Why Do People Need An Estate Plan?
There are many reasons why people need estate plans. First, an estate plan is needed in order to pass properties on to specific people as opposed to having them subject to a formula calculated by the state. Secondly, an estate plan is needed in order to avoid certain taxes in transfers, which is important because the tax burdens on estates can be very high. For instance, for any estate in Massachusetts that is worth more than one million dollars, there will be an estate tax. On the federal level, there will be an estate tax on any estate that is worth more than five million dollars, which could be waived under President Trump.
What Happens If I Die Without An Estate Plan Or Even A Will?
When someone dies without an estate plan or will, then someone will have to file for what is called an administration of the estate in the probate court. The person’s assets would be left in accordance with the formula that the state uses in order to determine how property will be distributed. For instance, half of a person’s assets could go to their spouse and half could go to their children. When someone has a will, they can choose to leave everything to the spouse, and have that spouse leave everything to the children upon his or her death. Alternatively, a person could choose to leave their estate with their church.
How Often Do You Have Your Clients Maintain Or Revisit Their Estate Plan?
I recommend that my clients revisit their estate plan every five years. This is because the laws change and it is important to ensure that what they have in their will is still going to effectuate what they want.
What Are The Basic Items In An Estate Plan And What Does Each Item Do?
There are four basic documents that I generally utilize for a simple estate plan: the will, the power of attorney, the living will, and the healthcare proxy. The power of attorney is used so that if a person is still alive but unable to make decisions, there will have been someone appointed to make decisions on their behalf. A living will is used so that if someone is in a comatose state and there is no hope of recovery, others will know whether or not that person wanted to donate their body to science or to a specific hospital. Lastly, a healthcare proxy is used so that if someone is unable to make their own medical decisions, there will have been someone appointed to make those medical decisions on their behalf.
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