Goals of Estate Planning

Each person has unique goals and priorities in planning for gifts in the estate planning process, either during life or upon death. One person may be concerned with assuring that a surviving spouse has sufficient money to enjoy a comfortable lifestyle. Others may wish to maximize the amount of property passing to children or other beneficiaries. Some wish to leave property to individuals outside the family, or to charitable institutions. For large bequests to children, parents may wish to limit children's access to the principal via a trust until a child finishes college or university or reaches a more mature age. The estate planning process focuses on individual goals while taking into account practical options for estates of different sizes, and tax ramifications of alternatives. The process involves balancing control, responsibility of a beneficiary, and taxation. The estate planning process allows you a solution tailored to your needs.

Executors and Trustees

An executor carries out your wishes as stated in your will. A trustee carries out the terms of your trust. Of course, your executor or trustee (your "fiduciary") will have the ability to call upon the assistance of your attorney and accountant or investment advisers as needed. The fiduciary should be comfortable with the responsibilities of winding up your financial affairs and dealing fairly with beneficiaries. It is wise to name an alternate fiduciary, in case your primary fiduciary cannot serve. Typically, a surviving spouse is the first choice as executor or executrix, with a child or other interested beneficiary as an alternate. It is useful to think about who you would want as an executor or alternate executor in advance of meeting with your estate planning attorney. We also serve as fiduciaries "of last resort."

Guardian of a Minor

For couples with minor children it is important to choose an appropriate guardian to serve should both parents die before their children are adults. Normally, a married couple will name the surviving spouse as the primary guardian, with other trusted family members or close friends as alternates. In some instances, it may be desirable to split the duties of taking care of the children and taking care of money or property left in trust for the children, depending upon the experience of the proposed caretakers.

Estate Tax Planning

Couples whose combined estates are over $1,000,000 frequently wish to set up their estates to preserve the maximum state or federal estate tax exemption amount which can pass free of Massachusetts estate taxes. In Massachusetts, the estate tax exemption is currently $1,000,000. The estimated federal estate tax exemption amount for 2014 is $5,340,000. (For married couples, opportunities exist to combine the exemptions of the couples.) At the present time, New Hampshire does not have an inheritance tax. Although property passing to a surviving spouse generally passes free of estate tax, upon the death of the surviving spouse, the potential to pass a total of $2,000,000 of your combined estates free of both state and federal estate tax to your children may be lost if proper planning is not done prior to the death of the first spouse. There are a variety of techniques available to reduce or eliminate estate taxes, most commonly including trusts, but there are certain trade-offs. It is important to understand the impact prior to executing any document with testamentary effect (including wills, deeds with right of survivorship, and contracts having beneficiary designations, including life insurance.

It is important to realize that even if you live in a state without an estate tax, owning real estate in another state, or moving to another state, can result in an estate tax unless you plan ahead.

Power of Attorney

At the same time you are planning your estate, you should also consider a Power of Attorney. A "Power of Attorney" can give a trusted individual the authority to do anything with your property, money, and securities that you could do yourself in person. In case of your absence or incapacity, you may wish someone else to be able to act upon your behalf, but you must give them the power to do so prior to your absence or incapacity. A Durable Power of Attorney will allow someone to act even if you become incapacitated. A springing power of attorney will only become effective in the event that you are found by a medical doctor to be without capacity to act. A limited power of attorney authorizes your agent to act only in specific circumstances or with regard to specific property. In your Power of Attorney, you may also nominate a prospective guardian in the event of incapacity .

Health Care Proxy or Durable Power of Attorney for Health Care

By executing a Health Care Proxy, (also called a Durable Power of Attorney for Health Care or included as part of an Advance Directive in some states) you designate an individual to make health care decisions on your behalf. Some patients do not wish to have "heroic measures" performed if death is imminent or they are in a persistent vegetative state. You may direct your Health Care Agent, through the Health Care Proxy's section on desires of the patient, to prohibit "heroic" measures in those situations and direct the doctors that you be allowed to die naturally, allowing only measures intended to increase your comfort but not extend the process of dying. On the other hand, you may also instruct your health care agent to have every medical effort made to keep you alive as long as possible, if that is your preference. It is key that you discuss your wishes with your agent before your incapacity. In any event, your health care agent will consult with the doctors attending to your health. Some states (including New Hampshire and Maryland) permit a living will, which dictates to your health care providers what medical measures are not to be performed on you in the event of a persistent vegetative state or imminent death, subject to any limitations provided by law. Mandatory instructions (e.g. "Do Not Resucitate", DNR) to emergency care providers (ambulance drivers, nursing home staff, etc.) generally require a doctor's signature, on a state-authorized form or otherwise, and must be immediately physically available to the emergency care provider. They can be obtained through your medical doctor only, or if you are in a hospital or nursing home, through those institutions. Otherwise, emergency responders will do what they can to rescusitate you.

Because of the Privacy Rule of HIPAA, a Federal law, some health care providers are very reluctant to release information to anyone other than the patient. To permit your spouse, family member, or close friend to advocate for you at the doctor's or in a hospital or nursing home setting, you may wish to execute a so-called HIPAA Authorization & Release, which directs the health care providers to share your protected health information with the individuals you have chosen to advocate on your behalf.

Guardian of Incapacitated

There may come a time in your life when you have lost the capacity to make decisions on your own behalf, either through an accident, through illness, or through certain diseases associated with aging. If you have executed a durable power of attorney and a health care proxy, the attorney-in-fact named in your power of attorney, and the health care agent named in your health care proxy may be able to take care of all your personal, medical, and financial decision making, with input from you if possible. However, some diseases cause mental states which cause the person afflicted to act irrationally and in such a way that they put themselves and others at serious risk. In this case, it may be necessary for your loved ones to seek appointment of a guardian for you in court. You may nominate a guardian in your Power of Attorney. Your guardian is then responsible for medical, personal, and financial decision making on your behalf. In Massachusetts and other states, the guardian is not authorized to allow treatment with antipsychotic medications unless specifically authorized by the court.

While planning your estate, you are also encouraged to discuss end of life issues with your loved ones so that in the event of an irreversible medical condition or in the course of the natural cycle of life, they know your wishes, including any religious beliefs which you want them to apply. You may also wish to complete an organ donor card, to keep in your wallet, and advise your family or loved ones of your intent.

In addition to the foregoing, there are a wide variety of estate planning techniques which are appropriate under different personal and financial situations. There is no substitute for a meeting with an estate planning attorney to find the best solution for your particular situation.

Additional Information

You may also wish to see our website www.wellesleyestateplanning.com for additional information concerning estate planning.

Link to ABA FAQ

The American Bar Association Estate Planning & Probate Section has a FAQ.