Estate planning attorneys often receive calls from potential clients requesting how much a simple Will costs.
What they do not know is that a simple Will – also known as a “Last Will and Testament” – in many cases, does not provide the type of protection they need. A simple Will often cannot accomplish the most common goals. Many of my clients who are going through the estate planning process for the first time are surprised by this information.
A Will allows you to indicate who will directly inherit your property (after the probate process is complete) and who will be appointed as the Personal Representative or Executor handling the probate process of your estate. A Will does not avoid the probate process, control your non-probate property or provide for any special planning concerns, such as estate taxes. It is just one piece of the Total Estate Planning picture.
Estate Tax Planning
In Massachusetts, your estate will owe estate taxes if it is valued over $1 million. A Will cannot help you lower the estate tax burden on your assets after death. If you think your estate will have to pay estate taxes, you can take steps during your lifetime to avoid or minimize that burden for your beneficiaries. Certain Trusts can minimize estate taxes, and you may choose to make some gifts during your lifetime for tax-related reasons.
Conditional Giving with Living or Testamentary Trusts
Do you want to make sure the money left to your children is spent on college tuition and not a new sports car? Do you want to make sure your children do not inherit before they are financially responsible? If you want your children or other beneficiaries to receive an inheritance only when they meet your guidelines, or if you want to limit how your children or beneficiaries spend their inheritance you must utilize a trust, either one established during your lifetime (Living Trust) or one created through instructions provided in a Will (Testamentary Trust).
Beneficiary Designations
Do you have a pension plan, 401(k), life insurance, a bank account with a pay-on-death directive, or investments in transfer-on-death (TOD) form? When you established each of these accounts, you designated at least one beneficiary of the account in the event of your death. The named beneficiaries will inherit these accounts upon your death outside of any probate process. You cannot use your will to change or override the beneficiary designations of such accounts. Instead, you must change them directly with the bank or company that holds the account.
Joint Tenancy with Right of Survivorship
Do you own a house with someone “in joint tenancy”? “Joint tenancy” is the most common form of house ownership with a spouse. This form of ownership is also known as “joint tenancy with right of survivorship,” “tenancy in the entirety,” or “community property with right of survivorship.” Bank accounts and other property can also be owned jointly. When you die, your ownership share in property owned jointly passes directly to the surviving joint owner. A provision in your Will leaving your ownership share to a third party will not have any effect.
Special Needs Trusts
Do you have a child or other beneficiary with special needs? Leaving money directly to a beneficiary who has long-term special medical needs may threaten his or her ability to qualify for government benefits and may also create an unnecessary tax burden. A Special Needs Trust is a more effective way to care for an adult child with special needs after your death.
While many clients come to me for a Simple Will, once they understand the limitations of this type of planning, they realize that a Will is just one piece of the Estate Planning puzzle.
If you are ready to put your Estate Planning puzzle pieces together, please contact The Heritage Law Center at mkarr@maheritagelawcenter.com or 617.299.6976.
