Estate Planning FAQ's

We know deciding who to appoint in your estate planning is difficult. We've summarized some of the things to consider here.

Who is typically the Executor of a Will?

Your Executor has the fiduciary duty to act in the best interest of your estate.  Many clients feel comfortable naming their spouse, an adult child or a trusted friend or advisor to be their Executor.  The key is to select someone who is organized, trustworthy, and who will carry out your wishes without bowing to pressure from other friends and family members.  You may name an Executor who does not live in Massachusetts, however the Massachusetts Probate Court requires that a nonresident Executor be represented by a resident agent who may be another family member, friend, or advisor

Who is typically a Healthcare Agent?

An individual’s medical decisions are extremely personal and sensitive.  Your Healthcare Agent may be required to make decisions relating to your end of life care, and it is important that your Healthcare Agent understands your wishes in order for him or her to be able to make the right decisions for you.

Who is typically an Attorney-In-Fact?

The name Attorney-In-Fact is slightly misleading – in reality, your Attorney-In-Fact does not need to be a lawyer at all.  Many clients appoint their spouse or an adult child to be their Attorney-In-Fact.  The Durable Power of Attorney is a very powerful document that allows your Attorney-In-Fact to act on your behalf on all matters related to your assets and property, so it is crucial that you appoint someone who will act loyally and in your best interests.

What should a comprehensive Estate Plan include?

We believe that everyone should execute a Will, Healthcare Proxy and Durable Power of Attorney.  These three documents ensure the appointment of a Guardian of your choosing for your minor children, the distribution of your estate according to your wishes and the management of your personal affairs in the event of your incapacity.  We also tend to recommend a Revocable Intervivos Trust for clients with taxable estates and for people who would like to further protect their assets and avoid probate. This Trust is especially valuable to clients with young children and may be essential in second marriages.

How often should I review my Estate Plan?

Estate plans should be kept current and evolve as your life changes.  These are just some examples of major life changes which may have a direct impact on your estate plan: 

• Getting married or divorced
• Having or adopting children
• Retiring
• Buying out-of-state property
• Winning the lottery
• Selling your business, buying a business or starting a new business
• Moving to a new state
• Purchase life insurance
• Receiving an inheritance

Aside from these life changes, changes in state and federal estate and tax laws also impact your estate plan. Your estate may not be taxable this year, but it might be taxable in 5 years, when your estate has grown or the state or federal exemption has changed.

What happens to my estate if I die without a Will?

If you pass away without a Will, the probate court will appoint someone to be the Administrator of your estate and your estate will pass according to the Massachusetts Intestacy Statute.  Generally, this means that your estate passes to your surviving spouse and children, if you have them.  Otherwise, your estate will pass to more distant relatives, starting with your parents.  Keep in mind that under current Massachusetts law, should you die married and childless, your spouse may share your estate with other family members – all the more reason to execute a Will!  Although for many people this sequence of distribution is very similar to their wishes, Intestate distributions can be unfavorable for those who are unmarried but have a significant other whom they wish to benefit. 

What is included in my taxable estate?

Your gross taxable estate includes all of the assets that you have control over at the time of your death. This includes all of your real estate, bank, brokerage and retirement accounts either individually or jointly owned.   Life insurance policies in effect on your death are also included in your gross taxable estate, as is the entire value of a Trust of which you are the beneficiary.

Do my children have to pay taxes on their inheritance?

There are two answers to this question, depending on the kind of tax you are talking about.  Inheritances generally do not cause income tax liability for the recipient at the time of the distribution.  However, any income generated by the inheritance once it is given to the beneficiary will be taxed like any other income.  For example, if a beneficiary receives $100,000 from her great aunt, she does not have to pay income tax on the $100,000 when she receives the check from her aunt’s estate.  If the beneficiary then takes the $100,000 and invests it in stock, she will have to pay income tax on any dividends paid by the stock, and she will have to pay capital gains tax when she sells it.  

Common Myths in Estate Planning

If I have a Will, I will avoid probate.

Your Will only allows you to name an Executor for your estate, a Guardian for your minor children and Beneficiaries of your estate. You must go through the probate process and estate settlement in order for your assets to pass to your named beneficiaries. A Trust is usually used to hold your assets in order to completely avoid probate.

 If I don’t have a Will and I don’t have any surviving spouse or children, the government will take my estate.

If you don’t have a Will, your estate shall be distributed under the Massachusetts Intestacy statute.  Under this statute, your estate will only be distributed to the Commonwealth of Massachusetts if your remote kin cannot be located.  Without a Will, however, your significant other, step-children, or any other non-related family and friends will not be able to inherit your property.

My spouse will be my automatic Healthcare Agent so I don’t need a Healthcare Proxy.

Unfortunately, Massachusetts does not recognize your spouse and/or children as your default Healthcare Agents, nor is there an automatic spousal right to receive your medical records.  It is therefore essential that you execute a Healthcare Proxy to ensure the proper appointment of your Healthcare Agent.

I don’t have a large enough estate to need a trust.

A trust is not only for people with large estates or families with small children or children with special needs.  People with out-of-state property, those concerned about going through probate, and people looking for an orderly transition at their deaths will all benefit from a trust.  Furthermore, trusts make it much easier to manage your property if you become incapacitated.

My life insurance policy is not subject to estate tax.