Everyone needs an estate plan. The type of plan you need will depend on your particular situation. Here are some of the most common questions that our clients ask when they start working with us.

What is the right estate plan for me?

A will-based estate plan is appropriate for individuals with simple estates: for example, those who are just starting out with little in the way of assets or older people who have begun divesting themselves of assets. A will goes into effect when you die.

A trust-based plan is essential for people who do not want to send their loved ones through probate: for example, single parents, married couples with children, blended families, parents of a child with special needs, business owners, individuals who own multiple properties, individuals with numerous financial assets, individuals who need to protect their assets from heirs who lack good judgment, and individuals who have no beneficiaries. Trusts go into effect when you sign them.

How do I avoid probate?

The best way to avoid probate is with a trust. Many people erroneously believe they can avoid probate if they have a will; however, that is almost always not true. Wills usually do go through probate.

A trust, regardless of whether it is revocable or irrevocable, does not go through probate. The only way a trust will not work is if it is not funded. Funding your trust is the process of putting assets in your trust by titling them in the name of your trust.

What is a pour-over will?

A pour-over will is the type of will used in a trust-based estate plan. The pour-over will is a safety net to ensure that all of your property is controlled by your trust. If assets are not in your trust when you die, the pour-over will puts them into the trust.

How can I make sure my minor children are taken care of with my estate?

In your will, you will designate a guardian(s) that could step in to raise your minor children in the event of your death. In addition, a trust-based plan allows you to make specific provisions for the care of your child(ren).

Another important provision in trust documents is the power of the trustee to postpone distributions if it would be detrimental for a beneficiary to inherit. For example, if a beneficiary becomes addicted to drugs, the trustee can postpone the distribution until such time as the beneficiary shows that the addiction is under control or will use the funds for rehabilitation. If the parents know about the addiction, more detailed language can be put in the trust about milestones that the beneficiary needs to meet.

What property is included in my estate?

Everything you own is part of your estate: that includes your life insurance, retirement assets, bank accounts, things, and real property. Many people think life insurance is not part of their estate because it is not subject to income tax; however, it is part of your estate.

Everything that is part of your estate is subject to estate tax. If you have assets in states that have a state estate tax, then those assets are subject to estate tax in that state. For example, Massachusetts has a $1 million state estate tax exemption. If you own a beach house in Massachusetts that is worth $2 million, only $1 million of the value is exempt. The remainder is subject to estate tax.

It does not matter that you are a resident of another state. The property that you own in that state is still subject to estate tax. That is true of most states with a state estate tax and death tax. It is important that your estate plan addresses that issue. If you have money in the bank in those states, it is also subject to state estate tax.

How often do I need to change my estate plan or trust, and how hard is it to change my documents?

An estate plan is a living, breathing document. Therefore, your plan should be revisited every three to five years or sooner in the event of a major life event such as a change in marital status, adoption or birth of a child, change in financial status, etc. Plans should also be reviewed to see whether any changes in the law necessitate a revision.

Changing your documents is easy as long as you have mental capacity. You have the right to amend your trust or will at any time. You can make a small amendment, or you can completely rewrite the entire thing.

What information and documents do I need?

At your first meeting, try to bring any deeds to real estate and any incorporation paperwork of any businesses that you own. If you cannot locate these documents, don’t worry. They can always be reviewed later.

If I put my assets in a trust, will I still have access to my assets?

If you put assets in a revocable trust, it does not change anything. For all purposes, you and the trust are the same. The trust uses your Social Security number. It does not cause you to pay higher taxes. You do not have to file a special tax return. You can buy and sell things exactly as you do now. In other words, nothing changes.

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