3 Reasons to Work with an Estate Planning Attorney

Death is not a topic anyone wants to discuss, let alone even think about. To be sure, I count myself among those ranks. However, regardless of our feelings on the matter, it is important that we have our estate in order, God forbid something unexpected should happen to any of us. 

Estate planning is critical to ensuring that your assets upon your death are distributed in accordance with your wishes, and that they are distributed in the most financially fruitful way possible. 

Estate Planning and Real Estate 

The term “estate” in this context is not too different from the term “estate” in the context of real estate: 

• In real estate, “estate” refers to a piece of land and the property on it. It can also describe the degree of ownership someone has in a property.

• In the estate planning context, “estate” refers to everything a person owns at the time of their death, including real estate, bank accounts, investments, personal property, and other assets.

Putting our estate in order means working with a trusted estate attorney to ensure all of your property (i.e. not just your real estate) is transferred and managed according to your wishes. 

If we do not have our affairs in order, unexpected demise adds a tremendous amount of stress to our families on top of what is already a tragedy in your death or incapacitation. For example, without a will or properly deeded ownership of personal and real property, your family will have to go through probate court. From my real estate experience, sadly, I know just how frustrating and time consuming a process this can be, and I can say confidently it is not something you ever want your family to have to go through.

Listen, I know that when we’re dead we’re not going to think about the money we left to our heirs, but the goal with all of this is to not make their lives any harder then they already need to be. That means quick and painless distribution of your assets in the most tax efficient and financially-fruitful way possible. 

Your work with an experienced estate planning attorney will accomplish just that. 

Here are the three most important reasons you should consider getting your affairs in order now. 

1. Avoiding Probate

   
   

Probate is the legal process of settling a deceased person’s estate, ensuring that their debts are paid and their assets are distributed according to their will. In the case of the deceased person not having a will, then their assets will be distributed according to the state’s laws. 

Probate court in Massachusetts for deceased persons dying “intestate”, meaning they do not have a will, can take 9-18 months, but can last longer if disputes arise. It is also expensive - costs include court filing fees, attorney fees, personal representative fees, and appraisal and administrative fees. It creates challenges for your family as well:

• Delays and costs - the lack of clear instructions by way of a will leads to longer probate and higher expenses

• Family disputes - without a will, relatives might fight over who should inherit what, and since no one has written instructions as to your wishes, this is likely to devolve into a nasty battle of he said she said

• Loss of control - the deceased’s wishes remain unknown, and the court follows strict inheritance laws

Simplifying probate matters, or avoiding them entirely, is something an estate planning attorney can help you out with. Some such strategies include:

• Having a valid will that is written with an estate attorney - This makes your instructions clear. And while your heirs may not avoid probate because you have a valid will, it will surely speed up and simplify the process.

• Revocable living trusts - Property held in a trust can be transferred to beneficiaries without going through probate. This is another area where an estate attorney can help you.

• Joint ownership with right of survivorship - If you bought a house with your now spouse and you were married, engaged, or planned to be married when you purchased it, it’s possible that your closing attorney already took care of this for you. If the property is just in your name, however, then without a will, the probate court will distribute your assets according to the state’s laws. If you do have joint ownership with right of survivorship, the question then is what if something happens to you and your joint owner? How would you want your assets distributed? 

• Beneficiary designations - Assets like retirement accounts and life insurance policies with designated beneficiaries avoid probate. 

2. Minimizing Estate Taxes

It’s important first to distinguish between how estate taxes are handled at a federal level versus at a state level. 

Most estates do not owe federal estate tax because only estates valued at more than $13.61 million per individual are taxed. Obviously that is a pretty high exemption threshold. Further, only amounts greater than $13.61 million are subject to the tax. Once you are outside of the threshold, federal estate taxes can get exorbitantly high. 

Massachusetts has its own estate tax, but it's exemption limit is only $2 million. Unlike federal taxes where the exemption functions like a deduction, however, if you have an estate valued greater than $2MM, then the entire estate is subject to Massachusetts estate taxes. 

Note that life insurance proceeds are also included in the value of an estate. Meaning, if you have a life insurance policy with a death benefit of $2MM, you’ve already hit your exemption in Massachusetts should something, God forbid, happen to you.

Proper planning, such as using trusts and gifting strategies, can reduce tax burdens for heirs. 

When working with an estate planning attorney, they can assist with an entire toolkit of estate-tax-minimizing strategies, ranging from the very basics to advanced, sophisticated strategies for large prospective estates. 

3. Durable Power of Attorney

If you become incapacitated, a durable power of attorney can help you manage your real estate and other estate-related affairs. Without a durable power of attorney, your loved ones may have to go through a court process to gain control over your finances, which will be time consuming, expensive with legal fees, and most importantly, very stressful for your family in an already incredibly stressful situation. 

A durable power of attorney ensures someone you love and trust can immediately steps in to handle your affairs without court involvement. 

The durable power of attorney will allow your loved one to handle everything from signing any documents requiring your signature, paying your mortgage, and manage other financial affairs. 

Your estate planning attorney will recommend a durable power of attorney and will draft it for you, naming your desired someone to handle your financial affairs. 

Conclusion

I hope reading this article has left you feeling more empowered about something you may not have known anything about prior to reading it. 

The most important thing in life is living it. We don’t want to think about what happens when we pass away, especially when it’s unexpected. But, we want to make things as easy as possible for our families and not make things more stressful than they already will be in that terrible situation. 

Working with an estate planning attorney will give you peace of mind and allow you and your family to enjoy your lives more fully.