Dear Friends, Clients and Colleagues:
So many clients say that they feel a great sense of relief after completing their estate plans. Estate planning is one of those tasks that people think to themselves, "I' ll do it before the end of the year," or "I'll get around to it after taxes," etc. It becomes lost in a list of everyday priorities that include working, managing your life, paying taxes, and dealing with life's unexpected events.
Speaking of unexpected events, here are some common problems that can become big issues if you've not done proper planning:
If you've remarried, your prior will is revoked by law, unless your wrote it in contemplation of this new marriage.
If you've divorced, you'll need to update beneficiary designations on retirement accounts and insurance policies, otherwise your former spouse may be dancing to the bank!
If you've married and have children from a previous marriage/relationship, you need to write a trust or will, otherwise ALL of your assets will pass to your new spouse, under the new Uniform Probate Code. Thus, you can accidentally disinherit your kids by failing to plan.
If you've accumulated significant assets, or have inherited a large sum recently, you may need to do some Estate Tax Planning. Estates over $1 million are taxable in Massachusetts, and will be taxable by the Federal government in 2013, at a rate of 55%.
If you become incapacitated for a time, maybe due to complications from surgery or a sudden illness, who can access your checking account to pay your bills, renew insurance polices, enroll your kids in school, or make payroll, if you're a business owner? Without a Durable Power of Attorney, no one is entitled to act on your behalf, unless they go to Probate Court and establish a costly, lengthy & public Conservatorship action.
Also, who could make medical decisions on your behalf if you were incapacitated? Too often, children argue over treatment options, and this is a burden they shouldn't carry when they're already emotionally upset. A comprehensive Health Care Proxy takes care of that problem.
If you're unmarried, but living with a partner, can your family kick them out of your home if you die? This issue is so relevant today, with so many unmarried couples living together, and gay couples who have no rights under Federal law. Special planning is needed to protect loved ones.
Last, if you or a family member might need Long-Term Care (assisted living, nursing home care, etc.) then you should look into planning early, to protect your assets.
I see families in crises all the time. Don't let life catch you unprepared; plan now, not next month or next year. You'll rest easy knowing you've protected your loved ones. No worries!
Best regards & Happy New Year!
To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer's particular circumstances.