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The 3 Estate Documents Everyone Needs

By Legal Editor Robin Gorenberg, Esq.

Estate planning tends to be something people put off. But it’s not just for the wealthy – it’s basic documents everyone should have in place, especially in these unusual times. It’s the right time to get this done, and things can always be changed in the future.

There are 3 basic documents everyone should have:

Will: You name an Executor and an alternate (now called a Personal Representative) to manage your assets at your death and make sure they pass to your intended beneficiaries. Also, if you have minor children this is the document in which you name a Guardian (and an alternate) to take care of the children until age 18.

Power of Attorney: This is only for during your lifetime. You name an agent (called Attorney-in-Fact) and an alternate if you wish, who can make your financial and general decisions (deal with financial accounts, real estate, taxes) and who can sign your name for you. This can be the “immediate” type (typical for spouses) which can be used for incapacity but also for convenience. The agent would need to present a copy of the Power of Attorney but not any sort of letter from a doctor stating that you are unable to handle your affairs. The 2nd choice is a “springing” power of attorney – it “springs into effect” only if you are unable to manage your affairs. This is a bit more protective, in that the agent can’t act for you without a copy of the Power of Attorney AND a letter from your doctor stating that you are unable to act. This causes a bit of a delay, but if you are concerned, this option might work for you. If you don’t want a delay in the event that you are incapacitated, you could have the immediate type but just keep it with you and only have it provided to the named agent if it’s needed.

Health Care Proxy: This is also only for during your lifetime. You name an agent (and an alternate if you wish) to make your medical decisions if you can’t make or communicate them. Typically, this is for dire situations, but it could be something as simple as oral surgery where you are sedated, and something has to be decided. There is a Massachusetts “short form” of Health Care Proxy but it doesn’t include certain provisions that I like to include:

  • HIPAA Authorization – This can be a separate document or included in your Health Care Proxy. This allows the agent to obtain your medical information.
  • Living Will – This is your instructions about “artificial life support” (machines keeping you alive). For most, it’s instructions to NOT be kept alive by machines if you are in an “irreversible vegetative state with no hope of recovery.” But for others, it’s instructions to keep them alive by machines. Please note that in Massachusetts the Living Will is not legally binding, but it still serves as instructions to your named agent and physicians. But even if you don’t include it, your named Agent could make that decision if need be at the time.

Adult children over the age of 18 should have a Power of Attorney and Health Care Proxy because after age 18, the parents can no longer make legal or medical decisions for them. If something happened to the child, the parents would have to go into probate court and be appointed their legal guardian, which is a lengthy and expensive process.

In addition to the 3 basic documents everyone should have, depending on your situation, you may decide on 1 or more Trusts for the following reasons (I will explain these in greater detail in future posts):

Single Trust (for individuals or couples): These can be used to provide for more mature ages of distribution to young children after your death (but naming a Trustee to be able to use or distribute money before those ages for the children’s needs). This type of Trust can also be used to avoid the 1+ year probate process, by re-titling assets into the Trust now. You lose no control, and everything stays under your Social Security number; it’s just a paper transfer.

Revocable Trusts: These are for married couples with more than $1 million of assets (including life insurance, which is non-income taxable to the recipient but part of estate taxes). While the federal estate tax threshold is now approximately $12.06 million per person and $24.12 million combined for married couples, the Massachusetts threshold is $1 million. If an estate is over that, the entire estate is taxed at 6-16% (not just the excess over $1 million). This only is taxed at the 2nd spouse’s death, but 2 Trusts can save up to $160k for your children or heirs. There is some paperwork to make this work but it’s pretty minimal for the savings achieved.

Irrevocable Life Insurance Trust (“ILIT”): Like the 2 Revocable Trusts, this type of Trust is to save estate taxes at death, but completely excludes the entire value of your life insurance (which can sometimes be in the millions) from estate taxes, so the estate tax savings can be much more substantial than the maximum $160k savings from the Revocable Trust. It can be used for non-married individuals as well. However, it is more complicated than the other Trusts because (a) it is irrevocable – it cannot be changed (although you can let the policy lapse but you may not be insurable at that point or the premiums may be much higher), and (b) there are numerous requirements during your lifetime (separate tax ID, separate bank account, notice letter to be sent out to spouse and children each time you pay a premium).

Robin Gorenberg is an award-winning attorney who specializes in estate planning, probate and estate administration for individuals and law firms. Robin works with clients on both basic and complex estate plans, from Wills to all types of Trusts. Robin also helps clients after a loved one dies, navigating the legal process including probate, trust administration, and estate taxes. Robin’s goal is to communicate in a way that clients can easily understand, and to make them feel comfortable with the process and the ultimate documents. Robin is a graduate of Brandeis University and Boston College Law School and has been practicing estate planning and probate for over 30 years. Robin is a member of the Boston Bar Association (Probate and Tax Sections). She lectures frequently on the topics of estate planning and probate. Learn how Robin can help you or someone you know at www.robingorenberg.com

Robin Go

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Sheila Hamwey
Sheila Hamwey
1 year ago

Thank you. Great timing. And never thought about our adult children over 18. Such useful information that we often put off addressing . Wonderful article.

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