Solid foundation of an estate plan

Life gets busy for everyone. Far too often, people do not think about their estate plan until much later than they should. Creating a set of foundational estate planning documents will ensure your property is transferred upon your death in the most time and tax-efficient manner possible and prevent you from needing to have a court-appointed guardian and/or conservator appointed for you should you become incapacitated. The essential foundational documents of an estate plan are listed below. Last will and testament - A last will and testament outlines how you would like your property distributed after your death. You nominate a personal representative who is appointed by the probate court to oversee settling your estate. If you have a minor child or a child with a disability, you can nominate a guardian to be appointed by the probate court. You may write a tangible personal property memorandum to direct specific items to individuals or organizations. Revocable living trust - A revocable living trust serves as a property management tool for your property while you are living. If you become incapacitated, the named successor trustee can easily step in and manage your property, which would eliminate the need for a court-appointed conservator. A revocable living trust eliminates the need for probate court involvement in managing your property, thereby saving time and money following your passing. For married couples with assets over the Massachusetts individual estate tax threshold of $2 million, a properly drafted revocable living trust can, depending on the total value of the couple’s combined assets, significantly reduce estate tax liability. Durable power of attorney - A durable power of attorney allows you to appoint an individual to manage your financial and business affairs. The person you appoint is called an attorney in fact. The creation of this document eliminates the need for a court-appointed guardian and/or conservator if you become incapacitated. Healthcare proxy - A healthcare proxy allows you to name a healthcare agent to make medical decisions on your behalf should you become unable to do so. HIPAA release - The Health Insurance Portability and Accountability Act of 1996 protects access to one’s personal health information. You can release this information to a personal representative should they need access to it. In addition to these foundational documents, other estate planning strategies should be considered, such as asset protection for long-term care costs, planning for a family member with a disability, and excluding the death benefit of life insurance from being subject to estate tax liability. If you don’t have an estate plan or have one that hasn’t been reviewed by an experienced trust-and-estate attorney in the last five years, you should consult with one to provide you with recommendations as to how to protect your loved ones. Having a basic foundational estate plan in place, and updating it regularly, will give you peace of mind to get back to that busy lifestyle.