Home Sweet Home!
Thinking of deeding the family homestead to the next generation as a quick and easy way to beat the tax man, avoid probate or save the property from nursing home bills? Think again, and read more here.
There is a gravestone in Boston that reads simply, "I told you I was sick."
When the time comes, may I stare my own mortality in the eye with a trace of humor. Over the course of my career, I have noticed a change in the attitude that many of us take toward our mortality.
When I first started practicing law in Littleton 43 years ago, estate planning was a tool used only by my wealthier clients. For many practitioners, estate planning was really another term for estate tax planning for those rich enough to warrant it. Ordinary people simply wanted a will. And for some, meeting with a lawyer to prepare one was an upsetting, emotional experience.
The
increased exemptions (now effectively $5.25 million per person this year, indexed for
inflation in the future) and the unlimited marital deduction under the federal
estate tax, as well as the repeal of New
Hampshire's legacy and succession tax, have all reduced or removed death taxes
as a consideration for most everyone. This is graphically depicted on the
map to right; look at tax-free New Hampshire standing out in the
Northeast!
But these days the process of aging and dying, and planning for these eventualities, receive much more attention than they used to, and even a person of ordinary means has a need for an "estate plan."
Nearly 50 years ago a non-lawyer named Norman Dacey wrote a book entitled "How To Avoid Probate." It was regarded as sacrilege by many lawyers, but the revocable trust or living trust that he espoused has become a popular device. If properly funded it can be a useful tool for avoiding probate which is often, but not always, a good objective. Avoiding the probate process can save heirs some time and money and also affords some privacy, rather than dealing with all the probate filings and having the administration of one's estate spread upon the public records for the curious to check out. The revocable trust also can be helpful in case of a long trip, a debilitating illness or incompetence, when the alternate trustee can step in and take care of things for you in much the same manner as he or she might under a durable power of attorney.
But establishing the trust involves a larger expenditure now, and some estates may be better administered under the watchful eye of the probate judge. Failure to fund the trust properly, or failure to administer it faithfully can undo some of the advantages. And for some people it is confusing to find that their assets belong not to them, but to a new legal entity even if they have full control over it.
Whether a revocable trust fits into your plan or not, virtually everyone should consider at least a basic estate plan consisting of:
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A will. |
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A durable general power of attorney. |
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A durable health care power of attorney (sometimes called a health proxy). |
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A living will. |
And the revocable trust should at least be understood as an option and considered in most cases.
The living will and the health care power of attorney are forms created and combined by statute in a so-called "advance directive," requiring a few boxes to be checked and blanks to be filled in to reflect your particular preferences, but these must be executed properly. Most hospitals and some physicians' offices provide these to their patients. If you have these "terminal care documents" prepared and signed elsewhere, it is still a good idea to have them looked over as part of your estate plan.
The estate plan is not complete unless all assets are reviewed to be sure that it is understood how title is held to each and how, if at all, the estate plan will work with respect to those assets. And the beneficiary provisions in life insurance policies, IRA's and pensions should be reviewed to be sure that these will function as intended.
I enjoy this sort of work because it is
about as close as we come to the general physical exam that we all should get
from our doctor every couple of years. It may not be necessary to get a
"legal checkup" so often, and your legal checkup should not be as
uncomfortable as your medical exam might be, but your estate plan
ought to be
reviewed from time to time, especially whenever there is some significant change
in your circumstances; e.g., an inheritance, retirement, change of
residence, a change in the character of your assets, marriage or divorce, a new child born or adopted, children coming of
age and getting married (or divorced), grandchildren being born or adopted,
hitting the Powerball, etc.
I would be happy to assist you with planning your estate. If you choose to engage me for this, it is helpful if you gather together documentation of your assets and how they are held (copies of deeds, account statements, bills of sale for significant assets, life insurance policies, beneficiary designations, etc.), and e-mail me or bring to our initial meeting a list of the names and addresses of those persons who are likely to be referred to in your estate plan, including yourselves, all children and grandchildren (even those to whom you intend to leave nothing), other objects of your generosity, and any persons you might ask to serve as fiduciaries (executor, trustee, guardian of your underage children, and holders of your general and health care powers of attorney).
This is an area in which it is very easy to procrastinate. Ultimately, no matter how objective we may be in facing the facts of our own mortality, there are simply a lot of other things that are either more pressing or more fun to think about. But you can derive some relief from tackling this task head-on, getting organized and getting a plan in place. If I can help, I hope you will contact me.