Some people believe that only the very wealthy need to bother with estate planning. However, estate planning is more than just an effort to minimize the taxes that heirs pay on large inheritances. Everyone needs an estate plan, and Massachusetts residents should understand the basic elements an estate plan should include.
Why Does Everyone Need an Estate Plan?
Estate plans do more than just distribute assets, which is why all adults need estate plans. Once a person turns 18 years old, he or she should create a basic estate plan. As a person ages and acquires more assets, the plan will become more complex. When young adults move away from home for the first time, such as when they go away to college, their parents no longer have access to their medical records and are not authorized to make medical decisions for their children in the event of an emergency. Estate planning documents can name individuals authorized to act on a person’s behalf in the event a person is unable to do so on his or her own.
Parents of minor children also need estate plans naming guardians of their children in the event that the parents both pass away. Business owners can also use estate planning documents to address business succession issues.
Many people have more assets than they realize, such as houses, life insurance policies, retirement savings accounts and other investments. Creating estate plans ensures that people can choose whom they want to receive their possessions, rather than allowing the intestacy laws to determine who inherits. Estate plans can also eliminate fights among surviving relatives over who gets what.
What Should Be in an Estate Plan?
Some estate plans are more complicated than others, but all Massachusetts estate plans should have some basic documents:
- Will: A last will and testament can provide directions for distributing assets after a person passes away. Additionally, parents can name guardians for minor children in their wills.
- Health Care Proxy: A health care proxy appoints another individual to make decisions about medical care in the event a person is temporarily or permanently incapacitated.
- Living Will: A living will gives directions about a person’s wishes for the extent of medical care he or she wishes to receive and life-ending decisions.
- Power of Attorney: A power of attorney gives another individual authority to handle financial matters for a person in the event that he or she becomes unable to do so.
How Does a Person Create an Estate Plan?
Estate planning is a highly individualized process that varies based on each person’s needs and desires. The best way for a person to make an estate plan is to consult an experienced estate planning attorney who can discuss the individual’s circumstances and advise him or her on the best way to achieve his or her objectives.