One goal of estate planning is to help clients avoid the costly and time consuming process known as Massachusetts probate. When a loved one dies, their will needs to be submitted to the probate court in the county where they lived, along with a slew of other documents, before their assets can be passed on to their heirs. If someone dies without a will, their estate still has to go through probate and will be distributed according to Massachusetts intestacy laws. Only very small estates—those with no real property and personal property valued at less than $10,000—will avoid probate without proper planning.
Certain assets however, such as annuities, life insurance, IRAs and retirement plans, allow you to name a designated beneficiary—that is, who will receive that asset when you pass away. In these cases, the assets are automatically distributed to the named beneficiary upon your death, thereby avoiding the probate process. I encourage clients to take advantage of this method of probate avoidance by carefully selecting and naming who they want to inherit these assets.
However, you must keep in mind that beneficiary designations take precedence over any other instructions you provide in a will or trust. If your intentions change, or if your designated beneficiary is no longer able to accept the inheritance, you must be proactive in changing the beneficiary designation as soon as possible. This can be especially important where your designated beneficiary has entered a nursing home. Once they receive your inheritance, all of their assets are typically subject to medical costs and could be taken by the nursing home.
To properly and efficiently use the power of the designated beneficiary, you should consult an estate planning attorney who can coordinate these assets with your will and trust. Together, you can avoid probate completely by planning ahead. Call the Heritage Law Center today to discuss how we can help.
