Estate Planning

Your will is a legally-binding statement of who will receive your property at your death. It also appoints a legal representative to carry out your wishes. The will only covers probate property, not joint property, trust property or accounts with designated beneficiaries.

A health care proxy is a document that you (the principal) can execute when competent giving another person (the agent) the authority to make health care decisions for you if you are later unable to make or communicate such decisions yourself.

If you ever become incompetent, it is important that someone has the legal authority to communicate your wishes concerning medical treatment. This is true especially if there were to be a disagreement among your family members about your treatment. By executing a health care proxy, you ensure that the direction you have given your agent will be carried out.

A trust is a legal entity under which one person (the “trustee”) holds legal title to property for the benefit of others (known as the “beneficiaries”). The trustee must follow the rules provided in the trust instrument. An irrevocable trust is one that cannot be changed after it has been created. A revocable trust is one that may be changed or revoked by the person who created it. Trusts are often used for tax planning, to provide for someone who is disabled, or to shelter assets to protect them from creditors or for long-term care costs.

Supplemental needs trusts (also known as “special needs trusts”) are structured so that the trust assets will not be considered to be owned by the beneficiary of the trust in determining his or her eligibility for public benefits, such as Medicaid, Supplemental Social Security (SSI) or public housing. These trusts are designed not to provide basic support, but rather to pay for comforts and extras that could not be paid for with public assistance funds, such as education, recreation, counseling and medical care beyond what is required simply to maintain an individual.

Each public benefits program has its own restrictions that must be complied with in order not to jeopardize the beneficiary’s continued eligibility for public benefits.
For instance, a beneficiary would lose a dollar of SSI benefits for every dollar paid to him or her directly by the trustee. In additions, payments by the trustee for the beneficiary’s food or housing are considered “in kind” income for SSI purposes and benefits will be reduced by one dollar for each dollar of the value of such “in kind” income. Some attorneys draft the supplemental needs trust agreement to limit the trustee’s ability to make such payments; other lawyers do not limit the trustee’s discretion by the terms of the trust agreement but instead counsel the trustee on an on-going basis as to how trust funds may be spent, thus providing more flexibility for a trustee to use trust funds in case of the occurrence of unforeseen events or changes in circumstances. The difference in approach is a reflection of philosophy, the situation of the client and the size of the trust.

The estate tax applies to both the probate and non-probate property of the individual who has died. For the federal government, the amount free from taxation is currently $11 million. Massachusetts has its own estate tax for estates that exceed $1 million. As a result only individuals with estates in excess of one million dollars will pay a Massachusetts estate tax. Regardless of the size of an estate, there is no estate tax owed when the first spouse dies, assuming that all of the estate is left for the benefit of the surviving spouse.

A power of attorney is a document that grants legal rights and powers by one person (called the “principal”) to another person (called the “agent” or “attorney-in-fact”). The agent acts on behalf of the principal for legal, financial and business matters. The agent can do whatever the principal may do, as defined in the power of attorney document, such as withdraw funds from bank accounts, trade stock, pay bills and cash checks.

In general, a power of attorney expires if the principal becomes mentally incompetent. However, it is often useful for an individual to be able to appoint someone to act for him or her when the individual is no longer able to make decisions or handle his or her affairs. Therefore Massachusetts law permits individuals to create a “durable” power of attorney which continues in effect after the individual loses competence.

No. Only a court can take away a principal’s rights in a conservatorship or guardianship proceeding.

Yes. A principal may revoke a power of attorney at any time. All a principal needs to do is send a letter to his or her agent telling them that their appointment has been revoked. From the moment the agent receives the letter, he or she can no longer act under the power of attorney.

Depending on the wording of the power of attorney, you may or may not have to act together on all transactions. In most cases, when there are multiple agents they are appointed “severally,” meaning that they can each act independently of one another. Nevertheless, it is important for them to communicate with one another to make certain that their actions are consistent.

Yes. The principal may revoke the power of attorney at any time. All he or she needs to do is send the agent a letter to this effect. The appointment of a conservator or guardian does not immediately revoke the power of attorney. But the conservator or guardian, like the principal, has the power to revoke the power of attorney.