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Do You Know The 9 Different Taxes Your Estate Plan Should Protect Against?

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When it comes to estate planning, it is wise to have a good understanding of the main types of taxes your estate may be exposed to, and how to best plan to minimize your estate’s tax liability. The same strategy applies to those who expect to receive a large share of a loved one’s inheritance at some point in the future. Dealing with taxation matters when someone passes away can be stressful and overwhelming, so it is best to do your homework early so you can be prepared. Our estate planning law firm helps countless clients by customizing their estate planning strategies to reduce or avoid certain types of taxes — here are a few essential tips for anyone looking to do the same.

What is the Estate Tax ?

The IRS defines the estate tax as a “tax on your right to transfer property at your death”, and it consists of an “accounting of everything you own or have certain interests in at the date of death.” For 2021, the highest estate tax rate is 40%, but only estates valued at or above $11.70 million are required to pay federal estate taxes. It is important to point out that taxes are assessed only on the value of the estate that exceeds the 11.70 million threshold, meaning most estates in this country are unlikely to have to pay federal estate taxes. However, many states have their own estate taxation structure, so check the laws in your state residence, as well as each state in which you own real estate or personal property to see if you are required to pay state estate taxes.

Many of our clients must plan around Massachusetts estate taxes, even the clients who are residents of other states, like Florida. The estate of a Massachusetts resident is subject to the state estate tax if the total of the assets owned at death exceeds $1,000,000. While the tax rate is graduated, a quick rule of thumb to estimate the amount of estate tax liability is:

(Estimated estate value – $1,000,000) x 10% = estimated MA estate tax

Although the above equation is not precise it gives a reasonable estimate. For example, lets look at a single person who passes with an estate of $2,000,000. The decedent has an exemption of $1,000,000, leaving $1,000,000 subject to the tax. At 10% the tax would be estimated at $100,000. The actual tax is $99,600.

Residents of states other than Massachusetts may still face Massachusetts estate tax if they own Massachusetts real estate or own personal property located in Massachusetts. For example, a Florida resident who owns a summer home on Cape Cod will be subject to the Massachusetts estate tax. Let’s assume the Florida resident has an estate of $1,500,000 with Massachusetts real estate valued at $750,000. To estimate the tax of an out of state resident we need to calculate the following:

Step 1:
(Total Estate Size – $1,000,000)
x 10%
__________________________________ (equals)
MA Estate Tax on a MA Resident

Step 2:
MA Estate Tax on a MA Resident
x ((MA Real Estate Value + MA Personal Property Value)/Total Estate Size)
__________________________________ (equals)
MA Estate Tax on Out of State Resident

So for the example of the Florida resident with an estate size of $1,500,000 and MA Real estate worth $750,000 the tax estimate is as follows:

Step 1:
($1,500,000 – $1,000,000) x 10% = $50,000

Step 2:
$50,000 x ($750,000/$1,500,000) = $25,000

So we can see that the estimated MA estate tax for our Florida resident is $25,000. In actuality, the MA Estate Tax on the estate of a Florida resident in this example would be $32,200.

It is important to recognize that every person with assets located in states other than their state of residence must be sure that his or her estate plan considers the tax requirements not only of his/her state of residence, but also the tax laws of any state in which assets are owned – it doesn’t matter whether the asset owned is a second home, a time share or property co-owned with a friend or a sibling.

What is the Gift Tax?

The gift tax is defined as a tax on the transfer of property from one individual to another. This transfer results in the donor receiving nothing in return, or receiving a return that is less than the full value of what was transferred. Many property transfers may be counted as gifts, including money, assets, use of income generated by a property, and even a low-interest or interest-free loan. Many people are aware that there is an annual gift tax exclusion of $15,000. In other words, each person may give up to $15,000 to any other person. As of 2021, any person may make many gifts of up to $15,000, as long as no more than $15,000 is given to the same person. Any gift in excess of the annual exclusion will reduce the lifetime exemption. The IRS requires every taxpayer to file a tax return (Form 709) by April 15 of the following year to report gifts in excess of $15,000.

The code allows each person an amount they may give during one’s lifetime without having to pay a transfer tax. As of 2021 the lifetime gift tax exemption is $11.70 million – the same amount as the estate tax exemption. This means an individual can make gifts during their lifetime of up to 11.70 million without being subject to the gift tax. Anytime that a taxpayer makes a reportable gift (ie. over $15,000) the lifetime exemption is reduced as is the estate tax exemption.

How does the ordinary income tax and capital gains tax apply to my estate or my trust?

Certain assets in an estate may be subject to income tax. For example, if a decedent owned assets that generated income, such as rental properties, CDs, stocks, bonds, mutual funds, or savings accounts, and those assets generated more than $600 in income, then it will be necessary to file an estate income tax return. Similarly, if the decedent created a revocable trust, once the person who created the trust has passed away, the trust becomes irrevocable and it, too, will need to file an annual income tax return. Once these assets are transferred to an heir, that person will not need to pay income tax on the amount received, but any subsequent earnings generated by the inherited assets will be subject to income tax and must be included in that person’s yearly tax return.

Likewise, heirs may need to pay capital gains tax if selling any inherited property that may have appreciated in value. The capital gains tax is a tax that applies to the growth in value of investments at the time those assets are sold. For example, if someone inherits a house worth $200,000.00 and later sells it for $250,000.00, that person will need to pay capital gains tax on the $50,000.00 difference.

How does the Generation-Skipping Transfer tax work?

The Generation-Skipping Transfer Tax (or GSST) is a tax applicable to transfers of property (through gift or by inheritance) to a beneficiary who is at least 37 ½ years younger than the donor. It was designed as a way to stop donors from transferring large sums to their grandchildren without paying any taxes. The GSST has the same exemption threshold as the Estate and Gift taxes – 11.70 million. Any transfers above that threshold will likely be subject to the flat GSST rate of 40%, which leaves the vast majority of the estates in the country exempt from paying GSST.

Are there other taxes I need to keep in mind for my estate plans?

Yes, there are four other types of taxes you may want to know about. Not every estate will be subject to all of these taxes, but it is important to have an understanding of what they are and whether they may apply to your estate.

  • Net Investment Income Tax: a 3.8% surtax applicable to income earned from investments. Only the income that lies above the thresholds outlined by the IRS will be required to pay net investment income tax. Estates and most trusts are subject to this tax if the income of the estate or trust exceeds a very low threshold (as of 2021 the threshold is only $13,100). With proper planning this tax may often be eliminated.
  • State and Local taxes: As of 2021, 13 states in the U.S. levy estate taxes. When planning your estate, check if your state and local government require payment of any estate or inheritance taxes. Additionally, estates and trusts are subject to state income taxes – and sometimes there may be income tax liability in multiple states.
  • Business Income tax: if an estate includes assets (such as rental properties or a family business), it may be required to pay business income tax.
  • Payroll tax: in the case of a decedent that was employed and receiving paychecks, the final paycheck may or may not be subject to payroll taxes depending on whether it is issued in the same year or the following year following the death. Sometimes the estate or trust may have to pay payroll taxes too. For example, if the client has employed caretakers or home health workers, then payroll taxes will need to be paid.

As you can see, taxation rules pertaining to estates can be quite confusing. At Boyd & Boyd, P.C. our attorneys can help you understand these complexities and give you advice so you can employ the best strategies to reduce the amount of tax to which your estate may be subject. Contact us today for a free strategy session.

Filed Under: Estate Planning

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In Massachusetts, the wisest estate planning takes place when a Cape Cod estate & trust administration attorney guides you through the process of creating the legal documents that will make your wishes and instructions regarding your estate unmistakably clear after your death.

Determining how your assets and your property will be divided and distributed when the time comes is the most essential part of estate planning for most people. But if you have no obvious heirs, what should you do with your estate? What are your options and alternatives?

People who have the right to inherit are known as “heirs,” but you may have no spouse, children, or other heirs. Estate planning attorneys often work with unmarried and childless clients who have no idea what they should do with the assets and property that will be left behind.

What Does “Dying Intestate” Mean?

In Massachusetts, if you do not leave behind a will or an estate plan – in other words, if you die “intestate” – your estate will go through the probate process and will then be divided and distributed under the terms of the state’s intestacy laws.

When someone dies intestate, the spouse is the first person legally eligible to inherit. However, there are many instances where a surviving spouse will receive less than the entire estate, as most married couples would want. In fact, in many situations, the surviving spouse will inherit a little more than 50% of the estate. The balance will go to other relatives, based upon who survives the decedent.

To make matters worse, children of the decedent may receive almost 50% of the estate and if any of the children are minors there are additional complications and expenses. If there are no children of the decedent the remainder goes to other relatives in the order specified by Massachusetts law.

If there is no living spouse, the children inherit, and if there are no living children, the grandchildren inherit. If the decedent never had a spouse or children, the parents may become heirs, and then siblings, nieces, nephews, and cousins, etc.

Additionally, if you die intestate, whoever your heirs may be, they may have to pay inheritance taxes that could have been avoided with the right estate plan. A well written estate plan usually includes a trust that can minimize the taxes your loved ones may have to pay.

What Can Happen if You Have No Heirs?

If you have no living relatives, no will, and no estate plan, you will not have any control or say about what will happen to your property and assets after you’ve passed away. A court may even designate someone that you don’t know to administer your estate.

If you leave no will or estate plan behind, and if you have no living relatives, your property will eventually go to the state, but this seldom actually happens. If you have no obvious heirs, the law transfers your property to any living relative who can be found.

What is Probate?

Probate is a court proceeding. As a court proceeding, what goes through probate is generally a matter of public record – meaning the decedent’s personal, financial matters can be seen by anyone who asks. In Massachusetts, a probate court proceeding cannot be closed until at least one year after the date of death has passed.

However, most probates typically last about a year and a half. Because probate is a court proceeding, most families need the assistance of at least one attorney (and in some cases each family member may need his or her own separate attorney), and consequently probate can end up being expensive, with the costs associated with probate totaling to be around 5% of the estate size.

In the probate process, the decedent’s assets and property, which are owned individually, are identified, evaluated and appraised, remaining debts and estate taxes are paid, and what remains is distributed according to the decedent’s will (if a will was left) or according to Massachusetts intestacy laws. Probate can and should be avoided.

It ties up assets and property, often for months. During the probate process the assets going through probate are generally not available for the heirs to use. It can greatly reduce the value of your estate. Creating a living trust with the help of a Massachusetts estate planning attorney, so that your assets and property are owned by the trust and no longer probatable, is one way to avoid probate.

If you don’t have a spouse or children, it is still better to create an estate plan and name an heir than to let a Massachusetts court divide and distribute your estate. Faced with the question of what to do with their estates, people without heirs often name a charity to inherit an estate.

If you choose charitable giving, that may create some options that your estate planning attorney will need to explain to you in detail. Rather than naming a charity as a direct heir of your estate, you may instead want to consider creating a private foundation or a charitable remainder trust.

How Do Private Foundations Work?

Private foundations offer grants to charities. Usually, private foundations are created with a tax-deductible donation. The foundation is managed by directors or trustees. These directors or trustees are usually paid, and they oversee the foundation’s assets and properties.

How Do Charitable Remainder Trusts Work?

If you choose to give through a charitable remainder trust, an estate planning attorney will help guide you through the process. The Trustee you have named will then be in control of the trust. Your attorney will:

  1. Confirm that the organization you designate has IRS approval.
  2. Move into the charitable remainder trust the assets you’re donating to the trust.
  3. The Trustee will manage the trust during your lifetime, making distributions (typically to you and/or your spouse) of the specified amount for a fixed period of years or for the rest of the beneficiary’s lifetime.
  4. Designate the charity as the remainder beneficiary, to receive whatever may be left in the trust at the end of the term of years or after the death of the income or annuity beneficiary.

Whether you name a charity or some other party as your heir, you should review the estate plan after no more than five years – or sooner if changes have happened in your life or in your relationship with the party you’ve named as your heir.

Whether or not you have a spouse or children, no one can know what tomorrow will bring, so start the estate planning process promptly. Good estate planning requires work, time, and care, but the proper estate plan will give you control of what is yours – even after you’ve passed away.

What Else Should Be Part of Your Estate Plan?

Whether you name a charity or some other party as your heir, you should review the estate plan after no more than five years – or sooner if changes have happened in your life or in your relationship with the party you’ve named as your heir.

Whether or not you have a spouse or children, no one can know what tomorrow will bring, so start the estate planning process promptly. Good estate planning requires work, time, and care, but the proper estate plan will give you control of what is yours – even after you’ve passed away.

What Else Should Be Part of Your Estate Plan?

For those who have no spouse or other relatives, your estate plan also needs to designate someone to make decisions for you if you should become incapacitated. A Cape Cod estate planning lawyer will help you create one or more of these key legal documents:

  1. A Health Care Proxy (sometimes called a durable power of attorney for healthcare in other states) authorizes someone to make healthcare decisions for you if you cannot make those decisions by yourself. In some states a medical power of attorney is not recognized. In those states a living will is used to specify which life-prolonging treatments you will and will not receive if you are unable to articulate those preferences. A good estate plan will include both a Health Care Proxy and Living Will, even though Living Wills are not yet recognized by statute in Massachusetts.
  2. Similarly, a durable power of attorney for finances authorizes someone to handle your financial and legal affairs if you cannot manage those affairs by yourself.
  3. Revocable Trusts are often a better way to handle management of assets upon an incapacity because most financial institutions are very comfortable with trusts. Trusts allow you to retain control of your financial affairs until you are no longer able to manage things by yourself but may also be designed to allow you to continue to have a say in the management of your own financial affairs, even after you start to experience incapacity issues by using a co-trustee. Additionally, revocable trusts may help to keep your personal financial affairs private.

Take Control – With the Right Attorney’s Help

Probate and inheritance laws are difficult and often confusing. Nevertheless, the right Cape Cod estate planning attorney can provide reliable, sound guidance that lowers estate taxes, makes sure your instructions are honored when the time comes, and fully complies with Massachusetts law.

The estate planning process gives you control you otherwise do not have. The right Massachusetts estate planning lawyer can make that process easier. And once again – it can’t be stressed strongly enough – no one knows the future, so the time to plan your estate is now.

Filed Under: Estate Planning

Power of Attorney Documents Provided by Knowledgeable Lawyers in Cape Cod

A Power of Attorney is a legal document giving one person (referred to as the agent) the power and permission to act for another person (referred to as the principal). The agent can make decisions on behalf of the principal in case of disability, illness, or any sort of incapacitation as certified by a physician.

The authority awarded to the agent can be either broad or limited as defined in the document, and it can be used to make legal decisions on the principal’s behalf in areas such as medical care, finances, and property. A Power of Attorney can begin immediately after the document is signed, or upon a certain event such as when the principal is deemed incapacitated by a doctor.

What are The Different Types of Power of Attorney Documents Available?

A Power of Attorney is a tool often considered when planning for long-term care. They can be classified under two different categories – general and limited. A General Power of Attorney allows the agent to act on behalf of the principal in any and all matters allowed by the state. That includes handling bank accounts, signing checks, and selling property and other assets including stocks, as well as filing taxes, to name a few examples.

A Limited Power of Attorney gives the agent authority to act on behalf of the principal in specified events or matters, or for a specific period of time. As an example, this type of Power of Attorney may allow the agent to handle the principal’s retirement accounts, but does not allow him or her to represent the principal in any other matter. It can also allow the agent to act on behalf of a person while he or she is travelling abroad, and it becomes invalid upon that person’s return to the country.

These two main types of Power of Attorney (POA) are only valid while the principal is in good mental health and not incapacitated. If the principal becomes mentally or physically unable to make decisions for medical reasons, the POA would end unless the principal has signed an additional agreement called DPOA or Durable Power Of Attorney, which will remain in effect after the person’s health deteriorates.

What are The Main Types of Durable Power Of Attorney Agreements?

There are a few different types of DPOAs depending on the desired purpose for them. In general terms, an agent with Durable Power of Attorney is able to continue making decisions on the principal’s behalf in certain property, legal, and financial matters even after the principal’s health deteriorates. Those decisions are spelled out and defined in the agreement. However, this type of DPOA does not allow the agent to make health-related decisions (such as removing the principal from life support, for example).

In order for an agent to be able to make healthcare decisions, he or she must have a Health Care Power Of Attorney (HCPA). This document grants the agent consent to make health-related decisions on behalf of the principal in case of an unfortunate event. This type of Power of Attorney makes the agent legally bound to oversee medical care for the principal.

There is also a third commonly used agreement called Financial Power of Attorney. It allows the agent to handle business and financial affairs for the principal, granting him or her authority to sign checks, file tax returns and deposit Social Security checks. It is used in the event that the principal becomes physically or mentally unable to manage his or her finances on their own.

In any of these, a legal document called springing power of attorney is what contains the conditions defining when a DPOA needs to become active. A springing power of attorney defines the type of event and level of incapacitation that would activate the DPOA, which would otherwise remain inactive up to that point.

Generally speaking, having a Power of Attorney document is important, especially for those who do not have a trust in place, have a chronic condition expected to progress negatively, or simply want to make sure someone will care for their financial and personal affairs once they become incapacitated to do so.

How Can I Know Which Type of POA is Right For Me?

While there are many sources to obtain this type of document on the internet, only a qualified professional would be able to advise you on which POA is right for you, and to craft it according to state requirements. At Boyd & Boyd, we have a team of knowledgeable estate planning attorneys ready to help you with your estate planning and long-term care planning.

Call us at (508) 775-7800 and request to book a free initial estate planning consultation. We are here to help!

Family Limited Partnership Lawyers Providing Knowledgeable Advice in Cape Cod and Throughout Southeastern Massachusetts

A Family Limited Partnership (or FLP), as the name says, is a partnership among family members that allows joint ownership of family-owned assets. It is a more sophisticated real estate planning tool often used in conjunction with an Irrevocable Life Insurance Trust. This tool is often used by families with significant assets, as it may prove to be useful for wealth preservation by allowing the family to protect assets, minimize taxation, and plan their estate. An FLP can have a combination of General Partners and Limited Partners.

A properly executed FLP may protect families from creditors and reduce or eliminate gift and estate taxes while still remaining flexible, giving the family the ability to make changes or updates to it anytime. Family Limited Partnerships typically require more administrative compliance than other alternatives, but also offer a number of benefits that often outweigh the work associated with it.

What are The Benefits Of Starting an FLP?

An FLP allows individuals to consolidate family assets and may lead to significant operational cost advantages. It can also reduce the taxable estate of older family members by enabling them to transfer property to their children, thus removing it from their estates and shielding it from federal estate taxes without giving up control or the ability to make decisions related to their property.

Another noteworthy benefit is the ability to simplify annual giving by the patriarch or matriarch and avoid gift taxes, due to the fact that FLPs qualify for the gift tax exclusion. This can result in tax savings for the family. Additionally, a properly-drafted FLP can help protect assets from creditors. Creditors cannot force distributions, vote, or own a limited partner’s interest without an approval from the general partners.

Another benefit of having an FLP is that it protects and preserves the family estate by keeping assets and properties in the family in the case of a divorce. If a limited partner gets a divorce, he or she is no longer part of the family unit, and the partnership can mandate that any property be transferred back to the FLP at a fair market value.

Who Should Consider Forming an FLP?

Individuals in their fifties, sixties, or seventies with many assets and/or a net worth of $2 million or more may want to consider the option of forming an FLP. This is also a useful option for families with significant real estate assets, because it allows the donor to avoid subsidiary probates by making gifts of real estate destined to a state where the donor does not live.

Due to the complexities of forming a Family Limited Partnership, it is recommended that those who are interested in this option begin planning for it early in life. It is worth mentioning that an FLP works best as an estate planning tool for those who have a sufficient amount of non-personal assets (such as investment properties and securities) to be transferred into the partnership. Because the FLP is technically a business, you cannot transfer personal assets into it without jeopardizing the ability to use the annual gift tax exclusion for property transfers to your heirs.

How Does an FLP Differ From an LLC or a Trust?

Both an FLP and an LLC are considered businesses, but an FLP is structured to take advantage of the IRS gift tax exemption on annual gifts to members of the family in the partnership. The IRS considers FLPs a pass-through entity when it comes to income taxes; in other words, it does not recognize an FLP as a taxpayer, and income from the FLP passes through to the partners.

A Trust is a completely different type of legal arrangement. It is not considered a business, but simply a vehicle set up to hold property for the benefit of the trustmaker’s beneficiaries. Individuals may place assets in a trust and pre-determine when and how they will be distributed, usually after the trustmaker’s death.

How Do I Know If an FLP is Right For Me?

Family Limited Partnerships can be quite complex to set up and manage, and they require extensive planning and research to ensure it will serve the purpose you envisioned for it. Seeking advice from an experienced professional is fundamental to make sure the FLP is the right choice for you and to become fully informed about what it takes to set up and run this type of legal entity. At Boyd & Boyd, our legal team of knowledgeable estate planning attorneys is ready to serve you and your family with all your estate planning needs.

Call our Law Firm at (508) 775-7800 and request a free initial estate planning consultation to learn more.

Cape Cod Attorneys Providing Estate Settlement Advice in Southeastern Massachusetts

After taking care of immediate needs such as communicating with family and friends about the death and making funeral arrangements, as an executor, you should communicate the death to agencies and businesses such as attorneys, accountants, banks, the post office, utility companies, credit card companies, and anywhere else the deceased person had an account or conducted business.

The next thing you will want to do is to find the deceased person’s will by searching his or her home and office. In case a will is nonexistent, the property will need to pass through intestate succession. If you do find a will, then you must file it with the local probate court even if you anticipate that a formal probate will not be needed.

After that, you will need to inventory the assets and get proper appraisals. This step will be instrumental in helping you determine how assets will be divided among beneficiaries and find out if the estate will owe any state or federal estate taxes. Having a complete inventory is a required step for probate. You will also want to determine if a formal probate process is required, or if the estate can be settled through informal probate.

In some cases, you will need to liquidate or sell some of the assets. This usually happens when the estate is deemed insolvent (with more debts than assets) or when the decedent died without a will. It also applies for when the deceased person had a lot of personal property not directly addressed in the will that needs to be disposed of.

What Should I Do Before Distributing Property? What About Debts?

After making a complete inventory of the decedent’s assets, you will need to determine if he or she owed any debts. Debtors are required to contact the estate and inform that they believe money is owed. State probate laws determine in which order the creditors will get repaid, and in the case of an insolvent estate, creditors may not receive full payment or any payment at all. You will also want to file income tax returns for the deceased person as well as for the estate if it has a valuation of over $5 million dollars.

All debts and taxes should come off the estate funds, and you do not need to repay debts out of your own pocket. If you don’t believe the estate will have enough funds to cover all debts, get guidance from the court or from an estate planning attorney.

It is also important to keep beneficiaries informed and notified along the process. Beneficiaries can grow unhappy or become suspicious of wrongdoing if there is a lack of communication from the executor, or if the executor fails to notify them about important steps such as selling real estate. If a beneficiary believes an executor is incompetent or is not acting honestly, he or she may go to court to try and have that person removed.

Once all estate debts are repaid, you may begin distributing property among beneficiaries. If the deceased person left both a will and a living trust, you will need to work closely with the successor trustee (the person in charge of trust assets). Any property in a trust can go directly to beneficiaries and does not require the use of a probate court.

How Can I Learn More And Get Help?

Bearing the responsibility of an executor while grieving the loss of your loved one is quite challenging for anyone. Strategic planning ahead of time might really help you in the process. In the case of a loved one with a will, as soon as you are informed by him or her that you have been chosen as the estate executor, you may want to start doing research and learning what it all entails so you are better prepared when the time comes.

The legal team at Boyd & Boyd has helped many clients walk through the process of being an executor and settling their loved one’s estate while avoiding headaches and unwanted surprises. We have a deep understanding of Massachusetts Probate Laws and can help you fully understand your responsibilities as an executor and assist you in taking the steps required to ensure your loved one’s estate is cared for and properly handed down to the next generation.

Call our Law Firm at (508) 775-7800 and request a free initial estate planning consultation to get attorney’s help with your Estate Settlement needs.

Elder Law Attorneys Providing Compassionate Services in Cape Cod

Elder Law is a subspecialty of Estate Planning in which attorneys focus on helping clients make plans for retirement, long term care, incapacity planning, and other legal issues specifically for seniors and people with disabilities. Elder Law attorneys deal with the needs of older adults, handling estate and financial matters as well as day-to-day matters such as assisted living, Medicare and Medicaid benefits, and life planning.

While estate planning is important so that your family will be taken care of after you die, many of us are living well into our retirement years. That means you also need a plan for the latter years of your life, when you might need to have the means to pay for assisted living or long-term care arrangements, and need to have peace of mind knowing you and your assets will be taken care of in case you become incapacitated. An Elder Law attorney can help you handle all important aspects related to aging, including legal issues related to seniors and disabled individuals.

How Can An Elder Law Attorney Help Me?

An Elder Law Attorney can provide services and guidance for a variety of aspects related to aging. From assisting with estate planning, wills, trusts, and asset protection to guiding clients through health care planning, long-term care planning, financial representation, guardianship, and assisted living, an Elder Law Attorney’s main focus is on the needs and challenges that come with aging.

The rising cost of long-term care at a nursing facility can quickly deplete your life savings without proper planning. For that reason, it is fundamental to plan ahead to not only protect and preserve your assets and wealth for the next generation, but also to ensure you can live your latter years in life comfortably without any unexpected financial burdens. A knowledgeable Elder Law Attorney can help you and guide you through all the steps you need to take in order to have such arrangements in place.

What is Long-Term Care Planning and Why Do I Need It?

Long-term care planning is essential for most people who anticipate living into their latter years and want to have the right provisions in place to live comfortably and receive the care they require without depleting their savings or affecting their ability to pass on wealth to their spouse or next generation when the time comes. Focusing on health care and finances, strategic plans for this phase of life can save you and your family many headaches.

For many, the main concern is having the means to pay for long-term care or nursing home care. This requires many decisions, such as opting for either in-home care or nursing home care and calculating the costs of amenities such as a private room in the nursing home of your choice versus other alternatives. While Medicare covers some health care costs for individuals 65 and older, it does not cover long term care, rehabilitation, or assisted living fees. In order to receive help, an individual must qualify for Medicaid, which might be a complex and hard-to-navigate process.

The most common problem is that many people don’t like to think about such aspects, and they end up waiting to make plans until much later. Early planning is key to ensure you will have the financial means to receive the care you prefer without draining your life savings. Consulting a professional is highly recommended if you are unsure of where to begin. An estate planning attorney with knowledge in the area of Elder Law can help you walk through every step needed to have a long-term care plan in place that will protect you, your assets, and your family.

What is Incapacity Planning?

Besides aging, another concern is becoming mentally incapacitated due to an injury or illness. In a situation which would render someone incapable of making financial decisions, having the proper plans and measures in place is fundamental in order to protect your finances and well-being. Without a comprehensive incapacity plan in place, a judge might end up appointing someone to take care of your financial matters and make all medical and personal decisions on your behalf. This often results in loss of time and money. In this situation, families may not regain control of the situation until you recover or pass away.

An Incapacity Plan usually includes a few foundational legal documents for managing finances. Those usually include a Financial Power of Attorney and a Revocable Living Trust. Such documents must be in place ahead of time while the individual is still mentally fit to sign documents and make decisions. You should also consider adding health-related documents such as a Living Will, a Medical Power of Attorney, and a HIPAA authorization.

At Boyd & Boyd, we have been helping families plan for the future for many generations, and have the knowledge to help you and your family understand your options and craft a complete long-term care plan that includes measures to protect your assets and ensure you receive the care you wish to receive when you age or become incapacitated.

Call us at (508) 775-7800 and request a free initial estate planning consultation to learn more. We are here to help.