What does estate planning mean?

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When many people hear the term “Estate Planning,” they think of billionaires like Bill Gates or Warren Buffett. They think of their elderly parents. Estate planning isn’t only for the wealthy or the elderly. Simply put, estate planning is your opportunity to make legally effective decisions regarding how you want your property, finances, and health care to be handled. Estate planning may also include planning for the care and custody of your minor children or family members with disabilities in the event of your death. It usually involves deciding how and to whom your property will be distributed. Additionally, it may involve deciding who will manage your financial, personal and medical affairs if you can no longer do so yourself (i.e. if you become “incapacitated”).

By preparing an estate plan and communicating your decisions with your loved ones, you can lessen the conflicts and difficulties they may encounter later. What are typical estate planning documents? The most common estate planning documents include a durable power of attorney, living will, health care proxy and a will. Trusts are sometimes used too.

What is a durable power of attorney? A durable power of attorney is a document in which you authorize someone (called an “agent”) to take care of your financial matters. A durable power of attorney either becomes effective immediately upon signing (“execution”) or upon you becoming mentally or physically incapacitated so that you cannot make decisions or otherwise handle your financial affairs. The durable power of attorney continues in effect until you either revoke it or pass away. Generally, your Attorney-in-Fact (or agent) will be granted broad powers to handle many financial transactions, such as signing checks and tax returns, entering into contracts, buying or selling real estate, depositing or withdrawing money, buying or selling stock and other assets, applying for public benefits, etc. In Massachusetts, within your durable power of attorney, you can nominate your agent to become your conservator or guardian in the event this should ever become necessary. A guardian is someone who is appointed by a court to safeguard the physical wellbeing of someone who is incapable of caring for her/ himself. A conservator is someone who is appointed by a court to safeguard the financial wellbeing of a person incapable of this responsibility.

What is a living will? A living will documents your wishes regarding different kinds of medical treatment. Many people think of a living will as a declaration that if their illness is expected to result in death in a matter of months, or if the patient is in a persistent vegetative state, they do not wish for medical intervention designed to prolong their life (“heroic measures”). A living will is not recognized as a valid legal document in Massachusetts, although it may provide valuable evidence of an individual’s wishes regarding medical treatment. A living will is something to consider if you are going to be spending significant time in a state that recognizes or requires them. In Massachusetts, one’s wishes regarding artificial life support is addressed in a health care proxy.

What is a health care proxy? a health care proxy is a document appointing a person as your health care agent designated to make health care decisions for you if you are unable to do so for yourself. In the document appointing your health care proxy you can include specific directions for your proxy to follow, including a living will-type provision for end of life treatment (or refusal of such). A health care proxy does not override your ability to make your own health care decisions. Rather, your proxy has the authority to act on your behalf only if you are unable to do so. You should give a copy of your health care proxy to your doctor, any hospital that you visit, and to the person(s) that you appoint to act on your behalf.

What is a will? A will is a written document that states your intentions and instructions for the distribution of your property upon your death. Not all property gets distributed via a will. For example, if you own property jointly, that property may go directly to the co-owner without the need to go through the probate process (submitting your will for approval by the Probate & Family Court). A will also appoints a Personal Representative (formerly known as an Executor) to oversee the distribution of your estate. A will provides specific authority and can waive certain legal requirements in the Probate process to lessen the burdens involved in distributing property. A will can assign property directly to heirs or to a trust for the benefit of other. A will can nominee someone to be the Guardian of their minor children. A will cannot, however, appoint a Guardian for minor children. Only the Court can do that. Stating one’s wishes allows the Court to take that into consideration if there is a contested or disputed guardianship case after your death.

What is a trust? A trust is a legal relationship under which one individual (the “donor” or “settlor”) provides for the transfer of property to another (the “trustee”) who holds and manages the trust property for the person or persons who will benefit from the property (beneficiaries). Trusts can be created for many different reasons. People with young children will often create a “life insurance trust” which is funded upon the donor’s death so that a Trustee is managing the money for the minor children’s benefit. Another type of trust is a “Special Needs” or “Supplemental Needs” Trust. These are designed for disabled individuals so that said people do not become disqualified for any government or private benefits they may be receiving.

If you are interested in determining which of these estate planning documents are right for you, contact Attorney Schutzbank of Berid & Schutzbank, LLC to arrange a consultation.

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