We are certainly living in an unprecedented time. Just turning on the news broadcast invokes a sense of panic and uncertainty. While there are numerous concerns during the COVID-19 public health emergency, there is one thing that individuals and families can do as a practical measure to address these concerns: we should all consider updating our estate plans.
We have heard from many of our clients in the past few weeks with questions. Below I outline the practical questions that you should consider in the wake of the current uncertainty. Many of us are home with our families more now than ever before. Now is a good time to communicate with your loved ones about your wishes and ensure that your estate plan aligns with your values. Beyond the practical benefits, updating your estate plan can be empowering and give you peace of mind in the face of so many unknowns.
Who will make medical decisions for me if I am not able to communicate my wishes?
A Health Care Proxy, HIPAA Authorization, and Living Will work together to make your health care wishes known, should you become incapacitated. They allow designated loved ones to make decisions in accordance with your wishes and allows health care providers to share your private health care information with your specified family members. These documents help remove numerous roadblocks that may lay between your family and your care in the health care system.
What will happen if I’m unable to manage my own finances due to illness?
A Durable Power of Attorney names a trusted individual to make financial decisions on your behalf if you are incapacitated. This authority can include paying your bills, managing investments, and even operating businesses. Having a Durable Power of Attorney in place can help to prevent an illness, temporary or otherwise, from destroying your wealth or stranding your loved ones financially.
What will happen to my minor children if I pass away?
A Will enables you to name the guardians and conservators that you would like to take care of your minor children, should you pass away. If you were to die without a Will, the Commonweath of Massachusetts’ default rules for guardianship of minors would apply. The care of your children is too meaningful to leave up to default statutes. Having a Will in place empowers you to make the best decision in your own judgment and gives you peace of mind knowing that your children will be well cared for.
How will my estate be administered after my death?
Many people also think of a Will as the document that controls how a person’s property is distributed upon their death. Historically speaking, Wills have served this purpose, but using a Will in this way requires an antiquated and extremely slow process through the Probate Court.
When a family chooses a Will rather than a Trust to administer their estate, many are surprised to learn that even though they have an executed Will in which they express their intentions for distribution of their assets to family members and charities, they will still need to enter the time-consuming and expensive probate process in which a court oversees the administration of the Will.
The probate of an estate that only has a Will is inherently going to involve a delay in getting a person – formerly known as an Executor – appointed as “Personal Representative.” This delay, which historically takes around 90 days (and the delays are only expected to get a lot worse in the wake of all of the Probate Court closures as a result of the current COVID-19 public health emergency) may cause frustration and financial hardship for loved ones who in the interim are often left paying the expenses for real estate and funeral costs from personal funds. Until the formal appointment of a Personal Representative, no one is authorized to access the decedent’s financial assets during this probate period. In addition, creditors have a one-year statute of limitations to bring a claim against an estate, and even if there are no creditors, the court will not issue a complete settlement until the expiration of this one-year period.
All this delay, inconvenience, and expense can be avoided by having our office prepare a Trust for you and your loved ones. I like to describe a Trust as an empty bucket into which you can place all of your assets. This is done by simply changing the ownership of assets to the name of the Trust. Your Trust is amendable, which means the simple process of drafting an amendment enables you to change parts of the Trust without having to redraft the entire estate plan. As Trustee of the Trust, you retain complete control over the Trust during your lifetime. After your death this authority is passed on to your Successor Trustee.
Trusts serve an important function while you are healthy and able to make decisions as well as during times when you may be unable to do so due to reasons such as physical or mental illness. Language in the Trust provides for this situation by naming someone to serve as Successor Trustee. The role of the Successor Trustee is to act in a fiduciary capacity on your behalf. As you are still the beneficiary of the Trust while you are alive, he or she is thus given the power to use funds for home care and living expenses without the need for permission from Probate Court. This simple measure circumvents the lengthy and arduous process of having the court appoint a conservator or guardian, as these decisions and responsibilities are already provided for by the Trust.
On your death, the Trust is administered in the same way as a Will with one significant difference. As I have stated above, the Probate Court oversees the administration of a Will, while a Trust passes outside of this lengthy probate process, which can save considerable time and money. The Successor Trustee can simply direct banks and investment companies to close out accounts as necessary – without the need for court approval. Similarly, when the Estate’s property is held in Trust, the sale of real estate is significantly expedited. After your death, the Trustee can simply engage a Real-Estate Broker to market the property for sale. Once there is a satisfactory Buyer, your Successor Trustee is the person to attend the closing and sign the deed transferring the property. There is no requirement that the court be involved in this process in any manner.
Let us take the current uncertainty, to spend this time thinking about these important decisions and to control what happens to you and your loved ones if you are incapacitated as well as what happens to your assets at your passing. If we can assist you with this, please do not hesitate to contact my office and I would be happy to discuss during a no-fee consultation regarding the details of administering your estate by way of a Trust.