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    4.  | Estate Planning

Estate Planning

Bacon Wilson’s estate planning/probate group is one of the largest in Western Massachusetts and Northern Connecticut. They have represented multiple generations of families assisting with thousands of estate plans and probate estates, allowing wealth transfers to be made to family members or charities in a manner that is as sensitively, economically, and administratively efficient as possible.

Estate planning is important to minimize estate, gift, and income taxes, preserve assets, secure the future of your special needs child, and avoid probate. Bacon Wilson will guide you through this process and provide viable options and solutions to maximize your objectives.

Bacon Wilson’s elder law attorneys are often engaged by other counsel to determine the most appropriate means of preserving protecting and assets from long-term care expenses. Their attorneys frequently speak at local, regional, and national conferences to educate other elder law attorneys in strategy development, including organizations such as the National Academy of Elder Law Attorneys.

Asset preservation

Many people shudder to think about the impact of financing nursing home care with the financial resources that they spend a lifetime building. Long-term care in a nursing home setting is very expensive, with a typical cost of $12,000 per month or more. Many Americans believe that the federal government or Medicare will pay for their long-term care. Unfortunately, this is not the case. There are various means of financing long-term care, and often it is possible to do so while also protecting a portion of assets. In Massachusetts, long-term care is provided under the MassHealth system. In Connecticut, long-term care is provided by the Department of Social Services, or DSS. For both states, the application and qualification process is highly regulated, nuanced, and subject to continuous change. Whether you are a resident of Massachusetts or Connecticut, our legal team can help you plan for the future and protect your assets.

Charitable remainder and annuity trusts

These trusts provide significant tax and non-tax benefits to you, your family, and charities. We can draft the most appropriate type of trust to suit your needs and also prepare tax calculators to determine your tax savings.

Cohabitation Agreements

There is no common law marriage statute in Massachusetts, so unmarried couples who live together enjoy none of the rights and protections that their married counterparts do. Unless their partnership is defined through a legal contract such as a cohabitation agreement, the law is likely to classify them as strangers in the event that the relationship dissolves. A cohabitation agreement forces each party to carefully consider his/her intentions, obligations, and expectations during the relationship and upon its demise. Our legal team can advise you in this matter.

Conservatorships

A conservator is appointed for a ward when the probate court determines that the ward suffers from one or more of the following conditions:

  • Mental weakness
  • Mental retardation
  • Physical incapacity
  • Inability to make or communicate informed decisions due to physical incapacity or illness

Once appointed, conservators have many duties, and the manner in which those duties are carried out is subject to supervision by the probate court. As the general law gives no preference to any particular class of persons or relatives who can act as a ward’s conservator, any person who is deemed “proper and fit” is eligible to be appointed. This can have considerable implications when you understand that the conservator has, among other duties, the legal ability and responsibility to:

  • Pay the ward’s debts
  • Represent the ward in all lawsuits
  • Control and manage the ward’s property
  • Invest the ward’s funds
  • Collect funds due to the ward
  • Support the ward and his or her family using the ward’s funds
  • Sell, lease, or mortgage the ward’s property (with approval from the probate court)

Co-ownership of property

There are three principal types of ownership (tenancies) relative to real estate. The most familiar is what is known as “joint tenants”. This means that if one person dies, the survivor owns all of the interest in the property. In a “tenancy in common”, each owner of the property has an undivided interest in the whole of the property. In this type of tenancy, upon the death of any owner, his share will pass as directed by his will, or by intestacy if he does not have a valid will. A third, special form of ownership allowed in several states is what is known as a “tenancy by the entirety”. In this case, only a husband and wife may own the property, and the property passes to the survivor.

Each type of ownership has advantages and disadvantages specific to your situation. Our lawyers can help you determine which suits you best.

Durable power of attorney

A durable power of attorney (POA) is one of the most important and powerful legal documents that everyone should have as part of their estate plan. If you should become mentally incapacitated or physically disabled, it allows you to appoint someone to take control of your financial affairs that you usually take care of yourself, and eliminates the necessity of a guardianship or conservatorship. This document allows your attorney-in-fact to handle your affairs without the necessity of formal probate proceedings, thereby saving expenses and emotional energy, and retaining privacy. You retain the right to modify or revoke the power at any time, and it terminates automatically on your death. The appointed individual or attorney-in-fact typically has the power to buy or sell real estate, manage your property, conduct your banking transactions, invest your money, make legal claims, conduct litigation, attend to tax and retirement matters, and make gifts on your behalf. The POA is an important document to have, and Bacon Wilson can help you draft the most appropriate one for you.

Estate planning questionnaire

Please download and complete the attached form prior to your first meeting with your estate planning attorney, and please bring it with you to your meeting.

Estate Planning Questionnaire

Estate administration questionnaire

Please download and complete the attached form prior to your first meeting with your probate attorney. The information is necessary to complete the estate tax return. Please bring this form with you to the meeting.

Estate administration questionnaire

Family limited partnerships

In a family limited partnership (FLP), family members (typically parents) put assets into a partnership, and then give minority interests to other family members, typically children, while the general partners retain control of these assets. This gives the parents an opportunity to shift assets to their children. The FLP also allows children to manage their parents’ assets such that, following their parents’ deaths, those assets do not need to be probated.

An FLP provides a good option for parties seeking to protect their family assets. It removes the assets from their estate while still retaining control over them. The partnership becomes its own entity, with its own tax identification number, which can then conduct the same activities as an individual or a corporation.

There are significant advantages to using a family limited partnership as a part of your estate plan:

  • The general partners retain control over the assets and can decide whether to distribute or reinvest any income or profits from the partnership.
  • Restrictions can be placed on the limited partners, such as a restriction from transferring or selling their interest, thus ensuring that wealth stays within the family.
  • A family limited partnership can protect assets in the event that a limited partner gets a divorce or has trouble with creditors.
  • FLPs provide greater flexibility than other estate planning devices such as an irrevocable trust. For example, the partnership may be amended or terminated upon agreement of the members, and can provide that all disputes be resolved through arbitration, rather than in court.
  • Perhaps one of the largest advantages to a family limited partnership is the valuation discount. This valuation discount is due to a limited partner’s lack of control and marketability in their interest. For example, a gift of10% interest in a $1,000,000 limited partnership has a substantially lower value than a gift of $100,000 for gift tax purposes. With careful drafting, a gift of a partnership interest can fall under the annual gift tax exclusion.

By using a family limited partnership, families with significant assets can significantly lower both their gift and estate tax payments. Our attorneys can advise you in this matter.

Gifting

You may give away up to $15,000 to a person each year without having to file a gift tax return, and up to $11,180,000 over your lifetime (as of 2018) without paying any gift tax. This Federal law is proposed to significantly reduce as of 2026. Gifting may be useful to alleviate taxes because children and grandchildren are often in a lower tax bracket than you are, and thus will not have to pay such a large tax on the income. Gifting may also help fund a child’s or grandchild’s education, or provide for their medical expenses. The Bacon Wilson legal team can assist you with gifting.

Grandparents’ rights

This is an emerging area of law, and an extremely difficult one. It is the burden of the grandparent seeking visitation to prove that a decision by the judge to deny visitation is not in the best interest of the child. Since parental decisions, no matter how wrong they seem to be, are given presumptive validity, it must be alleged and proven that failure to grant visitation will cause the child significant harm by adversely affecting the child’s health, safety, or welfare. It must also be established that a strong current relationship exists between grandparent and grandchild.

An affidavit must be submitted to the court at the onset of the action, which particularly and sufficiently sets forth facts strong enough to rebut the presumption of parental fitness. It is certainly not a lost cause, and well worth the battle to many grandparents, but grandparents should know that the burden rests on them if they desire to establish grandparents’ rights.

Guardianship

If your loved one has not drafted and signed a health care proxy and durable power of attorney and then becomes mentally or physically disabled, you or a social service agency will need to petition the local probate court for an appointment of guardianship. You will also have to obtain a medical certificate clearly stating the loved one’s medical condition and the need for a guardian to serve. This certificate establishes that your loved one no longer has the ability to make personal, social, medical, or financial decisions for him- or herself. It is then necessary to petition the court for authority to become your loved one’s guardian, and the court will issue a notice called a citation, which has to be published in the newspaper where the ward currently lives. There is a date by which any person may object to the guardianship proceeding, and if no objection is made, then the hearing may be scheduled. This is a process best undertaken with legal guidance, and our firm can help. We can also assist you with the bond and accounting that the court requires.

Health care proxy

Scientific and medical advances have presented society with numerous bioethical issues. These advances have provided physicians with enhanced control over the time and nature of death. In Massachusetts, the legal document that addresses the challenges posed in making end-of-life decisions when you are unable to make the decision personally is called a health care proxy. It designates someone to serve as your agent in making health care decisions if you’re incapable of making them for yourself and ensures that your wishes are respected. There are nuances specific to different life stages and sexes, and Bacon Wilson attorneys can help you to draft the document that addresses your unique situation.

Bacon Wilson is proud to partner with DocuBank. DocuBank is the perfect solution that lets your doctors and loved ones immediately access your advance directives anywhere in the world. This service also provides your doctors with a list of your medications, critical medical information, the name and phone number of your doctor, and contact information for three family members or friends so they can be contacted quickly.

It’s as easy to use as it is valuable for you. You’ll receive a personalized Emergency Card to carry in your wallet. Simply give the card to the hospital staff when you’re hospitalized, and they can call DocuBank’s toll-free number or go to their website and immediately obtain your documents. It works 24 hours a day, anywhere in the world, so you won’t have to worry about your loved ones scrambling around during a crisis.

You’ll receive a complimentary one-year membership in DocuBank when you complete your estate plan at our firm. If you already have an estate plan, it’s a good idea to review it every few years to make sure it still reflects your wishes. There are many reasons you may need to update your plan, including changes in the law, a new child or grandchild, a death in the family, divorce, or serious illness. Contact our firm to schedule a review of our estate plan and we’ll be happy to give you a complimentary one-year membership in DocuBank.

DocuBank Member Log In



Homestead declaration

In Massachusetts, homeowners and condominium owners may file a homestead declaration to protect $500,000 of equity in their property. It must be filed in the Registry of Deeds for the county in which the property is located. This document protects you from creditors or judgments against you in the event that you are sued. It does not, however, protect you against existing mortgages, long-term care claims for Medicaid payments by the Division of Medical Assistance, or existing claims or lawsuits. The Declaration of Homestead is a relatively straightforward document that is filed after being notarized. However, there are certain special situations that require attention, such as ownership of multiple residences. Our team of legal experts can help.

Income in respect of a decedent, (IRD)

Income in respect of a decedent (IRD) is income that a person has earned during his or her lifetime, but did not realize for tax purposes due to his or her death. Examples include a 401(k) account with a beneficiary, annuities, and savings bonds. The beneficiary will be pleased to learn that you left him or her money for future endeavors. However, that same beneficiary will learn that when the money is withdrawn, income taxes will be due at his or her ordinary income tax rate.

With IRD, the earned income must be taxed and does not receive a step-up-in-basis, which would allow the beneficiary to avoid paying any taxes on the inheritance. Our lawyers can assist you with IRD issues.

Last Will and Testament

Everyone has a will, whether or not they know it. You might say: “I never drafted a will, so I can’t possibly have one.” The reality is that if you fail to draft or properly execute a valid will, then the laws in your state will determine how your estate will be distributed. Thus, even though you may have failed to formally address your wishes about how to distribute your estate, state law will step in to distribute your estate (based on their guidelines and determination) upon your passing. A will is a legal document that states your wishes regarding the distribution and settlement of your estate (the property that you own and hold in your name) after you have passed away. As a legal document, a will is designed to guarantee that your wishes be carried out. In a well-drafted will, you determine and state:

  • How your property will pass (either by gift or trust)
  • When the distribution will be made, (i.e. when a child reaches the age of 21,)
  • Who will serve as your executor/trustee

In basic terms, a will guarantees that your wishes will be carried out in the way you have requested once you die. If you die without a written will, then you are said to have died “intestate” and your estate will be distributed by the probate court according to state law. The problem that can occur with this process is that the laws in your state may not yield the same results that you wish to occur upon your passing. Our legal team can help you create a will that will state how you want your estate to be distributed following your death.

Letter of intent for minor and disabled children

When parents contemplate the possibility of dying prematurely or suffering a catastrophic illness, they are naturally concerned about what will happen to their children. Parents of disabled children are often especially concerned about the quality of their children’s lives should the parent become unable to provide needed care.

These concerns can be addressed by writing a letter of intent (LOI). An LOI is a document in which parents include important information about their child’s history, personality, interests, care, development, needs, and current situation. It also includes the parents’ hopes and expectations regarding the child’s future.

Although an LOI is not a legally binding document such as a contract or a will, courts and future care providers will rely on it for guidance and insight into the needs of a child who can no longer be cared for by his or her parents. It serves as a voice on behalf of a child whose parents can no longer be that voice.

Writing a letter of intent can be a highly emotional experience and requires special attention and legal assistance to complete. Our firm can help in this matter.

Living will

Scientific and medical advances have presented society with numerous bioethical issues. These advances have provided physicians with enhanced control over the time and nature of death. In Massachusetts, the legal document that addresses the challenges posed in making end-of-life decisions when you are unable to make the decision personally is called a health care proxy. It designates someone to serve as your agent in making health care decisions if you’re incapable of making them for yourself and ensures that your wishes are respected. There are nuances specific to different life stages and sexes, and Bacon Wilson attorneys can help you to draft the document that addresses your unique situation.

MassHealth & Medicaid planning

Many people shudder to think about the impact of financing nursing home care with the financial resources that they spend a lifetime building. Long-term care in a nursing home setting is very expensive, with a typical cost of $12,000 per month or more. Many Americans believe that the federal government or Medicare will pay for their long-term care. Unfortunately, this is not the case. There are various means of financing long-term care, and often it is possible to do so while also protecting a portion of assets. In Massachusetts, long-term care is provided under the MassHealth system. In Connecticut, long-term care is provided by the Department of Social Services, or DSS. For both states, the application and qualification process is highly regulated, nuanced, and subject to continuous change. Whether you are a resident of Massachusetts or Connecticut, our legal team can help you plan for the future and protect your assets.

Organ donation and burial instructions

Many individuals wish to be organ donors. While you can add this intent to your driver’s license, it is also a good idea to include this information in your estate planning documents, such as your health care proxy.

Also, many people desire special burial arrangements, such as cremation and scattering rites. It is also common for people to have opinions about which spouse they want to be buried with in cases in which they have had more than one spouse.

These preferences should be clearly set forth with the help of an attorney in estate planning documents to prevent post-death problems and litigation.

Parental care agreements

When an aging parent needs assistance to continue to live at home, many children opt to provide the needed care personally. The caretaker child arrangement begins when either the parent begins residing with the child in the child’s home, or the child begins residing or continues to reside with the parent in the parent’s home and child provides the care similar to that of a board and care facility.

When a child provides care for a parent, it is best to establish a care agreement. This is a contract between the parent and the child, and possibly the child’s spouse, in which the parent agrees to pay the child a monetary sum (in either a lump sum or on an ongoing basis) or to finance an improvement to the child’s home. In return the child agrees to care for the parent until either the parent passes away or is no longer able to perform the activities of daily living, which include:

  • Bathing
  • Eating
  • Dressing
  • Transferring
  • Toileting

When establishing a care agreement, there are numerous considerations and potential pitfalls to be addressed. At Bacon Wilson, our experienced legal team can help.

Pet estate planning

Most people consider their pets to be members of their family, and there is often a very strong bond between pets and their owners. If you pass away and do not have an estate plan for your pet, it is possible that your pet may be euthanized, neglected, or abandoned. To prevent these outcomes, you may create an estate plan that provides for the proper care and love for your pet in the event of your death. Legally, an animal is considered tangible personal property, similar to your car, furniture, or jewelry, and would pass to heirs or beneficiaries of your estate who are entitled to your personal property. However, you may prepare for the continued care of a pet through a trust. Our attorneys can assist with pet estate planning arrangements.

Probate

Probate is a court proceeding in which the following events take place:

  • The validity of your will is determined or your intestate (without a will) estate is settled
  • An executor or administrator is appointed
  • The executor or administrator inventories all of your assets that you held individually at your death
  • All your debts, taxes, and probate administration fees are paid
  • Distributions are made in accordance with the terms of your will or according the laws of intestacy in the that event you die without a will

This process does not occur overnight, and requires significant expertise to administer it properly in order to avoid prolonged lawsuits. Probating an estate can be very expensive and can take years to complete. It is not a private process, meaning that anyone can see what assets you have and where the assets are transferred. If these are areas of concerns for you, it’s important to understand how to avoid the probate process. Bacon Wilson attorneys possess extensive experience in this area.

Property co-ownership

There are three principal types of ownership (tenancies) relative to real estate. The most familiar is what is known as “joint tenants”. This means that if one person dies, the survivor owns all of the interest in the property. In a “tenancy in common”, each owner of the property has an undivided interest in the whole of the property. In this type of tenancy, upon the death of any owner, his share will pass as directed by his will, or by intestacy if he does not have a valid will. A third, special form of ownership allowed in several states is what is known as a “tenancy by the entirety”. In this case, only a husband and wife may own the property, and the property passes to the survivor.

Each type of ownership has advantages and disadvantages specific to your situation. Our lawyers can help you determine which suits you best.

Qualified personal residence trusts

You may have maintained a home, summer cottage, ski chalet, or similar property for family use. A qualified personal residence trust (QPRT) may accomplish your objective of maintaining this property after your death so that your children will be able to use it for future generations. The property will mostly have appreciated since you purchased it, and the QRPT may be utilized to reduce taxes upon passing the property to your children, so that they won’t be forced to sell it.

Remarriage estate planning

Whether entering into marriage for the first time or a subsequent marriage, a spouse should always revisit their existing estate plan or create a new one. Acknowledging a spouse by including them in your estate plan, or ratifying and confirming an antenuptial agreement, is critical to preserving your rights and maintaining control over designation of assets to your heirs. Bacon Wilson can assist you in estate planning matters.

With the divorce rate reaching 50%, remarriages require estate planning. The first spouse to die may wish to ensure that assets are available to or for the benefit of his or her children from a previous marriage. Perhaps a trust will need to be established for these children.

Alternatively, you may establish a trust for the benefit of your spouse, so that he or she will receive income and/or principal at the discretion of an independent trustee, with the remainder of the funds being distributed to children of your first marriage. In this way, your surviving spouse is protected during his or her lifetime, but the trust will ensure that the principal passes to the children of your first marriage, as opposed to leaving all assets to your surviving spouse, who could leave all assets to his or her own children upon his or her death. There may also be a need to establish a trust fund for your grandchildren’s education or medical purposes.

Same-sex partnership and marriage

With various states adopting rules relative to civil unions, same-sex marriages, and other legal relationships, several significant issues relative to taxes arise. One primary issue may be the recognition of the relationship for income tax purposes that would allow a couple to file a joint state income tax return versus the federal distinction.

The Internal Revenue Service does not permit same-sex couples to file jointly even in cases where there is a legal marriage, such as in Massachusetts. The 1996 Federal Defense of Marriage Act limits the impact of civil unions under federal law. However estate, tax, and long-term care planning (Medicaid,) are significant issues when determining whether the individual filing a return or requesting an application for governmental assistance will be considered married or single.

In addition, with the advent of adoptions by same-sex couples and the subsequent dissolution of some relationships, life will certainly become more complicated and more planning will be necessary. All significant documents must be reviewed to ensure that all plans are in order and are coordinated with all necessary documents. These include wills, health care proxies, powers of attorney, prenuptial agreements, and any other legal documents, such as beneficiary designations. It may also be important to review the older generations’ estate planning documents to ensure that both biological children and adopted children are included within their documents.

All couples should contemplate how to protect the assets they possess from becoming marital property at the time of marriage to their partner. Couples must remain aware that upon marriage all assets of an individual become assets of the couple and that, absent the existence of a written mutual agreement to the contrary, the distribution of marital property will be decided by the Commonwealth of Massachusetts’ general laws in the instance of either divorce or death. Our legal team can advise same-sex couples in addressing the many issues that must be considered.

Spendthrift trust

A spendthrift trust is a trust that contains language that gives the trustee the authority to make decisions as to how the trust funds may be distributed to a beneficiary. This type of trust prevents creditors of the beneficiary from gaining access to the funds; however, the amount in trust that can be sheltered from creditors can vary widely from state to state.

Additionally, a spendthrift trust can dictate precisely how the beneficiary may use the funds. By doing so, the grantor, who is the person who established the trust, ensures that the beneficiary cannot squander the trust assets as they could if the assets were given to the beneficiary outright. Such protections can be extremely valuable, particularly for those who are not financially savvy or who are going through difficult times, such as unemployment, creditor issues, or divorce.

A spendthrift trust is flexible and can last for the life of the beneficiary or can be limited to a certain number of years. It is a sensible idea to investigate incorporating a spendthrift clause into any trust, as the benefits can be considerable.

Succession planning

Owners of closely held business must plan well in advance to prepare for and ensure the continued success of the company following a triggering event such as the death, disability, or retirement of one of its shareholders. For family-owned businesses looking to carry the organization along through generations, the typical track record is ominous. According to the Small Business Administration, 90% of the 21 million U.S. businesses are family-owned, and one-third of Fortune 500 businesses are either family-owned or family-controlled. However, only 30% of family-run companies today succeed into the second generation and only 15% are passed on into the third generation. At Bacon Wilson, we can assist with the orderly transition of your business.

Trusts

Revocable trusts, also known as an “inter-vivos trusts” or “living trusts”, are among the most useful estate planning tools for the management and distribution of family assets. Trusts serve a wide range of functions and may be appropriate for a variety of family financial circumstances and goals.

A common misconception is that trusts are only for the very wealthy. In reality, trusts can be used in variety of different circumstances and are a powerful way to manage assets.

Forming a trust consists of several steps:

  • The trust is created by the “grantor”.
  • The trust is funded, meaning that the grantor’s assets are placed into the trust. Assets can include stocks, bonds, mutual funds, real estate, bank accounts, etc.
  • The trustee(s) accept the responsibilities as expressed in the trust document. The trustee can be the grantor during his or her lifetime.
  • The trust itself contains dispositive provisions to instruct the trustee in managing the investments and distributing income or principal to the beneficiaries. This is the roadmap detailing how your property is distributed.
  • Beneficiaries are chosen to benefit from the trust. This typically includes the grantor during his or her lifetime, as well as family, friends, or charities upon the grantor’s death.

There are a number of helpful functions that trusts can perform:

  • A trust can help with business succession when it is desired that certain parties run the business and others benefit from its gain.
  • A trust can ensure the continued management of a business or personal finances.
  • A trust can direct the trustee to provide full management in the event of incapacity.
  • Assets held in a trust avoid probate and its attendant delays and costs.
  • Dearly loved pets can be cared for upon the death or incapacity of the owner.
  • The trust can be part of overall estate planning and can allow for control of assets even after death.

A trust has a number of beneficial attributes. The trust, and therefore its assets, can be professionally managed if you name a bank or trust company as its trustee. Certain tax benefits can be gained, especially for married couples. Financial privacy is maximized when your estate avoids the public process of probate.

Other types of trusts include:

  • A special needs trust to maintain benefits for a disabled individual
  • An irrevocable trust to allow life insurance benefits to pass tax-free to younger generations
  • An alternative irrevocable trust to protect assets from long-term care expenses

Bacon Wilson’s experienced attorneys can help you navigate your trust options and select the type most appropriate for your needs.

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