Estate Planning and the Probate Process

Dealing with the death of a loved one is never an easy process. A well-thought-out and implemented estate plan is one way that you can help your family deal with a very difficult situation. The following information is designed to provide a general overview of the estate planning process. You should always consult with an attorney to discuss your specific situation and the most effective estate planning strategies for your family.

What is estate planning?

We all seem to spend a significant amount of time working to accumulate assets. Estate planning is simply the legal process used to determine who gets our assets when we are no longer here. More significantly, estate plans also dictate who will serve as the legal guardians of our minor children (under 18 years old) in the event of our untimely death.

The basic estate planning documents that we utilize in our practice are the following:

  • Will
  • Trust
  • Durable power of attorney
  • Health care proxy
What is a will?

A will is the most common estate planning document and is used to direct who inherits your assets. You also use a will to specify the person who you want to be the legal guardian of your minor children.

Do I really need a will?

Surprisingly, the answer to this question is simple: NO. Even if you have not prepared a will on your own the Commonwealth of Massachusetts has drafted one for you. The real question is do you want to determine who gets your assets or would you rather the government make that decision on your behalf? Not surprisingly, the people who retain us prefer to make their own choices. If you leave minor children and do not have a will, ultimately a Probate Court Judge will decide who raises your children.

What is a trust?

A trust is a legal relationship created by a declaration of trust where the creator of the trust transfers assets to the trust for the benefit of individuals who are known as beneficiaries. There are many types of trusts and they can be created for a number of different reasons. A trust can be used very effectively to save a significant amount of estate tax. A trust can also give you much more control over how and when your assets may be used by your heirs. A well-drafted trust can allow your children to gain full access to their inheritance over a period of years as opposed to all at once.

What is a durable power of attorney (“POA”)?

A POA is the instrument you prepare which gives the person of your choice the legal authority to manage your affairs while you are alive. The POA is extremely important if you become incapacitated and can be critical in helping your family deal with a host of issues if you are no longer able to make decisions. Without a properly executed POA your family may need to go to probate court to have a legal guardian appointed to manage your financial affairs.

What is a health care proxy?

A health care proxy gives legal authority to someone of your choice to make health care decisions on your behalf when you are no longer capable of making those decisions. You also can express your desires regarding end of life care including what extraordinary measure you either do or do not want taken.

The Probate Process

The probate process refers to the legal procedures that have been put into place by the Massachusetts Probate Courts to oversee the orderly distribution of assets from the decedent to his or her heirs. Depending upon the size of the estate the probate process can be relatively simple or extremely complex. Because of the time period within which a creditor can file a claim against the estate, estates generally will be open for at least one year after the death of the testator.

What assets are covered by probate?

The probate process only applies to “probate assets,” which are assets that are owned by the decedent at the time of his or her death and do not otherwise pass by operation of law. A good example of a probate asset would be a mutual fund or bank account that is in the name of the decedent only. At the time of the decedent’s death the ownership of that mutual fund would pass to the individuals set forth in his or her will. If the decedent dies without a will, then the ownership of the mutual fund is determined by the rules set forth (intestate succession statutes) under the general laws of the Commonwealth of Massachusetts.

An example of an asset that would not become a probate asset is a home that is owned by two individuals with a legal right of survivorship. Thus, a home that is owned by a husband and wife as tenants by the entirety will pass automatically by operation of law to the surviving person and would not need to go through probate. Similarly, if you own a joint bank account or mutual fund with another person and there is a right of survivorship, that asset will pass directly to the survivor and there is no need to probate that asset.

Can the probate process be avoided?

Yes it is possible to avoid probate by making sure all assets are held in such a way that they pass by operation of law. This would include making sure that all assets which can be titled with a right of survivorship are so held. A trust can also be used to hold assets and avoid probate. At your death the trust would still be the legal owner of the asset with the beneficial interest passing to the successor beneficiaries named in the trust.

What about estate taxes?

Both the Commonwealth of Massachusetts and the United States impose taxes on the estates of individuals which exceed a certain value. Generally speaking the estate tax is imposed on the value of your assets at the time of your death. Thus, an asset that will pass outside the probate process (e.g. a home you own with your spouse) will still be included in valuing your estate subject to the state or federal estate tax. The 2009 estate tax threshold for the Commonwealth of Massachusetts is $1,000,000 and $3,500,000 for the federal estate tax. With careful planning and the use of trusts it is possible to save a significant amount of estate taxes.

Schedule a no-cost 30 minute consultation to discuss your needs.

The above discussion was intended as a general overview of the estate planning process. To provide specific advice you need to consult with an attorney regarding the specific facts regarding your family and your estate planning needs. Click on the link below to open our standard estate planning questionnaire. If you schedule an appointment please print and review this questionnaire prior to our meeting. To schedule an appointment please click on the “contact” tab in the navigation bar and use the form to request an appointment. You may also call our office at 781-934-8200.