life insurance trust (also called an ILIT), upon the donor’s death the beneficiaries are provided with liquidity along with the added advantage of taking the life insurance proceeds out of the gross taxable estate. Since the estate tax threshold is so low in Massachusetts (currently $1 million), many people will unknowingly have a taxable estate if they own even a modest home and have a life insurance policy in place.
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Ordinarily, an applicant for Medicaid benefits cannot own more than $2,000 in assets, making anyone who owns a home ineligible. Subject to a 5 year look back period, a home placed in an irrevocable trust is not a “countable asset” for Medicaid eligibility purposes. Another advantage to this type of trust is that upon death, the Medicaid Estate Recovery Unit cannot force a surviving spouse or heir to sell the home in order to reimburse Medicaid for long-term care expenses incurred prior to death.
FAQ About Estate Planning
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Who do you want your home to go to? Is it owned solely by you, or jointly with a spouse, parent, or child?
Who do you want your other assets to go to? (personal possessions, cars, accounts, etc.)
Who do you want in charge of distributing your assets when you die? (Personal Representative/Executor)
Do you own a business? If so, do you have a succession plan in place?
If you have minor children, who would you name as guardian(s) for them?
Are there potential heirs in your family that may not be able to handle large distributions of cash at once for various reasons? Are there potential heirs that can be trusted to manage assets for other family members?
Are the beneficiary designations on your life insurance policies and retirement accounts up to date with your current situation?
Who do you want to make medical decisions for you if you are unable to make them for yourself? (Health Care Proxy)
Who do you want to handle your financial affairs for you if you are unable to manage them yourself? (Power of Attorney)
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For people that die without a will, also known as intestate, the probate process can be lengthy, expensive and frustrating for their family members. Your assets will be distributed according to the state’s intestacy laws, rather than your wishes.
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For people who die leaving a properly executed will in place, the probate process is typically much shorter, less costly and less complicated. A simplified probate petition can be filed along with an original copy of the will. Your assets will be distributed according to the directions you left in your Will.
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They cover two different periods of time. A Revocable Living Trust provides for control and distribution of your assets while you are alive, if/when you become incapacitated, and after you pass away. A will provides for distribution of your assets only after you have passed away. An added advantage of a Revocable Living Trust is the avoidance of probate.
FAQ About Real Estate Closing
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If you are purchasing property and will be taking out a mortgage, then all purchasers will need to be in town for closing as lenders require all purchaser’s signatures on the mortgage documentation. In addition, many documents will need to be notarized so you will need to bring a valid form of identification on the closing date.
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You as a consumer in the United States can certainly sign anything you want. However, keep in mind that a Purchase and Sale Agreement is a contract. Purchasing a home is likely one of the largest investments you will ever make. You may want to have an attorney review and negotiate on your behalf to prevent signing a document you don’t fully agree with or understand.