Estate Planning in Massachusetts: Is it for You?

Some people think that estate planning is only for wealthy individuals subject to large taxes.  But minimizing estate tax liability is only one reason for estate planning.  Consider these six additional reasons for completing an estate plan:

1.         Determining who shall receive a share of your assets;

2.         Deciding how and when your beneficiaries shall receive their inheritance;

3.         Selecting a executor for your estate and a guardian for your children:

4.         Providing for the orderly continuance or sale of your family business;

5.         Creating a living trust; and,

6.         Planning in case of your permanent disability.

In the absence of a valid executed will, state laws determine who inherits your assets and when they receive them.  Further, the Probate Court will appoint a guardian for your children and an administrator for your estate.  Accordingly, your wishes will not control disposition of your own estate and your estate may incur unnecessary taxes and administrative costs.

Minimizing Estate Tax Liability

If your taxable estate is less than $2 Million in 2006 – 2008, and less than $ 3.5 Million in  2009, no Federal estate tax should be owed.  At the state level in Massachusetts, however, the Massachusetts Legislature recently passed an estate tax bill that shall tax estates in excess of $1,000,000, even though Federal exempt amounts are higher as above described.

To minimize taxes:  (a) make a provision for a certain amount of assets to pass to the

surviving spouse, tax free, up to the amount exempted from federal estate tax and/or state; (b) place an additional amount  of assets in a qualified terminable interest trust (QTip) so that income of these assets will be paid to the surviving spouse; (c) make up to $11,000 annual of gifts to each of your children per spouse, the amount permitted to be transferred tax free; (d) consider charitable remainder trusts which require that certain amount of assets are placed in trust with income being distributed to the owner, and upon his/her death, the principal amount shall be distributed to a designated charity, thereby eliminating the trust principal for the taxable estate; and (e) establish an irrevocable life insurance trust to exclude life insurance proceeds from the taxable estate.

Who Shall Receive and When?

A properly prepared and executed will designates beneficiaries of your estate and considers  alternative beneficiaries in the event the primary beneficiaries predecease you.  Often, certain personal effects, such as jewelry or art work, are designated to pass to certain people.  Additionally, parents often desire to have assets pass to their minor children in trust, with the principal to be disbursed upon the beneficiary reaching a particular age in order to protect against youthful indiscretions.

Selecting Executor, Trustee, and Guardian

An executor is your personal representative after your death, and is responsible for such functions as:  (a) administering the estate and distributing the assets to your beneficiaries; (b) paying estate expenses and outstanding debts; (c) ensuring that all life insurance and retirement plan benefits are received; and (d) filing or hiring a person to file all necessary tax returns, and paying the appropriate federal and state taxes from estate funds.  When those duties are complete, this responsibility ends.

A trustee is required if your will creates trusts to accomplish more long-term goals, such as providing for minor children or giving to a charity or educational institution.  Your trustee is responsible for managing the trust’s assets and ensuring that the beneficiaries are provided for in accordance with the provisions of the trust.  Finally, a guardian is appointed to act as surrogate parents for your children, ensuring that the children’s best interest are served.

Orderly Business Succession

If you own a business, your will should provide for a management succession plan, including who should operate the company in the short term.  The will should also provide for a buy/sell arrangement with existing shareholders or outside interests and should refer to an existing Buy-Sell Agreement, if one exists.  If no Buy-Sell Agreement exists, consider drafting one so that your wishes regarding the disposition of your business at the time of your death can be followed.

Consider a Living Trust

A Living Trust is a legal document that resembles a will.  It contains instructions for managing your assets, should you become disabled, and directions for the distribution of your assets upon death.

First, assets in a Living Trust are not probated.  Probate is the process of proving and administering a will under the jurisdiction of the Probate Court.  It can be a time-consuming and potentially expensive process.

Second, a Living Trust provides a good vehicle for managing your assets in the event of your disability, much like a durable power of attorney.  While you are alive and well, you act as your own trustee.  In the event of your disability or death, the successor trustee that you selected takes over.

Durable Powers of Attorney and Disability Planning

Durable Power of Attorney

A Power of Attorney is a document in which you name another person to act as your agent to do things on your behalf while you are alive.  Generally, it is effective when signed.  A Durable Power of Attorney remains effective when you are incapacitated, for example, by a stroke.  The person you choose to represent you does not need to be an attorney-at-law; you may name your spouse, a relative, or a friend.

Health Care Proxy

A Health Care Proxy is a document in which you may name someone to make health care decisions on your behalf at any time you are incapable of making or communicating such decisions yourself.  It can be revoked or revised at any time.

Living Will

A Living Will is a written expression of your wishes as to whether you wish life-prolonging medical procedures maintained even though there is no reasonable expectation that you will recover.  It will help those entrusted with your medical care understand how you feel about the most critical medical care decision that someone may have to make for you.  A Living Will may be revised or revoked at any time.


Estate planning should be contemplated and acted upon while you are healthy and able to implement those decisions which minimize estate tax liability, determine who shall become beneficiaries, decide who shall serve as executor, trustee, or guardian, and develop disability planning.  The time to act is now.

The Greater Boston Massachusetts lawyers at Goldman & Pease LLC concentrate in business law, real estate law, condo law, civil litigation, and estate planning and serve the greater Boston metro region including Alston, Arlington, Belmont, Brighton, Brookline, Cambridge, Canton, Dedham, Dover, Milton, Natick, Needham, Newton, Norwood, Waltham, Watertown, Wayland, Wellesley, Weston, West Roxbury, Westwood, and all of Massachusetts.

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