Estate Planning is intended to cover four basic parts of planning your estate: Lifetime needs, your will, trusts, and estate taxes.

Lifetime Needs
We will review how to protect you and your family from adversity while you are living in the form of power of attorney, health care proxy and standby guardianship (if you have minor children).  We will also review the Massachusetts Homestead Exemption, to be sure that you understand the advantages of declaring a homestead (in case you have not already done so).

• Power of Attorney grants another person power to make financial and legal decisions for you if you are incapacitated or unable to conduct your affairs for other reasons.
• Health Care Proxy gives another person the ability to make decisions concerning your health care, such as surgery and treatment during an illness, or life and death decisions in the event you are ever terminally ill, when you cannot make these decisions for yourself.
• When you sign a Standby Guardianship, you are appointing a temporary guardian for your minor children.  The Standby Guardian is able to step in and make decisions for your children's care in the event that you are sick, traveling, or otherwise unable to care for your child for a short period of time.  The Standby Guardianship avoids having to go to Court to appoint a permanent guardian for up to ninety days.
• The state of Massachusetts allows you to declare a Homestead, which exempts your property from the claims of creditors trying to collect a judgment against you.  You may claim this exemption for the first $500,000 of equity in the property.  In Massachusetts, this declaration must be in writing, unlike some states where it is automatic.  Only one owner in each household signs the homestead declaration, but it is for the benefit of the household.  (The exemption may be claimed by married and unmarried persons.)  We usually prepare the form for whoever is first on the title to the property or whoever is the borrower in a mortgage transaction.

Your Will
Your will states who will receive your estate, what amounts or proportions they will receive, and when they will receive it.

• For example, although you may want your children to receive your estate in equal shares, you might want to direct that they receive it in stages until a mature age, like 25, 30 or 35 while having access to the funds for their support.
• Your will also appoints an executor, who is in charge of wrapping up your affairs, and persons who are in charge of any long-term responsibilities, such as guardian for your children and trustee over any money or property that is left for the children.
• Without a will, state law decides who gets what in your estate, and who is in charge of your estate or children will be up for grabs.
• Your will must be probated, in other words, approved by the Probate Court following your death, with formal inventory of assets and accounting.

Trusts
There are many types of trusts, but all are intended to avoid the public, lengthy and expensive probate of the will.  For this reason, trusts do many of the same things that wills do (stating who is in charge of your affairs, who gets what, and so on), but they do these functions more efficiently.  All trusts are sometimes known as living trusts simply because you establish them while you are living and generally place assets under trust ownership during your lifetime.

• The most common functions of Living Trusts are avoiding Probate, minimizing estate transfer costs, and minimizing Estate Taxes.

Living Trusts may also be needed:

• To manage your affairs when you are incapacitated.  The trust is preferred over power of attorney for taking care of your financial affairs.
• To make effective gifts to minor or disabled persons, and
• To protect assets from being taken by creditors, such as for long-term care costs.
• Having a Living Trust usually does not complicate your life in any way because most trusts fall under your Social Security Number and you often reserve the right to change the trust terms which is actually somewhat easier than changing your will.

Estate Taxes

• Estate taxes are the taxes imposed by the federal and stategovernments on the amount of assets you have at the timeof your death, including cash, investments, business interests, retirement accounts and life insurance.  The taxes are imposed on the estate, not directly on the persons receiving the inheritance, which is why they are called estate taxes, not inheritance taxes.
• The estate of every person dying in the US in 2006 is entitled to pass the first $2.0m free from taxes at the federal level and the first $1.0m free from taxes at the state level.  These estate tax exemptions are on a use it or lose it basis, so one goal of good estate planning is to be sure the exemption is used or preserved.  Poor planning may result in loss of the exemption.
• If you are married, the exemption must be used when the first of you and your spouse die and not simply pass the exempt amount on to your spouse.  A trust is used to make sure your spouse still has access to the exemption amount, however.
• Each estate is also allowed a deduction for assets passing to your spouse if you are married.  There are many ways to qualify for this deduction and it is important to ensure that your estate will meet the requirements.
• If you are not married or are married but have the potential for a large estate ($2m or more), then the taxes may be minimized by other techniques, such as sheltering all of your life insurance from taxation, and lowering the value of assets on paper, by trusts and legal entities, such as limited partnerships.