Estate Planning is not just for the Elderly & the Wealthy

EAP Ask the Expert: Attorney Catherine Lundregan Oatway, expert in estate planning, probate and trust administration, Morisi & Oatway, PC

Estate Planning, (a legal process for organizing your affairs), is not something people tend to embrace. According to Care.com., 2 out of 3 Americans have no estate planning document. Why? There are different reasons, such as the fact that the process forces us to think about a taboo topic or to make difficult decisions. Some of the reluctance can be tied to a lack of understanding about estate planning and what it can accomplish. To say it’s just about having a will is an over-simplification.

Common myths are that estate planning is:

• Only for the wealthy
• Just for the elderly
• Only about financial assets
• Necessary only for after death planning

In this month’s feature, our expert, Attorney Catherine Oatway, debunks these myths, explains why estate planning is necessary for everyone over 18, and provides an introduction to the main components of an estate plan.* We focus primarily on estate planning in Massachusetts but many of the concepts are applicable in most states.

Why does Estate Planning Matter?

Estate planning allows you to control who will handle your financial affairs, dependents, and medical care during your life, (if you are unable to), and the distribution of your assets and care of your dependents after your death. If you don’t have an estate plan, someone else will make these important decisions for you and your goals and wishes may not be met.

 What is a Will?

A will is probably the term that most people associate with an estate plan. It serves to do the following things upon your death:

• Identify the agent who will handle your estate and distribute your assets.
• Indicate the beneficiaries who will receive your probate assets (things you own independently or in your name, without a designated beneficiary). Probate is the legal process for settling an estate.
  -Catherine strongly recommends creating detailed lists to indicate who will be the beneficiaries of your tangible personal property, such as furniture or jewelry. This tends to be an area that causes significant disagreement in the absence of specific instructions.
• Identify the guardian(s) for your children if they are minors when you die.

If you die without a will in Massachusetts, then the Commonwealth assigns a distribution order (for example spouse, children, parents, siblings) to dictate how your assets are distributed after your death. However, estate planning involves much more than making sure you have a will.

Financial Aspects of Estate Planning

An estate plan can help protect and manage your financial assets, both while you are alive (if you should become incapacitated), and after you die.  You may want to consult with a financial expert or an attorney to determine what type of plan makes sense for you and your family. Below, we review goals you should consider and the common tools used for the financial part of estate planning.

Goal 1: Designating Agents for your Affairs

One goal of estate planning is to make sure you have the right documents in place so that if you become incapacitated and are unable to manage your own finances, you have designated others to have the legal authority to manage your finances for you. The most common documents that allow you to do this are:

Trusts

There are many types of trusts, but they are all fiduciary arrangements that allow a third party, or trustee, to hold assets on behalf of beneficiaries. Catherine refers to a trust as “a better version of a will.” Trusts can:

• Be used when you are incapacitated.
• Limit the need for probate, allowing for quicker distribution of assets.
• Minimize Federal and State estate taxes.
  – If you die as resident of Massachusetts, if the value of your taxable estate is more that $1 million, then you may be subject to a MA estate tax on the full amount of your estate.
• Control how and when beneficiaries inherit your assets. As an example, you may not want an 18-year-old to receive all your assets at once. You may prefer to have an agent distribute the assets to ensure that they are used appropriately and last over time.

Durable Power of attorney

A durable power of attorney allows you to identify and give formal powers to someone to manage your finances for you if you are incapacitated without involving the probate court.

Planning for Pets

Providing for pets has become a part of estate planning. You may need assistance with your pets if you become incapacitated during your life, or after you die. Catherine recommends addressing pet care in a durable power of attorney or a trust (now legal in MA). This ensures that your agent will have the authority to provide for your pets.

Goal 2: Avoiding Probate

Another goal of estate planning is “avoiding probate,” to make sure you do not have to involve the probate court in the management of your affairs if you become incapacitated and/or when you die. You can accomplish this by having a trust, a durable power of attorney , and the health care documents referred to below.  You can also accomplish this by assigning designated beneficiaries to your insurance policies, retirement plans (401K/IRA), bank accounts, and some other assets.  You can usually get forms to name beneficiaries from the institutions where have your accounts so that when you die, those assets will pass directly to your beneficiaries outside of probate.

Goal 3: Long-term Care Planning

Consider how you will pay for long-term care (i.e. a nursing home, assisted living facility, or home health care). This can be a large expense and the goal should be to avoid using all of your savings to pay for care.

• Catherine recommends exploring the purchase of  long-term care insurance by sometime in your fifties.
•  Some people engage in Medicaid planning  ( type of estate planning) to address long-term care needs.

Healthcare Planning

While many people think only about financial assets in estate planning, Catherine explains that planning for healthcare issues may be even more important.

Why plan for healthcare needs?

• To ensure that your healthcare wishes are met if you become incapacitated (unable to make your own decisions about your care).
• To make it easier for your agents (family or friends) to have the knowledge to be able to carry out your wishes.
• To ensure that your agents can communicate with and get information from healthcare providers. Remember, being related to someone (even a parent of a child, if over 18) does not mean that providers can share information with you or include you in decision-making. In the absence of documentation of permissions, loved ones may have to go to probate court to secure a guardianship.

How can you ensure that your healthcare goals are met?

Catherine identifies several documents that everyone over 18 should have, in case they are needed. Choose agents carefully – who do you trust to handle your care and decisions? Those you trust to represent you should have the skill set to navigate the medical system and the emotional ability to step in for you. Here are the documents you should have:

•  A Health care proxy is a simple legal document that enables you to appoint someone to make healthcare decisions if you are incapacitated. You should choose one agent and at least one back-up agent. It’s a good idea to give a copy of the most current health care proxy to all agents and providers/healthcare systems. The most current one trumps all others.

• A HIPAA Release is a written form that authorizes your medical providers to share your protected medical information with people identified by you.

• An Advanced Directive is a document where you express your general wishes regarding what end-of-life care you do and do not want.

• A Molst Form, Massachusetts Medical Orders for Life-Sustaining Treatment (MOLST), is a medical form that you can complete with your doctor that allows you to indicate your specific instructions regarding many aspects of end-of-life care. In Massachusetts, patients with a serious advanced illness at any age, may discuss filling out a MOLST form with their clinician.

• Organ donation – You may want to make your choices known concerning organ donation, either on your driver’s license or in your health care proxy.

How often should you Revise your Estate Plan?

At a minimum, Catherine recommends doing an annual review to make sure your documents are updated and are still accomplishing your goals, and that the agents you identified are still able to assist in meeting your goals. Otherwise, you should review and update your estate plan, with the following life transitions:

• Marriage or divorce
• Having children
• Death of a beneficiary or agent
• Receiving a life-changing medical diagnosis
• Retirement
• Selling a home or business
• When you move – different states have different estate planning laws and procedures

Do you Need an Attorney for Estate Planning?

The answer is that “it depends.” You may be able to use self-service options for healthcare documents (health care proxy or HIPPAA release) or beneficiary designation forms. It’s a good idea to consult with an attorney around more complicated processes such as drafting a will or setting up a trust. MGB employees have access to a free legal consultation session and  MetLife services, for those who are eligible. Here are some other resources for finding an attorney.

In Summary – Planning is Caring

The thought of being unable to care for yourself or accepting the idea of “life after you” is hard for everyone involved. It’s natural to want to avoid thinking about this, let alone discussing this topic. Consider how this avoidance will serve to increase stress and create confusion and even conflict. If you take the time to make a plan, it might bring you peace of mind, to know that your wishes will be met and that you are helping your loved ones during difficult times.

• Make a solid, detailed, legally binding estate plan for when you may be incapacitated or after you die. A little time up front can save a lot of time later.
  – Consult with experts as needed.
  – Choose your agents wisely.
  – Make and maintain an inventory of your affairs.
  – Review your plan regularly.
• Don’t ignore healthcare planning.
• Plan for the arrangements (service, memorial) you desire.
• Modern times bring modern complexities, such as digital assets (devices, social media). Learn about and access legacy settings and make sure passwords and documents are available to your family and agents.
• Have a dialogue with your loved ones so they clearly understand your wishes/expectations of their roles and are informed about your assets and distribution plans.

Resources

• EAP Estate & Healthcare Planning Resources
• Legal Assistance 
• Calculators & Inventories
• Elder Fraud 

Help from the EAP

The EAP offers free and confidential services for employees and immediate household family members. EAP records are separate from medical and HR records. Contact the EAP at 866-724-4327 or request an appointment via our online form for confidential assistance. In-person appointments are available at the following locations. Phone or Video (Zoom) appointments are available from all locations.

*This article is not intended to provide legal advice. Each person and family should consider their unique goals and requirements for estate planning and consult with an attorney or financial expert as needed.