Create documents to preserve your wishes in the event of incapacity or death, minimize estate tax exposure, handle business succession/transition, and manage minor beneficiaries’ inheritances or funds for those with physical, financial, or other concerns.
A Trust is essentially an agreement between the person creating it (the “Donor” or “Grantor”), the person or entity managing it (the “Trustee”), and the person it benefits (the “Beneficiary”). Sometimes the same person is more than one of these roles.
There are many varieties of trusts—testamentary (created for post-death use via a Will), inter vivos (created for lifetime use via a Trust document), revocable (amendable by Donor), and irrevocable (cannot be amended) are the most common categories. Trusts also meet a multitude of goals, the most typical of which: avoiding probate, minimizing estate taxes, providing for minors or disabled beneficiaries, and protecting assets from potential long-term care costs.
A review of your assets, family situation, and goals is necessary to see if a Trust is relevant and appropriate for your Estate Plan.
A Will is a document that outlines how you wish for your property to be distributed upon your death through the Probate Court process. Without a Will, you are considered to die intestate, and state laws determine your legal heirs. Wills nominate a Personal Representative (formerly known as an Executor) to administer your estate, a Trustee to manage any funds to be held in trust beyond your death, and a Guardian to raise any minor children.
Assets that pass through your Will (and thus overseen by the Probate Court) include any and all assets that are held in your individual name at your death or which designate your estate as beneficiary.
Durable Power of Attorney
A Durable Power of Attorney allows you to name another person or persons to sign your name and perform acts on your behalf. This person is called your “attorney-in-fact.” Examples of acts your attorney-in-fact may perform include accessing your bank accounts, paying bills, managing your investments, and selling real estate. Your Power of Attorney is effective upon signing and is valid until death or revocation. If you appoint more than one attorney-in-fact, each can act independently of the other, meaning that they do not need to act together. You should keep in mind that third parties are not required to honor this document simply because it is legal, because there is no law regarding its enforceability. However, most will accept a validly – executed, thorough, and current Power of Attorney.
Health Care Proxy
A Health Care Proxy allows you to appoint someone, called your “health care agent”, to make health care decisions for you. By law, a physician must declare that you are incapable of making medical decisions, even if only on a temporary basis, before your agent can have any authority. This document does not specify what your wishes are, but rather names the person who will make your medical decisions. Health Care Proxies are extremely important if it becomes necessary to make decisions concerning the termination of life support.
This is a companion to the Health Care Proxy. Whereas the proxy names the individual you wish to make the decisions, the Living Will expresses in writing your wishes with respect to end-of-life decisions. Although not legally enforceable in Massachusetts, this is a helpful document because it provides evidence of your wishes for your family and any other interested party (e.g., a hospital, a court). It should be noted that “DNRs” and “MOLSTs” are doctor’s orders and not a legally-derived document. MOLSTs (Medical Orders for Life-Sustaining Treatment) are in the process of replacing the DNR in the medical community.
HIPAA Release Designation
The Health Insurance Portability and Accountability of 1996 (HIPAA) contains privacy regulations that require virtually every physician, dentist, nurse, pharmacist, laboratory, and health care provider in the nation to limit access to confidential medical records and information. In order for your family members, friends, and/or designated health care agent to obtain individually-identifiable health information about you, you must specifically authorize disclosure to these people as well as the release of the information in writing.
Parental Appointment of Guardianship for Minors
This document allows you to name temporary guardians for your minor children in emergency situations. This document does not require any Court appointment or authority but is only valid for 60 days without court involvement. Normally the Guardian named in your Will takes over when that 60-day period ends if the emergency predicating use of this document is your death.
Limiting Liability & Asset Protection
Declaration of Homestead
A Declaration of Homestead is a document recorded at the Registry of Deeds. It protects your principal residence from most creditor claims during your lifetime. The current protection for all homestead declarations (including regular, elderly and disabled) is $500,000. The protection can double if there is more than one owner and at least one owner is elderly (over 62).
Other Forms of Asset Protection
Ownership of investment properties, interests in business entities, and other estate planning concerns (like divorce, bankruptcy, and the like) could dictate the advisability and implementation of other protective strategies and should be discussed with an attorney on an individual basis.