To many people, Estate and Tax Planning seems a difficult and insurmountable task. Some assume that they don’t need to plan. Others are simply unaware of the significant perils and expenses that may face family members in the absence of proper planning. When false assumptions and misperceptions are cleared away, estate and tax planning may seem much easier.

Our office offers comprehensive Estate and Tax Planning services in the following areas:

• The Basic Estate Plan
• Advanced Estate and Gift Tax Planning
• Estate Administration & Post-Mortem Planning
• Income Tax Planning
• Planning for Retirement Distributions
• Tax Return Preparation
• Representation Before IRS and MA DOR

Every dollar you pay in taxes is a dollar that isn't available to spend on something else or save toward your goals.   Tax planning can show you how to take advantage of favorable provisions in the tax laws – and avoid pitfalls that could cost you unnecessary taxes. The tax rules are complex, and you will want to make sure that the strategies you use are right for your particular situation.

The Basic Estate Plan

Many of our clients' needs are satisfied with the Basic Estate Plan.   Whether you are a young couple with minor children, or reaching retirement and wish to avoid probate, the following legal instruments should be considered as vital components to your individualized estate plan.

• Last Will and Testament
• Revocable Living Trust
• Health Care Proxy with Living Will Provisions
• Durable Power of Attorney
• Declaration of Homestead

A Last Will is the heart of the estate plan.  The Will details how you want your property divided among your family and heirs.   It also names the Executor, the person who is to carry out your wishes, and the Guardian, the person you appoint to care for your minor children.

A Trust is created for a variety of different reasons, including caring for elderly parents and minor children, to avoid probate and maintain privacy, and for tax avoidance purposes.  

A Health Care Proxy and Power of Attorney allow for family members to lawfully make medical and financial decisions in the event that spouses or elderly parents are no longer able to do so.

Advanced Estate and Gift Tax Planning

Estate and Gift Taxes may be the least understood tax of all. Recent changes to the tax laws make planning in this area extremely complicated. Many families find out too late that the government is often the biggest beneficiary upon the death of a family member. Taxable estates above the effective estate tax exemption amounts are required to file estate tax returns and possibly pay taxes.

Estate and Gift Tax planning continues to be critical for individuals with larger estates.  Gifts during life will continue to be subject to Gift Taxes even after the repeal of the Estate Tax in 2010.

Before making any recommendations or taking any action, we analyze both the income and estate tax consequences.  We want to make sure that total taxation is minimized and that in accordance with your wishes, your children and heirs receive the maximum after-tax inheritance possible.  Sophisticated estate tax planning vehicles offered by this office include:

• Living Trusts with "AB" Marital/Credit Shelter Provisions
• Counsel regarding systematic Gifting Programs to Lessen Estate & Gift Taxes
• Irrevocable Trusts with "Crummy 5 & 5" Gifting Provisions
• Irrevocable Life Insurance Trusts
• Minor’s (College) Trusts
• Charitable Lead Trusts
• Charitable Remainder Trusts
• Creation of Private Tax-exempt Foundations

The new Roth IRA can also be a very effective Estate Tax Planning Tool. Because the Roth IRA is an income tax-free (as opposed to tax-deferred) vehicle and there are no requirements which mandate minimum distributions at any point, Roth IRA assets can continue to grow income tax-free even beyond the owner’s death. Therefore, for those who qualify, the Roth IRA offers a very special and unique opportunity for parents to provide for a lifetime of "tax-free benefits" for themselves and their heirs.

Estate Administration & Post-Mortem Planning

Avoidance of probate is generally a significant estate planning goal.   However, this is not always possible or practical.  The purpose of administration of your estate is to ensure that your wishes as defined in your Last Will are carried out by your Executor.  In addition, there are many planning alternatives and tax elections that need to be decided post-mortem.  Several of these include:

Should a spouse waive his or her rights under an unacceptable Last Will?
Should a beneficiary disclaim his or her interest in an estate for tax avoidance or other valid reasons?
Is ancillary probate in another jurisdiction necessary?
Is IRS Section 303 Stock Redemption for closely held business applicable?
Is IRS Section 2032 Alternative Valuation appropriate?
Is IRS Section 6166 Estate Tax Installment Payment Plan advisable?

Both Wills and Trusts are devices which you can use to provide for the distribution of your estate upon your death. Deciding whether a Will or a Trust best fits your needs depends on your circumstances. A living Trust is a popular alternative to the traditional Will, but you should weigh the advantages and disadvantages of each before deciding on one form or the other.

	Will	Living Trust
Probate	Subject to probate proceedings. Out -of-state property requires probate proceedings in that state, as well. Provides court supervision for handling beneficiary challenges and creditor disputes. Becomes public record at the time of your death.	Not subject to probate proceedings. Avoids the cost of a second-state probate proceeding where there is out-of-state property. No automatic court supervision to deal with disputes. Remains private.
Tax Savings	Same tax saving provisions available as are available in a Trust.
Management of your Assets	In addition to the Will, must use a Power of Attorney or Conservatorship to manage assets.	Allows you as the grantor to manage the Trust assets as long as you are willing and able. Makes provisions for a successor trustee to take over in your place.
Costs	Costs less to prepare a Will than a Trust. Cost to probate a Will can be substantial.	Costs more to prepare, fund and manage a Trust than to prepare a Will. But avoids probate costs if all assets were held by the Trust.

What does a Will do?

A Will is the legal document that allows you to distribute your property to those you choose. A Will allows you to designate beneficiaries to receive specific items from your estate, and other beneficiaries to receive everything else. For example, if you want your house, your car, or your antique thimble collection to go to a certain person or organization, you designate that person or organization as the beneficiary.
Who's going to make sure that your antique thimble collection goes to the proper person? The executor of your Will. The executor's the person you designate to carry out your wishes.

A Will also gives parents of minor children the chance to nominate a guardian. The court makes the final decision when appointing a guardian for your children after your death, but the court will usually accept your nomination. A guardian’s legal responsibility is to provide for your child’s physical welfare.

What does a Living Trust do?

A Will comes into play only after you die, but a living trust can actually start benefiting you while you are still alive. A living trust is a trust established during your lifetime. It is revocable, which allows for you to make changes. You will transfer substantially all of your property into your living trust during your lifetime, and any omitted assets can be transferred into the trust at the time of death through the use of a simple Pour-over Will. You should always make a Pour-over Will at the time that you establish your trust.

A living trust will be used as the mechanism to manage your property before and after your death, as well as provide how those assets, and the income earned by the trust, are distributed after your death. If you should become incapacitated or disabled, the trust is in place to manage your financial affairs, usually by a successor trustee, if you were serving as trustee. A living trust is not subject to probate, and therefore, all provisions of the trust will remain private.

Joint living trusts are also possible. They simply combine the assets of a husband and wife into a single trust, governed by a single trust document. However, if estate tax minimization is important, the joint living trust must be very carefully drafted with the help of an attorney in order to achieve the desired goals.

What happens if I don't have a Will or Living Trust?

The legal term for dying without a Will is dying intestate. If you do not specify through a valid Will or Living Trust who will receive your property, state law controls and generally distributes your property to your spouse and/or your closest heirs. This may or may not be what you intended. Furthermore, if you fail to nominate a guardian for your minor children, the state could appoint someone you don't trust as a legal guardian of your minor children. Finally, by failing to appoint someone to carry out your wishes, the state can appoint anyone to be the administrator of your property, and the administrator may have to pay certain fees or post a bond at the expense of your estate, before he or she can begin to distribute your assets.