NOW IS THE TIME TO PREPARE YOUR ESTATE PLAN

NOW IS THE PERFECT TIME TO PREPARE YOUR ESTATE PLAN

     Discussing illness, death and a final distribution of assets is uncomfortable.  This is why so many people procrastinate and never plan their estates.  While the likelihood of any individual actually dying from COVID is very small, the outbreak has caused many procrastinators to prioritize planning their estate and schedule a meeting with their estate planning attorney.  Attorney client meetings are increasingly being held on zoom and other virtual platforms.  In Massachusetts, estate planning documents can be executed over zoom.  When zoom meetings and signings are not practical documents can be executed outside on a picnic table or in a well ventilated meeting room with all participants wearing masks.

     If you are a parent, planning your estate is critical to ensuring that your children are well taken care of when you pass away.  Your estate plan should address the care and custody of your children and protect their inheritance from waste and misuse so the monies will be available for their education and other major milestones such as purchasing a house or investing in a business.  Choosing the right guardian for your children is essential.  A guardian is the person who will take care of your children on a daily basis and provide for their basic education, medical and other needs.   The best way to protect your children's inheritance from waste or misuse is to create a trust.  The trust will contain provisions establishing when and how your children will receive their inheritance.  Many trusts provide that the child will receive one third of the inheritance at age 25, one third at age 30 and one third at age 35.  There are an unlimited number of ways to structure a trust.   You select a trustee or trustees who you trust will invest your children's money wisely and oversee expenditures appropriately.

     When planning your estate it is important to know how much your estate is worth.  In Massachusetts you will need to pay estate taxes if the value exceeds $1,000,000.00.  With proper planning a married couple can exempt $2,000,000.00.  If the proper trusts are in place, a married couple can leave $2,000,000.00 to their children or anyone without paying any Massachusetts estate tax.  The federal estate tax exemption is $11,580,000.00 per person for 2020 and $23,160,000.00 for a married couple.  Not too may individuals have estates in excess of $11,580,000.00 and not many couples have a combined estate in excess of $23,000,000.00; however, if you are one of those wealthier Americans, with proper planning you can save your beneficiaries very large sums of money.  When calculating the value of your estate, you must remember to include all of your assets, including retirement accounts, IRAs, 401(k)s, investment accounts, real estate and the proceeds of all life insurance policies you own.  Many people do not realize that the value of their estate includes the proceeds from all life insurance policies paid out when they die.  The estate of the deceased insured pays the tax, not the recipient of the proceeds.

     Over the past four to five months we have all been at home with our families.  For many of us, this has been a unique opportunity to appreciate and enjoy our families.  Please take this opportunity to reflect on the importance of a properly planned estate.