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Wakefield Massachusetts Estate Planning & Elder Law Blog

Estate planning is crucial at every stage of life

Thinking about the future is not always easy. Most younger and healthy adults don't give a lot of thought to what will happen if they pass away unexpectedly, but in reality, estate planning is important at every stage of life. From young college students to older couples with grandchildren, having certain plans in place are important for future security regarding finances and health care.

Massachusetts college students may not have many physical assets, but they can benefit from having certain protections in place. One important protection is to have a power of attorney for health care and a power of attorney for finances. These two things can allow a college student to name a person to act on his or her behalf in case of incapacitation. A will can also allow a student to decide what will happen to his or her stuff in case of the unexpected.

Check your estate plan for these 3 common mistakes

It can be uncomfortable to think about death. Still, whether you have considerable assets or just a few, you likely want to have some control over what happens to your wealth. You also want to be sure that your family members, friends and health care professionals respect your end-of-life wishes.

Estate planning is not a one-time event. On the contrary, to be sure your estate plan is meaningful, you should periodically update it. You should also watch for some common mistakes. Here are three of them:

Do college students really need wills and estate planning tools?

Life is unpredictable, and there is no telling when it will be necessary to have certain types of protections in place. Every Massachusetts adult, starting at the age of 18, will benefit from having wills and other types of estate planning documents drafted and executed. These types of plans can allow an adult to plan for his or her care in case of incapacitation and outline how to deal with assets in case of death. Many college students overlook the importance of estate planning.

Thinking about and planning for contingencies in the future is not something reserved only for the old, sick and rich. There are benefits available to virtually every person who is an adult, whether they have children, valuable assets or a health problem. College students should consider a will, something that would allow them the ability to have a say over what happens regarding their health care and assets in case of an unexpected event.

Where should an adult start with the estate planning process?

One of the main reasons that Massachusetts adults delay starting the estate planning process is because they assume they are too young or healthy enough to where this process is not necessary. However, estate planning is beneficial for every adult, regardless of income level, health status and age. When deciding to start this process and put certain protections in place for the future, it is not always easy to know where to start.

Starting the estate planning process can be a daunting task. The first step is to simply identify the objectives and decide what is most important. This may include establishing a trust for charitable giving, designating a guardian for minor children or simply outlining how the distribution of assets would work in case of death. The main goals will determine the direction of the process and the complexity of the final plan.

Estate planning in the age of COVID-19

Spring is in the air, which typically brings plans for summer vacation and travel. This year, with the advent of COVID-19, people in Massachusetts may be considering travel closer to home. They may also be thinking of making sure their affairs are in order before vacations begin. No one knows how widely the virus may spread and being prepared for the worst can allow one to better enjoy a hard-earned vacation. Having basic estate planning documents in place is a smart move to consider.

Contemplating one's own mortality is not welcome at the best of times and can be more difficult during times of crisis. The current health crisis may serve as an impetus for many to consider establishing a plan and a current will is the most basic document that can help determine who receives what assets when one passes. Another important document is a living will, also known as a medical directive. This allows one to specify a person who is empowered to make medical decisions in the event a person is physically or mentally unable to do so. It also can indicate a person's wishes regarding end-of-life medical care.

Estate planning information should be shared to be effective

Some families are very close-knit and communicate regularly on issues both great and small. Other families may be less communicative and keep important information to themselves. There is one area in which open communication can greatly benefit families in Massachusetts. Sharing estate planning information with loved ones may be a sensitive topic but it can save a tremendous amount of heartache at a future date.

Having a well-crafted and comprehensive estate plan may not be effective if people are unaware of its existence. It may not be necessary to share all the details but there are critical pieces of information that should be shared if a person wants his or her final wishes to be successfully carried out. Chief among these may be the location of important documents. This is particularly true for the person who is designated as executor of an estate. It may also be important to verify that one's chosen executor is comfortable with that role.

Estate planning can be a stress reducer

The baby boomer generation is aging, nearing retirement or already there. While many may have already done estate planning, many in Massachusetts have not. Many of their children are stuck in what has been referred to as the "sandwich generation," having young children and aging parents at the same time. Discussing death with one's parents is not easy but doing so can provide peace of mind to all concerned knowing that the parent's final wishes have been noted and are properly documented.

When broaching such a sensitive subject there are some things to consider. Some will say they are waiting for the proverbial "right time." That is a time that may never come and putting it off will not make the subject any easier to broach.

Less-common benefits of a special needs trust

As a parent, you want to provide for your children. Of course, if your child has special needs, you likely face some challenges that other parents easily avoid. To be certain that your child has the financial support he or she needs to have a happy and healthy life, you may want to consider setting up a special needs trust. This is true whether your child is eligible for government assistance or not. 

Special needs trusts supplement the benefits that an individual receives from government programs, such as Supplemental Security Income or Medicaid. These trusts involve three key players: the donor, the trustee and the beneficiary. While special needs trusts are common for beneficiaries currently eligible for government benefits, there are a couple of other reasons that establishing a trust may be a good idea. 

Many options exist to reach estate planning goals

Retirement planning and estate planning have both gone through changes in recent years in how people plan for them in Massachusetts. The two often go hand in hand when integrating retirement planning into estate planning where financial issues are concerned. One wants to enjoy retirement but may also wish to leave a certain amount for children or grandchildren. One vehicle that has been used to accomplish this is the IRA account.

A new law, known as the Setting Every Community Up for Retirement Enhancement Act (SECURE Act), changes the way some IRA accounts can be distributed. Prior to the law, IRA accounts could be left to one's heirs and they were able to take a minimum required distribution that allowed them to stretch the IRA account out over an extended period of time. This also allowed for stretching out the tax payments due on the account. In most cases under the SECURE Act, full distribution must be taken, and taxes paid, within 10 years of inheriting the account.

Minmizing the federal estate tax in estate planning

There are likely a number of things a person should do before they pass from the life. Estate planning is one of those things, and Massachusetts residents who have a number of assets might find planning easier if they know a few things about the federal estate tax or death tax as it is known. This federal estate tax is currently imposed upon estates worth $11.4 million or more, but when planning, a wealthy testator should know that amount -- as of now -- goes down to $5 million on Jan. 1, 2026. If there is tax owing, it must be paid within nine months of the testator's death.

Those whose estates are affected by this tax should know that any gifts they made while they were alive will be figured into the tax and taken off the exemption amount. All assets will be figured into a wealthy testator's gross estate and that includes stocks, bonds, value of jewelry, fine art and the like. Also, just because an estate might have sidestepped the probate process, doesn't mean it will be exempt from estate tax -- including assets in a revocable trust.