Are Your Documents Following the Same Script?

Needham Estate Planning

In the event of your untimely death, the manner in which your beneficiaries -- or those people who receive your assets from your estate -- are determined is highly dependent on how your property is titled.

Generally, property with title includes vehicles, boats, airplanes, real estate, bank accounts, savings bonds, life insurance policies, retirement accounts, and stock certificates.

If you die without a will or a trust and haven’t used any beneficiary or transfer on death options, state law will determine who inherits property with a title.

On the other hand, property without a title, such as jewelry, antiques, art, and even your digital assets are usually provided for in your will or trust, and if you don’t have one typically goes to your heirs at law.

As you can see, who you have listed as a beneficiary -- and not having a beneficiary designation at all -- can have serious implications for your family after you have passed away.

Increasingly, a wide range of financial products allows you to name a beneficiary upon your passing.

The benefit of naming a beneficiary is that the assets go directly to the named beneficiary upon the account owner’s passing, often bypassing the long and expensive process of probate.

The danger is, however, that when these designations are not carefully coordinated with your estate plan you can inadvertently disinherit a loved one, cause a disabled family member to lose government benefits, leave your heirs with a massive tax bill, or otherwise fail to achieve your goals.

What is a Beneficiary Designation?

Simply put, a beneficiary designation is a contractual agreement where the bank, insurance company, or financial company agrees to pay a person or entity, that you have selected, the specific assets upon your death.

For example, Bob may list Susan, his sister, as the payable on death (POD) beneficiary for his savings account at ABC Bank. When Bob dies, ABC Bank will pay Susan the balance in Bob’s account, without Susan having to first go to probate court.

But properly choosing a beneficiary and making sure it falls in line with your estate plan is often more complex than it seems at first glance.

Completing a beneficiary designation form is not just a routine task that you complete when filling out your bank account, life insurance, or human resources documents. In fact, naming beneficiaries is something that you should take very seriously and should consult your estate planning attorney about.

Coordinating Your Beneficiaries

It’s important to note that beneficiary designations supersede your will or trust.

For example, let’s suppose that Bob’s will stated that his entire estate is to be given to Elizabeth, his daughter. Since Bob used a payable on death beneficiary designation on his ABC Bank account, that asset will instead go to Susan, not Elizabeth.

In other words, if you name one relative to inherit assets in your will or trust, but some of those assets have someone else listed on the beneficiary designation, then your entire plan isn’t going to work as you likely intend.

For this reason, it is vital to ensure that your beneficiary designations are coordinated or aligned with your estate plan in order to fully protect you and your family.

Of note, many beneficiary forms have a designation for contingent beneficiaries.

A contingent beneficiary is basically a “Plan B” to your initial designation. So, in the event, your primary beneficiary passes away before you, the contingent beneficiary steps in their place and gets their share of the asset.

Estate Planning Help

The best strategy for ensuring your wishes are carried out is to first understand how naming beneficiaries has a significant impact on your heirs and then coordinate your wishes with an estate planner.

We are here to help you coordinate all of your assets and beneficiary designations with your estate plan so that everyone gets the protection they deserve.

How Estate Planning Can Help You Dream About Your Future

Needham Estate Planning

A dream without a plan is simply a wish.

Estate planning is not just about death and taxes -- it puts you in the driver’s seat of your financial life, allowing you to set achievable goals.

It is a great opportunity to focus on the legacy you want to leave behind for loved ones, help you avoid the expense and delay of probate, as well as help you save on taxes.

Putting Your Dreams on Paper

When putting together your estate plan, think about what legacy you want to leave behind. The best way to do so is to write down your wishes.

Consider the values you want to promote through your plan.

Think about important family traditions you want to encourage or memories you want to preserve.

Rather than a dry discussion of what happens to your assets, including these wishes in your estate planning documents makes your plan relatable and more meaningful for your family.

Because you’ve passed along values and wisdom along with your wealth, a comprehensive estate plan can help you achieve the dreams, hopes, and aspirations you have for your family, even though you are no longer with them.

For your estate plan to effectively pass along your values and wisdom, it should:

  1. clearly, state who you are leaving your assets to;
  2. give an explanation as to why an individual is receiving a particular asset;
  3. provide guidance about how you want a beneficiary to benefit from your assets (e.g. what “education” you intend to help with, whether or how you want to instill a work ethic, what you mean by “support,” etc.);
  4. make sure that those assets are received by your beneficiaries at the right time to maximize their benefit, and
  5. protect your legacy from being taken by estate taxes, creditors, predatory lawsuits, government claims or divorce.

You even have the opportunity to protect your legacy beyond your beneficiaries’ lifetimes into future generations if you want to do so.

Estate Planning Basics & Benefits

There are several benefits of developing an estate plan with your legacy in mind.

You can help the next generation become empowered to achieve competence, character, and confidence.

You can also preserve and reinforce your family’s core values and traditions.

In addition to preserving your legacy after you die, a comprehensive estate plan can provide guidance for managing your affairs if you become incapacitated and unable to make decisions for yourself.

Some basic documents that should be included in your estate plan are:

A will:

A written document that states who you want to inherit your property and names a guardian to care for your minor children or disabled family members.  The use of a will as your primary estate planning strategy does require the court process known as probate.

A trust:

A legal structure which holds property for your benefit during your life and for the benefit of your beneficiaries after your death. The use of a “fully funded” trust allows your beneficiaries to avoid the costly and time-consuming process of probate.

A healthcare directive:

A written document that spells out your wishes for healthcare and end-of-life choices when you are unable to make these decisions for yourself.

A financial power of attorney:

A written document giving a trusted person authority to handle your finances and property on your behalf. 

Guidance From Estate Planning Attorneys

A skilled estate planning attorney can help you make your dream a reality by communicating them through a well-thought-out estate plan.

Contact us today to learn about your options.

Estate Planning For the Newly Married

Needham Estate Planning

Now is the perfect time to start working on an estate plan—because, as newlyweds, you may not have a list of your accounts, but you've effectively just done a working inventory of your possessions—as you've figured out how to consolidate two households into one.

You've already been working on the new banking and shared the responsibility of bills and taxes and so forth.

Use that all time and energy and work as a leapfrog into planning for your future—so you'll be that much more prepared for the house, the kids, and the next stages of your new life together.

Why Think About Estate Planning At This Point?

Even if you have few assets, as we just talked about, you have more than you think.

Still, putting together a will or a trust probably is very straightforward at this point, since you just did that accounting of your collective assets.

You may have heard of state laws that give your property to a spouse if you don't have a will.

These laws—known as intestacy laws—vary by state and can sometimes have results you wouldn’t expect.

And, intestacy requires your estate going to probate—a court proceeding that can take months, even years, to resolve. So a basic estate plan should give you some peace of mind—knowing loved ones are taken care of if anything should happen.

You can even plan for the property you don't yet own (a house you may buy someday) and provide for children whenever they arrive on the scene.

And once you have that initial plan in place, you can easily update it as your circumstances and needs change.

Furthermore, if you already have a sizable amount of assets then estate planning may lead to tax benefits, now and in the future.

Who Can Make Decisions For Me, If I Can't?

In the U.S., a power of attorney (POA) is a legal document that designates someone else (often a spouse) to make financial and other decisions on your behalf.

In the financial realm, a POA can sign contracts, file lawsuits on your behalf, and more. Depending on the exact language, you can grant the POA broad powers, or something more limited to an issue or situation.

One specific form of POA is in effect only if you are unable to make decisions on your own—such as an emergency or illness.

And you can have that type of POA for both the financial side of things, as well as one relating to your medical care.

What Kind of Care Would I Want?

An advanced directive (also known as a living will) is a document that makes clear the kinds of medical interventions you'd prefer if you're unable to make decisions for yourself. In some ways, think of this as an emotional insurance policy:

You make decisions now, so the people you love won't have to. This can also make it easier for your spouse to make decisions if necessary, as long as you name them as a medical decision maker.

Who Will Look After The Kids?

If you don't yet have kids but want them someday, realize that an estate plan is essential for families with children.

The state statute providing assets for a spouse will probably also include some inheritance for children.

However, when it comes to guardianship, you need a will to designate caregivers for the children, should something happen to both parents.

Without a will, the court decides on the children's caregiver, and the court may select someone you don’t want.

As you start your new life together, one of the best ways to begin is by planning for the future, and whatever it may bring.

We've been helping families of all ages and kinds for decades, and we'd be delighted to help you, so contact our professionals today.

Do You Really Need a Will?

You may not think you need a will, but you do.

You might believe that a will is only for the rich and famous, and not the average person who has a far smaller net worth.

On the other hand, you may think that a will is entirely unnecessary since you have a trust, jointly owned property, or have named beneficiaries on your insurance.

So, do you need a will?

The short answer to this question is “yes.”

In fact, everyone who owns anything – no matter how little value it may seem to have – should have a will.

This is because a will puts you in charge of directing others to your wishes and distribution of assets upon your death. Without a will or other estate plan – referred to as intestacy – you have no control and your state’s rules determine who gets what after your death.

Even if you have a trust, jointly owned property, or have named beneficiaries on your insurance, a will is an important, even as just a “backup” plan.

As a practical matter, the simpler your affairs are – typically, the fewer assets you own – the less complicated your will and overall estate plan is going to be.

Surprisingly to most, it does not take much to complicate your estate.

For example, if you have minor children, your will must name a guardian for those children in the event of your death.

Likewise, if you have a relative who is disabled, elderly or without the financial sophistication to manage your assets after your death, a will allows you to name someone to watch over these assets for your loved ones in a special needs or supplemental needs trust.

And, these are just two examples of the many things that can complicate your affairs and your estate plan.

Many people believe if they have made beneficiary designations on life insurance policies, property deeds or retirement accounts that a will is not necessary at all.

While it is true that those particular designations will ensure the right people you elected will receive benefits or inherit those assets, the distribution stops there.

If there are other assets that you own – such as a car, a china set, or jewelry to name a few – or if you would like to give part of your estate to a charitable organization, a will is essential to your estate planning needs.

Furthermore, when a person dies without a will (referred to as intestate), the estate goes into probate.

Probate is a judicial proceeding by which the court decides the rightful heirs and distribution of assets of a deceased.

Going through probate can be both more time consuming and expensive without a will than it is with a will. This is because your will can waive certain probate requirements (like having the executor post a bond or obtain judicial approval to have an estate sale).

At the same time, probate without a will follows the governing state’s intestacy laws which may likely result in a less-than-perfect split of assets that not only may not be in line with the deceased’s wishes but may leave many surviving loved ones unhappy.

Consequently, for many reasons the creation of a will can fill in gaps of property assignment or plug holes in beneficiary claims on life or other insurance policies.

Family dynamics also play a part in estate planning; something state intestacy laws do not account for.

Many people have blended families. There may have been second or third marriages.

Older couples may choose to cohabitate after a death or divorce and never legally get married. You may have to treat your children differently on current accounts due to distance, and without a will, those assets will not be distributed fairly.

It is important to note that a will can also include a no contest clause, reducing the likelihood that potential heirs from arguing over its contents, something that simply isn’t possible if you don’t make a will.

Creating a will as part of your estate plan is primarily about passing your wealth to your loved ones after you die since a will only “works” after it’s gone through the probate court process.

It is about giving you both independence and control of what happens to your assets after your death.

Instead of leaving the distribution of your property to local intestacy laws, a will can put your wishes down on paper and direct a selected person to carry out your desires exactly as expressed.

What do successor trustees and executors do?

Executor’s Duties

An executor, sometimes called a personal representative, is the person who is named in a will, appointed by the court, and responsible for probating the will and settling the estate.

Depending on the state, an executor may work under court supervision or may use so-called “independent” administration for an unsupervised probate.

Typically, a petition of probate must be filed with the court for an executor to be appointed. If the person agrees to be the executor, and no one objects, the court will issue letters of testamentary.

These letters authorize the executor to gather the estate’s assets, sell assets, pay creditors, and open an estate bank account.

An executor is ultimately responsible for distributing the estate assets to the heirs in accordance with the terms of the will. If there is no will, then your executor will distribute assets in accordance with state law.

Distribution of estate assets, in either case, happens only after debts, taxes, and administration expenses are paid.

Trustee’s and Successor Trustee’s Duties

A trustee, on the other hand, is an individual or trust company named in a trust document and is in charge of the assets that are held in a trust.

Assets held in a living trust avoid probate, which means that court supervision is typically not required. In most revocable trusts, you act as the trustee.

While alive and well, you can make changes including moving assets to and from the trust, changing its beneficiaries, or even revoking the trust entirely if you choose it is no longer necessary.

If you are no longer able to manage your affairs, because of cognitive impairment or another injury, your incapacity trustee will step in and handle the trust for you.

Upon your death, the successor trustee will distribute the assets held in the trust to your named beneficiaries and subsequently close down the trust, similar to an executor, without the burden of probate.

Other Thoughts

You have the option of having more than one trustee or executor. It is better to name a sequence of trustees or executors rather than joint ones.

The executor and successor trustee can be the different people, but do not have to be.

Designating the same person as the executor of your estate and your successor trustee will minimize expenses but naming different ones will not allow one single person to have unilateral control.

There are advantages and disadvantages to each setup. Give us a call today so we can help you select your executor and trustee.

Estate Planning Cast of Characters

Estate planning is much more than simply drafting a will and leaving it at that. If you’re a parent, you want to make sure you’re putting your children in the best possible position for decades to come.

If you’re a parent, you want to make sure you’re putting your children in the best possible position for decades to come.

Regardless of your family situation, a lack of adequate estate planning can have major consequences in your life and the lives of those you love. Making no decisions at all can leave your care and assets in the hands of strangers through public court proceedings.

On the other hand, a comprehensive estate plan can provide you with control while protecting your family’s inheritance.

One of the most crucial components of comprehensive estate planning is the process of selecting fiduciaries.

Trustees, executors, healthcare and financial agents, and guardians for minors are just a handful of the fiduciaries you’ll need to name.

These fiduciaries are substituted decision makers that step in when you’re no longer able to make decisions, either because you’ve become incapacitated or because you’ve passed away.

Think of these people as your estate planning cast of characters — the people who will play various important roles in carrying out the terms of your plan. But who will you appoint, and what is it exactly that each of these individuals do?

Here are some frequently asked questions regarding your estate planning cast of characters:

Who should I pick as trustee?

Trustees manage assets contained within a trust. To figure out how to select the right person for the job, first consider whether the trustee should be an individual or a financial institution. If choosing an individual, pick someone you know who is diligent and detail-oriented, and whom you trust to carry out your clear instructions.

What does a successor trustee do?

A successor trustee can also be either an individual or an institution. This party serves as a back-up, or successor, to the original trustee in case the first trustee passes away or is incapable or unwilling to perform their duties regarding the management of your trust.

Should I pick a corporate trustee?

While it’s straightforward enough to pick a friend or family member you think will be up to the task, picking a corporate trustee is the best option for some people. Banks and trust companies that focus on trusteeship provide expert management. Being unrelated to your personal life, you can also rely on them to be impartial. However, corporate trustees do come at a cost.

What does a guardian do?

Guardians and conservators are court-appointed individuals who make decisions on a person’s behalf in the event of mental or physical incapacity. This can be avoided by adding proper powers of attorney, and explicit directions for them, to your estate plan.

What’s the difference between my health care agent and my financial agent?

While there is some overlap, healthcare and financial agents are two distinct roles in an estate plan. Your health care agents, also referred to as health care powers of attorney or health care proxy, are responsible for making medical decisions on your behalf and may also implement your pre-arranged instructions if you experience incapacity. Likewise, financial agents can manage your wealth, pay bills, file taxes, purchase insurance, and adjust investments for you if you become unable to do so yourself. They may or may not be the same person; it’s up to you to decide who is best for each role.

What does personal representative mean — is that different than an executor?

A personal representative is the same as an executor. This is the individual or institution named in a will who becomes responsible for carrying out the instructions provided in your will during the probate process.

Working with an estate planning attorney to pick your cast of characters eases the burden of figuring it all out on your own. Making these choices may seem daunting, but it can cut costs over the long-term by keeping your assets in the family and away from court control.

Making these choices may seem daunting, but it can cut costs over the long-term by keeping your assets in the family and away from court control.

And best of all, an estate planning attorney help you coordinate how fiduciary selection fits in with your big-picture goals.