An "estate" does not mean you have a huge house on sprawling grounds, or many hundreds of thousands of dollars in the bank. An "estate" is simply everything you own at the time of your passing, however big or small.
Many people are unsure about what they need in an estate plan, and worry about whether the investment of time and money in making a plan is worth it, especially if they feel they do not have a lot of assets. The truth is, there is a "right-sized" estate plan for everyone. Here are some common scenarios:
A family with young children and modest or minimal assets: Without a will, in most cases the law will distribute all of your assets to your surviving spouse. If this is what you want, the main things you need to be concerned about are: (i) designating a guardian for your children if something were to happen to both parents; (ii) designating a personal representative to make the probate process simpler and less expensive; and (iii) making sure you and your spouse have health care proxies and durable powers of attorney so that someone can make medical and legal/financial decisions if you are incapacitated. This can be accomplished at a relatively low cost by drafting a simple will, health care proxies, and powers of attorney.
A "blended" family: If your family includes children who are not all the children of both you and your spouse, making a will becomes even more essential, as the decisions the state will make about how assets are divided between your spouse and your children may not be what you want. You can take care of the division of assets with a will, but may also want to consider establishing a trust to hold assets for your children, especially if they are minors.
A family whose main assets are real property: This is a common scenario- the net worth on paper is high because of a family home, a farm, or other real estate, but those assets are not "liquid," and in many cases the individual or family does not want to sell the property. If the value of the real property, combined with other assets, life insurance policies, and retirement savings might make your net estate worth $1 million or more, it is essential to make an estate plan that can shelter as much as possible from Massachusetts estate tax. If your assets are worth $1 million at your passing, your estate will owe approximately $36,000 in taxes, but if the assets are worth $999,999, your estate will owe nothing.
Even if you are nowhere near the $1 million threshold, if it is important to you to keep a home, farm, or other real estate in your family, there are other estate planning tools you can consider, such as a realty trust which will pass the title to your beneficiaries without the need for probate.
Individuals and families without children: Without a will, the state will divide your assets among your spouse, your parents, if they are living, and siblings or descendants of siblings if your parents are no longer alive. If this is not what you want, or if you have other people in your life you want to take care of, you will need a will to make your wishes clear and enforceable.
Small business owners: your business has a value, and will be part of your estate. You may want to have the business liquidate on your passing and maximize the value to your heirs, or you may want to make it possible for family members or others to inherit and continue to carry on the business. Without a clear plan, your family members may struggle trying to run a business they are not used to running, or scrambling to get maximum cash value from the business. A will, powers of attorney, and review of your company's corporate form and governing documents can help eliminate this confusion and achieve your goals for your business and your family.
Whatever your situation, we are here to help you find the solution that meets your needs and your budget. Give us a call at (413) 667-2322, or click here to request a call back from a member of our team.
Emily Smith-Lee is an attorney and owner and founder of slnlaw.