Can I Protect My Family after Death?

Estate planning involves a close look at personal and financial goals while you are living and after you have died, as explained in a recent article titled “Professional Advice: Secure your future with estate planning” from Northwest Indiana Business Magazine. Having a comprehensive estate plan ensures that your wishes will be carried out and loved ones protected.

Your last will and testament identifies the people who should receive an inheritance—heirs—who will manage your estate—executor, now known as a personal representative in Massachusetts—and who will take care of your minor children—guardian. Without a valid will, the Commonwealth will rely on its own laws to distribute assets and assign a guardian to minor children. The Commonwealth's laws may not follow your wishes. However, there won’t be anything your family can do if you didn’t prepare a will.

Assets with beneficiary designations can be passed to heirs without going through probate. Certain assets, like life insurance policies and retirement accounts, allow a primary and secondary beneficiary to be named. These assets can be transferred to the intended beneficiaries swiftly and efficiently.

Many people use trusts to pass assets for a variety of reasons. For example, a trust can be created for a family member with special needs, protecting their eligibility to receive government benefits. Depending on the type of trust you create, you might be able to eliminate estate taxes. Certain trusts are also useful in protecting assets from creditors and lawsuits, and ensure that assets are distributed according to your wishes.  An Irrevocable Medicaid Shelter Trust are often used to protect a family from the high cost of long term care and nursing homes.

Revocable living trusts provide protection in case of incapacity, avoid probate and may provide asset protection for beneficiaries. If you are the creator of a trust—grantor—you will need to appoint a successor trustee to manage the trust if you are the original trustee and become incapacitated. Upon death, a revocable trust usually becomes irrevocable. Assets placed in the trust avoid probate, the court proceeding used to settle an estate, which can be both time-consuming and costly.

An Irrevocable trust can shield your home and other assets from the high cost of long term care and allow you to live in and maintain control over your home, provide protection for your spouse and loved ones, and preserve an inheritance for your children. The law allows for the use of a properly structured Irrevocable Trust to shield your home and other assets without adverse effect on your MassHealth eligibility.  However, Massachusetts imposes a 5 year lookback period on assets transferred to Irrevocable Trusts,  so find out if an irrevocable trust is right for you and start the clock as soon as possible. Be weary of the disastrous consequences of an improperly drafted irrevocable trust. Poorly drafted irrevocable trusts will result in a total loss of control, unnecessary tax burdens, loss of access to the homes equity, and denial of MassHealth benefits.

A Power of Attorney allows you to name a person who will handle your financial affairs and protect assets in the event of incapacity. That person—your agent—may pay bills, sell assets and work with an elder law estate planning attorney on Medicaid planning. The POA should be customized to your personal situation. you may give the agent broad or narrow powers.

Everyone should also have a Health Care Proxy, which gives the person named the legal right to make health care decisions on your behalf if you are unable to. You’ll also want to have a HIPAA Release Form (Health Insurance Portability and Accountability Act), so your agent can speak with all health care providers, access medical records and speak with the health insurance company on your behalf.

Having a comprehensive estate plan provides protection for the individual and their family members. It avoids costly and stressful problems arising from the complex events accompanying illness and death. Every three to five years (or when life or financial circumstances warrant), meet with an estate planning attorney to keep your estate plan on track.

Book a call with attorney John A. Laine today.

Reference: Northwest Indiana Business Magazine (Dec. 27, 2022) “Professional Advice: Secure your future with estate planning”