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Estate planning is the process of creating a plan to protect yourself, your loved ones, and your hard-earned assets in the event of your own incapacity and at your death. Here are some of the fundamental issues to consider in your estate plan if you live or own property in Massachusetts
You will is a legal document outlining how you would like your property to be distributed after you die. You also can use a will to name legal guardians for your minor children should something happen to both parents. At your death, your will is submitted to the Probate Court to ensure your wishes are carried out according to the terms you specified in your will.
If you have minor children, it's also important to appoint a guardian in your will. This is the person who will take care of your children if something happens to you and their other parent.
Guardians are typically close family members or friends who are willing and able to provide a loving home for the children. When choosing guardians, it is important to consider their ability to provide financial support, emotional stability, and a safe environment. Additionally, it is important to make sure that the guardians are compatible with each other and have similar parenting philosophies. By carefully selecting guardians, parents can ensure that their children will be well cared for if something happens to them.
Trusts are legal entities that can hold property and assets on your behalf. Trusts can be created for specific purposes, like avoiding probate, asset (or creditor) protection, estate tax planning, or even taking care of a family member with special needs.
Probate can be a lengthy and expensive process during which a judge will determine how your property should be distributed. If you have a will, it will be submitted to the probate court to ensure your wishes are carried out. If you don't have a will or trust in place, the judge will make decisions according to Massachusetts state law, which may not be what you would have wanted. Probate court can also tie up your assets for months or even years, making it difficult for your loved ones to access the money they need when they need it most.
The best way to avoid probate in Massachusetts is to establish a Revocable Living Trust (RLT). If probate avoidance is important to you and your family, be sure to consult with a qualified estate planning attorney about whether an RLT is the right strategy for you. We help our clients avoid Massachusetts probate with proper estate planning.
Another important part of estate planning is naming someone as your personal representative. This is the person who will be responsible for carrying out your wishes after you die. It's important to choose someone you trust implicitly to handle this task, as they will have a lot of responsibility. If you don't name an personal representative in advance, the probate court will appoint someone to serve in that capacity—and it may not be someone you would have chosen yourself.
Health care directives, also known as Advance Directives, are legal documents that outline your wishes for end-of-life care in the event you become incapacitated. These can include things like do not resuscitate orders and powers of attorney. Without advance directives in place outlining your end-of-life wishes, your loved ones will have to make those decisions for you. This can be an incredibly difficult burden to bear, and it can cause a lot of conflict within families.
When most people think of estate planning, they think of personal assets like houses and cars. But estate planning is just as important for businesses. After all, a business is an asset that can be passed down to future generations or sold to provide for one's family.
Succession planning is a key part of estate planning for business owners. It involves identifying a successor who can take over the business in the event of the owner's death or disability. This ensures that the business can continue to operate and provide for the owner's family.
Estate planning for businesses also includes making sure that the business is properly valued and that the appropriate tax elections are made. This can be a complex process, but it is crucial for ensuring that the business can continue to thrive after the owner's death.
Estate planning is an important part of any business owner's financial plan. By taking the time to create a succession plan and value the business correctly, owners can protect their families and their businesses.
In the United States, estate taxes are imposed by the federal government and some state governments, including Massachusetts, on the transfer of property at death. This is commonly referred to as an estate tax or a death tax. The tax is based on the value of the estate, which is defined as the fair market value of all real and personal property less any debts and other charges against the estate.
The federal estate tax was first imposed in 1916, with a rate of 10%. The estate tax rate has varied over time, but it has generally been between 1% and 20%. In 2024, the estate tax rate is 40%.
There are several exemptions to the estate tax. For 2024, the federal estate tax exemption for individuals is $13.61 million. With proper tax planning, a married couple can shelter twice that amount, or $27.22 million.
In Massachusetts, estate taxes are imposed on transfers of property valued at more than $2 million. The tax rate ranges from 0.8% to 16%, depending on the value of the estate. The progressive estate tax rates top out at 16%.
The best way to get started with estate planning is to sit down with an experienced attorney who can help you understand the process and figure out what works best for you and your family. They can answer any questions you have and help you create a plan that meets your unique needs.
Don't wait—estate planning is an important part of responsible adulthood, and it's something everyone should do.
