Darlene J. Pitt Attorney-at-Law

	WHAT IS “ESTATE PLANNING?” • Process by which you decide how you want your property and assets distributed both during and after your lifetime. • Process by which you designate individuals to act for you in various capacities, both during and after your lifetime. WHAT SHOULD A WELL-DRAFTED ESTATE PLAN INCLUDE? • Documents that dispose of your assets at death (e.g. a WILL and/or TRUST). • Documents that provide for the management of your assets during any period of disability and/or incapacity during your lifetime (e.g. a POWER OF ATTORNEY and/or TRUST) • Documents that provide for the management of your health care during any period of disability and/or incapacity during your lifetime (e.g. a HEALTH CARE PROXY or LIVING WILL). • Documents that assist in reducing or eliminating estate taxes and probate costs at death (e.g. a TRUST). WHY DO I NEED A WILL? • To designate an individual who will oversee the distribution of your assets after your death and raise your minor children. • To ensure that your assets are distributed according to your wishes, rather than by the complex laws of the State of Massachusetts. • To work in conjunction with any trust(s) to protect and distribute your assets for the care of your children, et.al. WHY DO I NEED A DURABLE POWER OF ATTORNEY? • To give another individual the ability to make financial decisions for you if you become incapacitated. • To allow an individual to sign checks, deeds, etc. for you, as well as manage your tax-deferred investments such as IRAs and 401Ks if you become incapacitated. • To avoid court-appointed guardianship proceedings. WHY DO I NEED A HEALTH CARE PROXY? • To designate an individual to make health care decisions for you, if you are unable. • Because a healthcare proxy is recognized by Massachusetts as the binding healthcare decision-making document. WHY DO I NEED A LIVING WILL? • A living will explains how you wish to be cared for if you become terminally ill. • A living will includes instructions regarding being placed on life support. • Because a will is recognized by many other States and Commonwealths if you are traveling and is evidence of your wishes here in Massachusetts. HOW DO I PROTECT AND PRESERVE THE VALUE OF MY HOME FROM LONG-TERM CARE COSTS? • Irrevocable trust. • Deed with a reservation of a life estate by you. • Outright gifting to a child or other individual. • Long-term care insurance. • There are several options available, depending on an individual’s unique circumstances. WHAT DOES A REVOCABLE LIVING TRUST DO? • Helps reduce and/or eliminate probate costs (can be as high as 7% of your assets at death). • Helps reduce and/or eliminate estate taxes and preserve your assets for your heirs, etc. • Prevents the tie-up of your assets in the probate process, which averages one (1) year or more. • Provides for your care and support if you become disabled or incapacitated. • Avoids the expensive probate process for all real estate owned in other states. WHEN SHOULD I PUT MY ASSETS INTO MY REVOCABLE LIVING TRUST? • As soon as possible while you are living, if your goal is to avoid the probate process. Otherwise, the assets will most likely have to go through Probate to get into your Trust. WHAT ASSETS ARE CONTROLLED BY THE PROBATE PROCESS? • Assets owned by you in your individual name during your lifetime. • Assets, such as life insurance or IRAs, that have no death beneficiary listed who survives you or lists your Estate as the death beneficiary. WHAT ASSETS COMPROMISE MY TAXABLE ESTATE? • All assets over which you have any incident of ownership or control, whether owned jointly or individually. • Real estate • Stocks and Bonds • Life Insurance • Retirement Plans • Bank Accounts HOW MUCH MONEY CAN AN INDIVIDUAL PASS TAX-FREE TO HEIRS UPON DEATH? • Federally, in 2008 - $2 million • Federally, in 2009 - $3.5 million • Federally, in 2010 – Unlimited amount • Federally starting in 2011 - $1 million unless legislation is enacted to change this. • For Massachusetts residents, for all years, there is separate estate tax due on everything over $1,000,000. HOW MUCH MONEY CAN I GIFT PER YEAR WITHOUT PAYING A GIFT TAX? • You can gift up to $12,000 per individual under current law. • Gifting can be done with case, real estate, stocks, etc. WHAT ARE THE TAX ADVANTAGES OF HAVING MARITAL TRUSTS IN PLACE? • Allows husband and wife to take advantage of each of your federal estate tax exemption amounts ($1,000,000 - $3,500,000) and Massachusetts estate tax exemption amounts ($1,000,000) – i.e. you pass the aggregate ($2,000,000 - $7,000,000 federally and $2,000,000 for Massachusetts) estate-tax free to your heirs, inc. WHY SHOULD I CONSIDER AN IRREVOCABLE LIFE INSURANCE TRUST TO OWN MY LIFE INSURANCE? • Value of the policy at Donor’s death is not includable in Donor’s estate for estate tax purposes. • Trust can purchase a “second to die” policy thereby providing liquidity after couple’s death to pay estate taxes due or give extra cash to heirs. MY CHILD IS DISABLED AND RECEIVING GOVERNMENTAL BENEFITS – WHAT SHOULD I DO? • Establish a Special Needs Trust which allows your disabled child to receive supplemental funds (usually to pay for living expenses other than food and shelter – e.g. education, counseling, recreation and other assistance beyond the basic necessities provided by the public assistance programs), while keeping that child eligible for public benefit programs (e.g. Supplemental Security Income and Medicaid).

WHAT IS “ESTATE PLANNING?”
• Process by which you decide how you want your property and assets distributed both during and after your lifetime.
• Process by which you designate individuals to act for you in various capacities, both during and after your lifetime.

WHAT SHOULD A WELL-DRAFTED ESTATE PLAN INCLUDE?
• Documents that dispose of your assets at death (e.g. a WILL and/or TRUST).
• Documents that provide for the management of your assets during any period of disability and/or incapacity during your lifetime (e.g. a POWER OF ATTORNEY and/or TRUST)
• Documents that provide for the management of your health care during any period of disability and/or incapacity during your lifetime (e.g. a HEALTH CARE PROXY or LIVING WILL).
• Documents that assist in reducing or eliminating estate taxes and probate costs at death (e.g. a TRUST).

WHY DO I NEED A WILL?
• To designate an individual who will oversee the distribution of your assets after your death and raise your minor children.
• To ensure that your assets are distributed according to your wishes, rather than by the complex laws of the State of Massachusetts.
• To work in conjunction with any trust(s) to protect and distribute your assets for the care of your children, et.al.

WHY DO I NEED A DURABLE POWER OF ATTORNEY?
• To give another individual the ability to make financial decisions for you if you become incapacitated.
• To allow an individual to sign checks, deeds, etc. for you, as well as manage your tax-deferred investments such as IRAs and 401Ks if you become incapacitated.
• To avoid court-appointed guardianship proceedings.

WHY DO I NEED A HEALTH CARE PROXY?
• To designate an individual to make health care decisions for you, if you are unable.
• Because a healthcare proxy is recognized by Massachusetts as the binding healthcare decision-making document.

WHY DO I NEED A LIVING WILL?
• A living will explains how you wish to be cared for if you become terminally ill.
• A living will includes instructions regarding being placed on life support.
• Because a will is recognized by many other States and Commonwealths if you are traveling and is evidence of your wishes here in Massachusetts.

HOW DO I PROTECT AND PRESERVE THE VALUE OF MY HOME FROM LONG-TERM CARE COSTS?
• Irrevocable trust.
• Deed with a reservation of a life estate by you.
• Outright gifting to a child or other individual.
• Long-term care insurance.
• There are several options available, depending on an individual’s unique circumstances.

WHAT DOES A REVOCABLE LIVING TRUST DO?
• Helps reduce and/or eliminate probate costs (can be as high as 7% of your assets at death).
• Helps reduce and/or eliminate estate taxes and preserve your assets for your heirs, etc.
• Prevents the tie-up of your assets in the probate process, which averages one (1) year or more.
• Provides for your care and support if you become disabled or incapacitated.
• Avoids the expensive probate process for all real estate owned in other states.

WHEN SHOULD I PUT MY ASSETS INTO MY REVOCABLE LIVING TRUST?
• As soon as possible while you are living, if your goal is to avoid the probate process. Otherwise, the assets will most likely have to go through Probate to get into your Trust.

WHAT ASSETS ARE CONTROLLED BY THE PROBATE PROCESS?
• Assets owned by you in your individual name during your lifetime.
• Assets, such as life insurance or IRAs, that have no death beneficiary listed who survives you or lists your Estate as the death beneficiary.

WHAT ASSETS COMPROMISE MY TAXABLE ESTATE?
• All assets over which you have any incident of ownership or control, whether owned jointly or individually.
• Real estate
• Stocks and Bonds
• Life Insurance
• Retirement Plans
• Bank Accounts

HOW MUCH MONEY CAN AN INDIVIDUAL PASS TAX-FREE TO HEIRS UPON DEATH?
• Federally, in 2008 - $2 million
• Federally, in 2009 - $3.5 million
• Federally, in 2010 – Unlimited amount
• Federally starting in 2011 - $1 million unless legislation is enacted to change this.
• For Massachusetts residents, for all years, there is separate estate tax due on everything over $1,000,000.

HOW MUCH MONEY CAN I GIFT PER YEAR WITHOUT PAYING A GIFT TAX?
• You can gift up to $12,000 per individual under current law.
• Gifting can be done with case, real estate, stocks, etc.

WHAT ARE THE TAX ADVANTAGES OF HAVING MARITAL TRUSTS IN PLACE?
• Allows husband and wife to take advantage of each of your federal estate tax exemption amounts ($1,000,000 - $3,500,000) and Massachusetts estate tax exemption amounts ($1,000,000) – i.e. you pass the aggregate ($2,000,000 - $7,000,000 federally and $2,000,000 for Massachusetts) estate-tax free to your heirs, inc.

WHY SHOULD I CONSIDER AN IRREVOCABLE LIFE INSURANCE TRUST TO OWN MY LIFE INSURANCE?
• Value of the policy at Donor’s death is not includable in Donor’s estate for estate tax purposes.
• Trust can purchase a “second to die” policy thereby providing liquidity after couple’s death to pay estate taxes due or give extra cash to heirs.

MY CHILD IS DISABLED AND RECEIVING GOVERNMENTAL BENEFITS – WHAT SHOULD I DO?
• Establish a Special Needs Trust which allows your disabled child to receive supplemental funds (usually to pay for living expenses other than food and shelter – e.g. education, counseling, recreation and other assistance beyond the basic necessities provided by the public assistance programs), while keeping that child eligible for public benefit programs (e.g. Supplemental Security Income and Medicaid).