1. What's important to you and your family for estate planning?
2. How would you assess your family dynamic/financial/health situation?
Common Considerations for Young Families
1. Ensuring children are cared for in the event of parental death or disability.
2. Avoiding the time and expense of probate.
3. Ensuring your assets are managed in accordance with your wishes in the event of death or disability.
4. Nominating health care agents and attorneys-in-fact for selves.
5. Estate tax planning.
6. Asset protection for the family.
1. Will, Durable Power of Attorney, Health Care Proxy, Living Will, Trusts
Trusts are great tools for young families for numerous reasons. Parents can name themselves as trustees of their revocable trust(s), thus retaining complete management and control during their respective lifetimes. The parents fund their trust(s) with their assets and nominate successor trustees who will manage the assets for the benefit of their children in the event of the parents' death or incapacity. Because trusts are private documents, they have the benefit of avoiding the time and expense involved in the probate process. Trusts are also powerful tools for estate tax planning, as well as "asset protection" from creditors, lawsuits, and governmental "spend-down" requirements after the first spouse's death.
Children can manage assets at the age of eighteen (18), but if the parents die or become incapacitated with significant assets, it's often not desirable for an 18-year-old to be given large sums of money. A trust can spread distributions of income and principal over longer periods. For instance, successor trustees typically have discretionary power to contribute trust assets to the health, education, and support of children, but many parents prefer trust provisions which delay mandatory distributions of income and principal - say for instance, 1/3 at the age of 25, 1/3 at the age of 30, and 1/3 at the age of 35 in order to limit or prevent waste. Revocable living trusts can also be changed while the settlor is alive. This flexibility and control make trusts an attractive option for young families.
Everyone should have a will. Even with a trust, a type of will called a "pour-over" will is typically used. A will allows people to name guardians and conservators for themselves and minor children. A will also ensures wishes are fulfilled upon death; whether that's distributing one's estate, outlining burial wishes, or just to make life easier for those you'll leave behind.
Durable Power of Attorney
A Durable Power of Attorney is arguably more important than a will. It can be limited or quite broad and allows your agent to deal with your property in the event of your incapacity.
Health Care Proxy
This document gives your named Agent the power to make medical decisions and sign consents and/or releases with hospitals and and/or doctors. This is another very important document to potentially avoid court involvement in the event you lack capacity to provide informed consent to treatment.
Although not binding in Massachusetts, a living will can be instructive for your health care agent for end of life decision-making.
It's very important that all assets to be included in your trust are actually titled in the name of your trust.
We work with you to equalize your estate in order to effectively double the applicable Estate Tax exclusion (if this is appropriate given the size of your estate, the ownership of your assets and your dispositive plans), which is currently $1 million in Massachusetts. Considering real estate, life insurance death benefits, and retirement accounts, many people are over the $1 million exemption.
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