Every state has comprehensive laws that will determine what happens to your property when you pass away without a will or estate plan. The process is called intestacy probate. Most often, your property will pass to your closest relatives and family. This process is cumbersome for the surviving family members and will likely be costly to your estate. The concern is that the intestacy laws may apply in ways that do not reflect your intentions at all. In addition, not having an estate plan means that there are many missed opportunities to plan for tax consequences, protect assets or establish guardianships for minor children.
This means that the Power of Attorney will remain in effect in the event that the principal (the person giving the Power of Attorney) becomes incapacitated.
A Power of Attorney is a document in which someone, the Principal, gives another person, the Agent, authority to do certain things on behalf of the Principal.
No. All the property held in the Revocable Living Trust does not shield the property from taxes. BUT- a Revocable Living Trust is a relatively simple way for a married couple to reduce, if not eliminate, the need to pay estate taxes.
Here are some of the benefits of having a trust in place.
Privacy: A Trust is a private document. This means that no one other than your trustee and your beneficiaries need ever read it. Remember, your Will is not a private document and is subject to probate.
Avoid Probate: If a Trust is properly drafted and your property has been properly placed into the Trust, there should be no need for probate. Upon your death, the trustee should be able to transfer property to the beneficiary of your trust. The benefit of avoiding probate is that Probate can be both time consuming and costly. Both your personal representative and their attorney are entitled to payment for their services. Additionally, once a will is admitted to Probate, it becomes a part of the court records and therefore a public document.
Avoid a challenge to your Estate Plan: Unlike a Will, a Trust is not subject to Probate. This means that it is not required that the Trust is filed with the Court and a Court is not required to "prove" that your Trust is valid. Therefore, the trustee is able to distribute your property as directed in the Trust and the trustee is not required to obtain anyone's permission. Note: This does not mean that your Estate Plan cannot be challenged. But if a Trust is properly drafted according to Massachusetts law, and without the intent of defrauding creditors, then it will be very difficult for someone to challenge the Trust.
Care for a family member: In a Trust, you can make a provision in your Trust to care for a minor child or family member after you die. For example, if you are concerned about a "spendthrift" child, who could spend in months what has taken you a lifetime to save, you can prepare a Trust that will spread your child's inheritance over an extended period of time. In that case, your Trust can direct the Trustee to give a certain amount of money over a period of time.
Avoid Guardianship: Once you have a Trust, your Trustee will take over the care of the Trust property if you are unable to do so. If you did NOT have a Trust, and become incapacitated, a court may need to appoint a Guardian or Conservator to care for your property. It is important to note that the cost to establish and maintain a conservatorship is charged to you.
The answer is really dependent on several factors. One must first look at how up-to-date the estate plan documents are and how well the paperwork was drafted. Generally, a simple will takes the longest, particularly if it is out-of-date. A properly drafted and fully funded Revocable Living Trust should be the easiest and quickest type of estate to settle. Each case is different and would require careful review prior to making a full assessment.
Often times, people assume that they do not have an "estate" and believe that they do not need to do any planning. In reality, having any asset in any amount is enough to protect. Certainly, if you own a home, have retirement assets or children, you should consider doing some form of estate planning. Finally, if your natural family is not the intended beneficiary of your estate, planning is necessary.
A Healthcare Proxy is a document in which someone, the Principal, gives another, the Healthcare Agent, authority to make medical decisions on behalf of the Principal.