What is Probate?

Probate is the process by which the court validates the authenticity of a will; appoints an executor (aka personal representative); and supervises the settlement of an estate, including the payment of bills, filing of tax returns, and transfer of assets to beneficiaries. Every probate estate is unique, but most involve the filing of a petition with the proper probate court; sending notice to heirs and beneficiaries; Inventory and appraisal of estate assets by Personal Representative; Payment of estate debt to rightful creditors; Sale of estate assets; Payment of estate taxes, if applicable; and then final distribution of assets to proper beneficiaries. Many people choose to avoid probate by using a Trust as the focus of their estate plan.

What are Fiduciaries?

A very critical decision that you must make in the Estate Planning Process is choosing your Personal Representative, Trustee, Power of Attorney, Health Care Agent, and Guardian of your minor children. These people are called your Fiduciaries.

Why is it important to avoid Probate?

Probate is the court process that your family must go through in order to carry out the wishes outlined in your will. All assets with no beneficiary designation must go through probate. It can be expensive, take time to complete, and become public record. For these reasons, it is important to take measures to avoid probate.

How do I avoid Probate?

Only assets in your individual name or payable to your estate will go through probate. Many folks use a (fully funded) revocable living trust to avoid probate. In addition, contract assets such as life insurance, retirement accounts, and annuities as well as assets owned by joint tenants with rights of survivorship avoid probate as well.

A well designed and executed estate plan, including trusts and other strategies, can help you avoid probate.

Is Probate bad?

Many people, but not all, think so. The difficulty and expense of probate varies from family to family because of family goals and personalities, and assets. Many clients wish to avoid probate because it’s a public process, time consuming, and costly.

If I go through Probate, is my Will public information?

Most people want to avoid probate because it can include high fees and costs, significant time delays and stress, and public dissemination of private information. In most cases, court records are public records, meaning that anyone could get a copy of your will, the estate’s inventory, and other information you might wish to keep private. The ease of accessing this information does vary from state to state, and sometimes even from county to county. Some places even have online dockets, allowing anyone with an internet connection to see a listing of your assets, debts, beneficiaries, and who got what. If you’re like most people, you want to keep your family affairs and finances private, so probate should be avoided.

What does it mean if someone dies intestate?

Intestate means that a person has died without a last will & testament. Who is in charge of your estate, and who your assets are distributed to, are determined by statute and becomes a function of which relatives are alive at the time of your death. Typically, your property will pass to your closest relatives and family. Very often, the intestacy laws may apply in ways that do not reflect your intentions at all. In addition, there are many missed opportunities to plan for tax consequences, protect assets or establish guardianships for minor children. Intestacy is, in effect, a default estate plan created by the Commonwealth.

What is a Will?

A last will & testament is a legal document a person signs to document who they would like to inherit their estate. A Will also typically designates someone to be your Personal Representative, which is the person you designate to carry out your instructions. If you have minor children, a will is also where you would nominate their Guardian and Conservator. What is important to note is that wills have no legal authority until the Testator (person who created the Will) dies and the original will is delivered to the Probate Court and is “allowed” by the Court. A Will does not avoid Probate.

What is a Living Will?

Sometimes called an advance medical directive, a living will is a non-binding document that allows you to state your wishes in advance regarding what types of medical life support measures you prefer to have, or have withheld/withdrawn if you are in a terminal condition (without reasonable hope of recovery) and cannot express your wishes yourself. This document is typically executed in conjunction with a Health Care Proxy.

What is the benefit of a Trust?

Placing your assets in trust provides many benefits for you and your family. If you become incapacitated, your successor trustee can step in to manage your affairs. You also get greater power and flexibility over how your wealth is distributed to your beneficiaries.For example, you have the option of providing them with long-term protection against court control, divorce, bankruptcy, and financial mismanagement.

Can my Trust be updated?

If your trust is a revocable trust, as most are, you have the power to update it whenever you’d like (so long as you have the mental capacity to do so). Updates which add to, or replace, parts of an existing trust are called “amendments.” If the entire trust is updated, it’s called a “restatement.” In many cases, your attorney may recommend a restatement, so that the entire trust can be modernized, but for small changes an amendment can still be appropriate.

Technically, irrevocable trusts are indeed irrevocable and can’t be updated; however, trust protectors, judicial and nonjudicial modification laws, and decanting allow us to update an irrevocable trust that is no longer meeting the trust maker’s intent.

Since revocable trusts and, in some cases, irrevocable trusts, can be updated to take into account new laws, like the proposed tax changes we’ve all heard about, it’s always a “good” time to work on implementing an estate plan. Estate plans are designed to be flexible, so they can almost always be updated later to take into account future changes to the law.

What is a Revocable Trust?

A properly drafted revocable trust, sometimes called a living trust, is a powerful estate planning tool that allows you to remain in control of your assets during your lifetime, have your assets managed for your benefit during incapacity, and, upon your death, will allow for the efficient, private transfer of your assets to your beneficiaries according to your wishes. In addition to these basic functions, a revocable trust can also provide for estate tax savings, creditor protection for future beneficiaries after your death, and allow for management of assets for minor or disabled beneficiaries. All of this can be done outside of the probate system.

Will I lose any control over my property if I create a Revocable Trust?

Creating a revocable trust and transferring your assets to the name of that trust will not impact your ability to control such assets during your lifetime. The exception to this would be in the event of incapacity, then the successor Trustee would be in charge of the trust assets and would be responsible for managing the assets for your benefit in accordance with the terms of the trust. During your lifetime, you may engage in any transaction that you could before you had a Trust. There are no changes in your income taxes either. A revocable trust does not file any separate income tax returns. Because a living trust is revocable, it can be modified at any time or it can be completely revoked if you so desire. Upon your passing, the trust can no longer be modified and the successor trustee(s) you have designated will then proceed to follow the terms of the trust in accordance with your wishes.

Do I have to transfer any of my assets to my Revocable Trust?

Yes. For your trust to work and function as designed, assets must be placed into the trust. It is important, however, to seek the counsel of an experienced estate planning attorney who can advise on and assist with transferring the necessary assets to your trust. How assets are connected to a trust varies depending on the type of asset (i.e. real estate vs. life insurance vs. retirement accounts, etc). A well drafted estate plan must factor in the proper funding of the trust for the plan to work.

Do my kids have to know what I’ve decided to leave them in my estate plan?

From a technical standpoint, there is no requirement for the children to see or be involved with your estate plan. We do think that it is important that your family know you completed your estate planning. In the event of illness or death, it is important that they know you did your planning and who to contact. Also, in some situations, we offer and encourage families to have a family meeting to discuss estate plans and how things will work after your passing. Usually in those meetings we discuss the mechanics of how the plan will work, and do not typically disclose the specific bequests or amounts of those bequests. If, however, there is considerable wealth being passed along to another generation, we often suggest some counseling with professional wealth counselors to help families learn how to discuss these delicate issues.

How do I name a guardian for my children?

In Massachusetts, if you have children under the age of eighteen, you should designate a person or persons to be appointed guardian(s) over their person and conservator(s) over their property. Of course, if a surviving parent lives with the minor children (and has custody over them) he or she automatically continues to remain their sole guardian. This is true despite the fact that others may be named as the guardian in your estate planning documents. You should name at least one alternate guardian in case the primary guardian cannot serve or is not appointed by the court. You make these designations through language in your Last Will & Testament.

What is a HIPAA Authorization?

As part of your incapacity planning, you should sign a HIPAA authorization form that allows the release of medical information to your designated health care agents, successor trustees, family or any other individuals you wish to designate. Without this release form, medical providers can refuse to release information, even to spouses and adult children, due to the restrictions of the 1996 Health Insurance Portability and Accountability Act, or HIPAA.

What is a Health Care Proxy?

Massachusetts law allows for a document called a health care proxy, in which you can appoint someone to make health care decisions for you should you be unable to make those decisions due to disability or incapacity.

What is a Durable Power of Attorney?

A durable power of attorney is a document that empowers another individual to carry on your financial affairs in the event you become disabled or incapacitated.
Without a Durable Power of Attorney, it may be necessary for one of your loved ones, including your spouse or adult child, to petition a court to be appointed conservator in order to make decisions for you when you are incapacitated. This conservatorship process is time consuming, expensive, often costing thousands of dollars and it can be emotionally draining for your family.

I am married. What happens if my spouse has to go to a nursing home?

For calendar year 2017 in Massachusetts, the spouse of a nursing home resident is allowed to keep $120,900.00 of countable assets. In addition, the nursing home resident is allowed to keep $2,000.00. Therefore, the total amount of countable assets that a married couple may keep is $122,900 in 2017. These numbers typically increase slightly each year. A married couple with assets under this amount is eligible for MassHealth without spending down assets. There are also stategies for a married couple with more than the allowed amount above in countable assets to still qualify for MassHealth in certain circumstances.

In addition, for a married couple, certain assets are considered “non-countable” in this assessment process, such as the primary residence, an automobile and an irrevocable prepaid funeral contract.