ESTATE PLANNING
Establishing a proper estate plan is an important step toward ensuring the security of your family’s financial future. A properly drafted estate plan will also ensure that your assets pass in the manner in which you intend, help to prevent disputes and create peace of mind so that you are assured your family will be cared for after you are gone. We are experienced in drafting estate plans for every stage of life, ranging from your first Will, which might primarily designate Guardians for your young children, to more complex planning designed to address potential estate tax to the State of Rhode Island, the Commonwealth of Massachusetts or the federal government.
Durable Power of Attorney
A financial Durable Power of Attorney (“POA”) is one of the most basic and potentially useful estate planning tools available. A POA is a document in which one person appoints another person to act on his or her behalf (usually called an “attorney-in-fact”). Although a POA can be limited to certain transactions, it typically is drafted as a general power, which would include handling all matters related to banking, real estate, payment of taxes, etc. It is important for the POA to state that it is durable, because it will then survive incapacity, which means the attorney-in-fact will be able to use it after the person granting the power is no longer able to handle his or her affairs though that power always terminates at the death of the maker of the POA. The importance of this fact cannot be overstated, as the alternative to a POA upon incapacity is to seek Guardianship over the incapacitated individual, which is a public process through the local probate court.
Durable Power of Attorney for Health Care
A Durable Power of Attorney for Health Care (“HCPOA”), might be the most important estate planning document that a person can execute. A HCPOA is a document in which one party designates someone to make health care decisions for him or her when he or she cannot do so. Notably, while a POA, above, can be used whether the person granting the power is incapacitated or not, a HCPOA is only effective when someone cannot speak for himself or herself. Unless that person is deemed incapacitated, an agent under a HCPOA would never be able to override someone making a medical decision for himself or herself.
It is important to note that, a HCPOA is not only for end of life decisions, but it is also useful where decisions must be made about the care that a loved one needs and possible placement in a facility, where the person cannot advocate for himself or herself. It also allows the agent access to medical records and other pertinent information.
Last Will and Testament
A Will is a document executed during your lifetime which directs how your real and personal property will be distributed upon your death and will be responsible for “settling” your estate. After you pass away, your Will must be submitted to the Probate Court for the town or city in which you lived when you passed away (in Massachusetts the Probate Courts have jurisdiction by County, not by town as in Rhode Island). In a sense, the Court acts a check system, to ensure that the proper party is named as Executor or Executrix and that your assets pass in the way you intended. Although the probate process can be slow (in Rhode Island you must keep the estate open for 6 months to allow for creditor claims), it does not have to be as costly as you might think. If there are no disagreements between the surviving heirs and beneficiaries, probate can be a smooth administration process. However, there are reasons other than the potential expense for people to prefer to avoid a probate, including the fact that probate is a public procedure where anyone would be able to access the information contained in the Court’s file, and, it can delay the estate administration process, at least, as compared to the utilization of a Trust, which is discussed in more detail below. Finally, a Will only operates on assets that are held in your sole name. For example, the proceeds of a life insurance policy, retirement accounts and annuities will generally pass outside of the Probate court, directly to the named beneficiary, as would any real estate that you own as a joint tenant or tenant by the entirety with another party.
Living Trust
Another common estate planning tool to be considered is a Living or Revocable Trust. A Trust is a document in which one party (usually called the Grantor or the Settlor) transfers legal title to another party (the Trustee) for the benefit of a third party (the Beneficiary). In most Living or Revocable Trusts used for estate planning purposes, the Grantor is typically also the Trustee and the Beneficiary during his or her lifetime. This allows the Grantor to continue to control the Trust assets while he or she is still living and capable. Upon the passing of the Grantor, or his or her incapacity, the successor Trustee is charged with the responsibility of administering the Trust assets, including paying the Grantor’s final expenses and distributing the Trust property, or perhaps holding it in further trust in accordance with the Grantor’s instructions. A Trust avoids the probate process, which makes it ideal for those who want an efficient estate administration process that is generally kept from the public eye. A Trust also gives the Grantor the ability to be more creative with the manner in which he or she distributes his or her property. A typical trust that we might draft usually includes estate tax language, at least for Rhode Island or Massachusetts estate tax planning, but can also provide for assets to be held for the Grantor’s children and grandchildren for distribution at a future date, perhaps to ensure that there are funds available for the beneficiary’s education. In some circumstances, a Trust is necessary if the intended beneficiary receives State benefits or has a financial history which would indicate that an outright distribution of money would not be a good idea. In these instances, a special needs trust or other ongoing trust might be advisable.
Establishing a proper estate plan is an important step toward ensuring the security of your family’s financial future. A properly drafted estate plan will also ensure that your assets pass in the manner in which you intend, help to prevent disputes and create peace of mind so that you are assured your family will be cared for after you are gone. We are experienced in drafting estate plans for every stage of life, ranging from your first Will, which might primarily designate Guardians for your young children, to more complex planning designed to address potential estate tax to the State of Rhode Island, the Commonwealth of Massachusetts or the federal government.
Durable Power of Attorney
A financial Durable Power of Attorney (“POA”) is one of the most basic and potentially useful estate planning tools available. A POA is a document in which one person appoints another person to act on his or her behalf (usually called an “attorney-in-fact”). Although a POA can be limited to certain transactions, it typically is drafted as a general power, which would include handling all matters related to banking, real estate, payment of taxes, etc. It is important for the POA to state that it is durable, because it will then survive incapacity, which means the attorney-in-fact will be able to use it after the person granting the power is no longer able to handle his or her affairs though that power always terminates at the death of the maker of the POA. The importance of this fact cannot be overstated, as the alternative to a POA upon incapacity is to seek Guardianship over the incapacitated individual, which is a public process through the local probate court.
Durable Power of Attorney for Health Care
A Durable Power of Attorney for Health Care (“HCPOA”), might be the most important estate planning document that a person can execute. A HCPOA is a document in which one party designates someone to make health care decisions for him or her when he or she cannot do so. Notably, while a POA, above, can be used whether the person granting the power is incapacitated or not, a HCPOA is only effective when someone cannot speak for himself or herself. Unless that person is deemed incapacitated, an agent under a HCPOA would never be able to override someone making a medical decision for himself or herself.
It is important to note that, a HCPOA is not only for end of life decisions, but it is also useful where decisions must be made about the care that a loved one needs and possible placement in a facility, where the person cannot advocate for himself or herself. It also allows the agent access to medical records and other pertinent information.
Last Will and Testament
A Will is a document executed during your lifetime which directs how your real and personal property will be distributed upon your death and will be responsible for “settling” your estate. After you pass away, your Will must be submitted to the Probate Court for the town or city in which you lived when you passed away (in Massachusetts the Probate Courts have jurisdiction by County, not by town as in Rhode Island). In a sense, the Court acts a check system, to ensure that the proper party is named as Executor or Executrix and that your assets pass in the way you intended. Although the probate process can be slow (in Rhode Island you must keep the estate open for 6 months to allow for creditor claims), it does not have to be as costly as you might think. If there are no disagreements between the surviving heirs and beneficiaries, probate can be a smooth administration process. However, there are reasons other than the potential expense for people to prefer to avoid a probate, including the fact that probate is a public procedure where anyone would be able to access the information contained in the Court’s file, and, it can delay the estate administration process, at least, as compared to the utilization of a Trust, which is discussed in more detail below. Finally, a Will only operates on assets that are held in your sole name. For example, the proceeds of a life insurance policy, retirement accounts and annuities will generally pass outside of the Probate court, directly to the named beneficiary, as would any real estate that you own as a joint tenant or tenant by the entirety with another party.
Living Trust
Another common estate planning tool to be considered is a Living or Revocable Trust. A Trust is a document in which one party (usually called the Grantor or the Settlor) transfers legal title to another party (the Trustee) for the benefit of a third party (the Beneficiary). In most Living or Revocable Trusts used for estate planning purposes, the Grantor is typically also the Trustee and the Beneficiary during his or her lifetime. This allows the Grantor to continue to control the Trust assets while he or she is still living and capable. Upon the passing of the Grantor, or his or her incapacity, the successor Trustee is charged with the responsibility of administering the Trust assets, including paying the Grantor’s final expenses and distributing the Trust property, or perhaps holding it in further trust in accordance with the Grantor’s instructions. A Trust avoids the probate process, which makes it ideal for those who want an efficient estate administration process that is generally kept from the public eye. A Trust also gives the Grantor the ability to be more creative with the manner in which he or she distributes his or her property. A typical trust that we might draft usually includes estate tax language, at least for Rhode Island or Massachusetts estate tax planning, but can also provide for assets to be held for the Grantor’s children and grandchildren for distribution at a future date, perhaps to ensure that there are funds available for the beneficiary’s education. In some circumstances, a Trust is necessary if the intended beneficiary receives State benefits or has a financial history which would indicate that an outright distribution of money would not be a good idea. In these instances, a special needs trust or other ongoing trust might be advisable.
