(888) 925-8225
Law Office of Walter E. Bak
7 Conz StreetNorthampton, MA
01060 USA
(413)584-7836
Frequently Asked Questions
Probate is the legal process required to transfer property owned individually by a decedent to his or her beneficiaries. Probate is only necessary when the decendent has assets that no one else can gain access to for payment of debts, expenses and the ultimate estate. Therefore, you may have a wealthy decedent who dies with a will (testate) but who held all of their assets jointly with their spouse or in a trust and nothing in their own name. This decedent would not have a probate estate. (Click here for more information about the probate process.) IF AVOIDING PROBATE IS A CONCERN, PLEASE CONTACT ME. I CAN HELP.
Is Joint Tenacy a Good Substitute for a Will or a Trust?
It would be quite easy to plan your Estate so that all assets are jointly owned. However, holding property jointly may not be the most desirable way to avoid the probate process. There are other ways to insure your property is inherited quickly and without cost to your heirs.
There are countless problems with joint ownership. Joint ownership always involves a gamble as to which joint owner shall be the first to die requiring probate upon the death of the surviving joint owner. If you hold property jointly with your adult child and if that child gets divorced, goes bankrupt or gets sued the child will then need to disclose their ownership of the joint assets and those assets may be ordered to satisfy a potential judgement. In this case, you and your spouse may find yourself spending money to prove that the account, or real estate or other asset was jointly established merely for convenience and that the asset really belongs to you.
You may be thinking, "I can make my adult child a joint owner of my home or create and reserve a Life Estate in my home and avoid the need for probate. I trust my child to do as I request. If I decide to sell, I know my child won't ask for any of the proceeds regardless of their legal right to those funds."
All of the above may be true but it will probably cost you more in capital gain taxes if you sell your home in your lifetime, than if you kept it in your name only. Additionally, joint ownership for the purpose of avoiding probate in many instances will result in the loss of tax credit for disabled veterans and their spouses, the blind, and loss of Homestead creditor protection.
The convenient and tempting use of joint ownership to avoid probate must be carefully measured against potential problems. IF HOLDING PROPERTY JOINTLY IS A CONCERN, PLEASE CONTACT ME. I CAN HELP.
What is a Last Will and Testament?
The Last Will and Testament of an individual is a document outlining a person's wishes as to the disposition of their real and personal property and, if appropriate, children's care and upbringing after the parents' death. The person who executes such a document is callled the "Testator," if male, or "Testatrix," if female. The "Executor" or "Executrix" is the person who is selected by the Testator and appointed to administer the Testator's estate. Wills are subject to the jurisdiction of the Probate Court and are public documents. Wills are easily challenged and are not private. (Click here for more information about wills.) IF YOU DO NOT HAVE A WILL OR WANT TO CHANGE THE PROVISIONS OF YOUR WILL, PLEASE CONTACT ME. I CAN HELP.
A trust is a document that creates a new legal entity. Property owned by this new legal entity (the Trust) avoids probate. A Trust also creates a fiduciary relationship between the person who creates the trust (the donor or settlor) and the Trustee or Trustees nominated under the instrument. This relationship is a very important one because the donor or settlor grants to the Trustee the possession and title of the real and personal property when the donor or settlor transfers to or funds the trust. The trust instrument then directs that the assets of the trust be used for your benefit or the benefit and use of others (the beneficiaries). There are various classes of people who fall into the category of beneficiary and they hold the equitable title to teh trust property.
Trust agreements that are found under the term of a will are know as testamentary trusts. Trus agreements may be created outside of a will, during the lifetime of the donor or settler; such trusts are known as inter vivos trusts. Two common types of inter vivos trusts that are created during the lifetime of the donor or settler are called: the Revocable Trust, also known as the "Living Trust," and the Irrevocable Trust. Each type of trust is created for a specific purpose and, if drafted and administered properly, can serve the clients's estate planning goals such as avoidance of probate and the reduction or elimination of taxes. (Click here for more information about trusts.) IF YOU ARE INTERESTED IN THE BENEFITS OF CREATING A TRUST, PLEASE CONTACT ME. I CAN HELP.
What is a Revocable Trust ("Living Trust")?
A revocable trust (also referred to as a "Living Trust") is an instrument created by a donor or settlor that will eventually hold title to the assets of the donor or settler on behalf of the beneficiaries. The Revocable Trust does not necessarily need to be funded during the lifetime of the donor or settlor, although many people choose to transfer assests to a Revocable Trust during their lifetime. The donor or settlor has complete control over the naiming the trustee and the beneficiaries and distributing assets contained in the trust. The donor also has the right to alter or make changes to the instrument during his or her lifetime and even to terminate the trust is he or she so desires. Donors or settlors may even name themselves beneficiaries of the trust during their lifetimes.
A Revocable Trust does not protect assets from creditors of from any type of Medicaid assistance. This is due to the donor's or settlor's power to change the Trust. However, this instrument does protect the privacy of the donor or settlor by allowing them to avoid including Trust assets in a probate inventory, which becomes public record upon the death of the donor or settlor. A Revocable Trust is not considered a probate asset and therefore the donor os settlor's privacy is maintained. Additionally, all assets transferred to the Trust are non-probate assets. Revocable Trusts work nicely for avoidance of probate court. If this were a Tesamentary Trust under a will, all assets of the Trust, as well as all accounts filed on behalf of the Trust, would become public record. For that reason, many pracitioners choose the inter vivos approach as part of their planning strategy. (Click here for more information about trusts.) IF YOU WOULD LIKE TO MAKE A REVOCABLE TRUST PART OF YOUR ESTATE PLAN, PLEASE CONTACT ME. I CAN HELP.
An Irrevocable Trust is created for a variety of reasons. Once an Irrevocable is executed by the donor and funded with the intended assets, those assets remain in the trust and the donor has no authority or power to change the terms of the Irrevocable Trust. The specific purposes of drafting such an instrument must be very clear to the drafter, as well as to the donor, so that there is no misunderstanding once funding begins. Once assets have been transferred over into an Irrevocable Trust, there is no way they can be removed, as the transfer istelf is considered irrevocable. This type of trust is useful for estate tax avoidance and Medicaid qualifying plans.
An Insurance Trust is also a type of Irrevocable Trust. An Insurance Trust is funded either with life insurance policies purchased by the Trustee on the life of the Donor for the benefit of the Trust, or with the policies gifted to the Trust by the donor. Upon the death of the donor, the life claim is made payable to the Trust. This trust is useful for reducing the gross taxable estate and for providing funds to pay for potential estate tax liability.
A Charitable Trust is yet another type of Irrevocable Trust which allows your favorite charity to benefit at your death while during your lifetime you may receive favorable tax status as well as the enjoyment associated with charitable giving.
Note, however, that the provisions set out in each of these trusts are different and should be examined closely, as they are each created for a specific purpose. (Click here for more information about trusts.) IF YOU WOULD LIKE MORE INFORMATION ON HOW AN IRREVOCABLE TRUST, A LIFE INSURANCE TRUST OR A CHARITABLE REMAINDER TRUST FITS INTO YOUR ESTATE PLANNING OBJECTIVE, PLEASE CONTACT ME. I CAN HELP.
A Power of Attorney is a document executed by one person containing specific or general language authorizing another person to act on his or her behalf should he or she become incapacitated. The level of authority contained in the instrument is based on the wishes of the person who executes the Power of Attorney. The person nominated to hold such authority under the provisions of the documents is known as the "Attorney-in-fact" and is not necessarily a lawyer. In most instances the Attorney-in-fact is the spouse, parent or child of the person for whom the document has been created.
A well drafted Power of Attorney in conjunction with a Health Care Proxy may eliminate the need to respond to the Probate Court for a Petition to appoint a guardian or conservator. Additionally, a well drafted Power of Attorney is essential for additional estate planning and liberal gifting to the Attorney-in-fact as the result of of a catastrophic illness requiring a Medicaid Qualifying Plan. Language contained in a Power of Attorney for the purpose of Estate Planning and establishing a Medicaid Qualifying Plan is very specific and usually not the same language contained in a General Power of Attorney that you might already have. For the correct language, please consult a professional. FOR MORE INFORMATION CONCERNING A POWER OF ATTORNEY, PLEASE CONTACT ME. I CAN HELP.
What is a Health Care Proxy (Living Will)?
A Health Care Proxy (or Living Will) may be, for the client, one of the most personal and difficult documents drafted, as the client must consider his or her own mortality and the process of dying. Drafting the health care proxy asks the client to make decisions about how he or she wants to be treated medically should the client become seriously ill. It also requests taht the client name a person or persons who would fulfill these wishes should the client become unable to do so due to an illness or unconscious state.
Health Care Proxies can be as specific as the individual wishes or can be drafted with a more general interpretation regarding quality of life. Both the client and the drafter shoud understand exactly what will go into the document and that the person responsible for carrying out these wishes will do so without hesitation. IF YOU HAVE CONCERNS ABOUT YOUR MEDICAL TREATMENT AND YOUR WISHES CONCERNING THE DYING PROCESS. PLEASE CONTACT ME. I CAN HELP.
The real property or manufactured homes of persons sixty-two (62) years of age or older, regardless of martital status, or of a disabled person or persons, attachment, seixure or execution of judgment to the extent of Five Hundred Thousand Dollars ($500,000.00) each.
The real property of manufactured homes must serve as an individual's principal residence and each individual filing will be eligible for protection up to a maximum of ($500,000.00) each regardless of whether such declaration is filed individually or jointly, regardless of marital status, will be exempt up to Five Hundred Thousand Dollars ($500,000.00) each.
If you transfer your home to your adult child, you will lose your Homestead Protection against creditors. If you child does not occupy the property as their homestead their is no creditor protection at all. Your child's creditors can force the sale of your home for relatively small amounts of unpaid debt. IF YOU HAVE CONCERNS ABOUT PRESERVING YOUR HOMESTEAD PROTECTION, PLEASE CONTACT ME. I CAN HELP.
Medicaid Qualifying Asset Eligibility?
There is a limit on the amount of Countable Assets that an Applicant may own and still qualify for Medicaid/Mass Health. Currently, the maximum dollar value that can be owned by, or available, to the Applicant is Two Thousand Dollars ($2,000.00) and a mothly income allowance of Sixty Dollars ($60.00). An Applicant who is over the Asset Limit needs to "spend down" to Two Thousand Dollars ($2,000.00) resulting in improvement, thus eligibility for Medicaid/Mass Health.
If the applicant is married, they can transfer all of their assets that exceed Two Thousand Dollars ($2,000.00) to their spouse, but there are limits to their spouse's assets as well. If the spouse lives in the community they are referred to as the Community Spouse.
The Community Spouse is allowed to keep up to $92,760.00 of their combined assets. The spouse's income is also counted. The current value set by the State of Massachusetts as the Community Spouse's Minimum Monthly Maintenance Needs Alloweance is $1,515.00. If the spouse's shelter costs are greater than $455.00 per month, the spouse is allowed an excess shelter allowance, provided the total value allowed as their monthly Income Allowance does not exceed the federal value of $2,319.00. Additionally, the Massachusetts Department of Medical Assistance (DMA) provides a list of additional assets that the applicant and the community spouse may own. These are non-countable assets or they have a dollar value limit. IF A MEDICAID QUALIFYING PLAN IS A CONCERN OF YOURS, OR YOU WOULD LIKE TO REVIEW THE LIST OF QUALIFYING ASSETS AND THEIR DOLLAR LIMITS, PLEASE CONTACT ME. I CAN HELP.
top home or create and reserve a Life Estate in my home and avoid the need for probate. I trust my child to do as I request. If I decide to sell, I know my child won't ask for any of the proceeds regardless of their legal right to those funds."
All of the above may be true but it will probably cost you more in capital gain taxes if you sell your home in your lifetime, than if you kept it in your name only. Additionally, joint ownership for the purpose of avoiding probate in many instances will result in the loss of tax credit for disabled veterans and their spouses, the blind, and loss of Homestead creditor protection.
The convenient and tempting use of joint ownership to avoid probate must be carefully measured against potential problems. IF HOLDING PROPERTY JOINTLY IS A CONCERN, PLEASE CONTACT ME. I CAN HELP.
What is a Last Will and Testament?
The Last Will and Testament of an individual is a document outlining a person's wishes as to the disposition of their real and personal property and, if appropriate, children's care and upbringing after the parents' death. The person who executes such a document is callled the "Testator," if male, or "Testatrix," if female. The "Executor" or "Executrix" is the person who is selected by the Testator and appointed to administer the Testator's estate. Wills are subject to the jurisdiction of the Probate Court and are public documents. Wills are easily challenged and are not private. (Click here for more information about wills.) IF YOU DO NOT HAVE A WILL OR WANT TO CHANGE THE PROVISIONS OF YOUR WILL, PLEASE CONTACT ME. I CAN HELP.
A trust is a document that creates a new legal entity. Property owned by this new legal entity (the Trust) avoids probate. A Trust also creates a fiduciary relationship between the person who creates the trust (the donor or settlor) and the Trustee or Trustees nominated under the instrument. This relationship is a very important one because the donor or settlor grants to the Trustee the possession and title of the real and personal property when the donor or settlor transfers to or funds the trust. The trust instrument then directs that the assets of the trust be used for your benefit or the benefit and use of others (the beneficiaries). There are various classes of people who fall into the category of beneficiary and they hold the equitable title to teh trust property.
Trust agreements that are found under the term of a will are know as testamentary trusts. Trus agreements may be created outside of a will, during the lifetime of the donor or settler; such trusts are known as inter vivos trusts. Two common types of inter vivos trusts that are created during the lifetime of the donor or settler are called: the Revocable Trust, also known as the "Living Trust," and the Irrevocable Trust. Each type of trust is created for a specific purpose and, if drafted and administered properly, can serve the clients's estate planning goals such as avoidance of probate and the reduction or elimination of taxes. (Click here for more information about trusts.) IF YOU ARE INTERESTED IN THE BENEFITS OF CREATING A TRUST, PLEASE CONTACT ME. I CAN HELP.
What is a Revocable Trust ("Living Trust")?
A revocable trust (also referred to as a "Living Trust") is an instrument created by a donor or settlor that will eventually hold title to the assets of the donor or settler on behalf of the beneficiaries. The Revocable Trust does not necessarily need to be funded during the lifetime of the donor or settlor, although many people choose to transfer assests to a Revocable Trust during their lifetime. The donor or settlor has complete control over the naiming the trustee and the beneficiaries and distributing assets contained in the trust. The donor also has the right to alter or make changes to the instrument during his or her lifetime and even to terminate the trust is he or she so desires. Donors or settlors may even name themselves beneficiaries of the trust during their lifetimes.
A Revocable Trust does not protect assets from creditors of from any type of Medicaid assistance. This is due to the donor's or settlor's power to change the Trust. However, this instrument does protect the privacy of the donor or settlor by allowing them to avoid including Trust assets in a probate inventory, which becomes public record upon the death of the donor or settlor. A Revocable Trust is not considered a probate asset and therefore the donor os settlor's privacy is maintained. Additionally, all assets transferred to the Trust are non-probate assets. Revocable Trusts work nicely for avoidance of probate court. If this were a Tesamentary Trust under a will, all assets of the Trust, as well as all accounts filed on behalf of the Trust, would become public record. For that reason, many pracitioners choose the inter vivos approach as part of their planning strategy. (Click here for more information about trusts.) IF YOU WOULD LIKE TO MAKE A REVOCABLE TRUST PART OF YOUR ESTATE PLAN, PLEASE CONTACT ME. I CAN HELP.
An Irrevocable Trust is created for a variety of reasons. Once an Irrevocable is executed by the donor and funded with the intended assets, those assets remain in the trust and the donor has no authority or power to change the terms of the Irrevocable Trust. The specific purposes of drafting such an instrument must be very clear to the drafter, as well as to the donor, so that there is no misunderstanding once funding begins. Once assets have been transferred over into an Irrevocable Trust, there is no way they can be removed, as the transfer istelf is considered irrevocable. This type of trust is useful for estate tax avoidance and Medicaid qualifying plans.
An Insurance Trust is also a type of Irrevocable Trust. An Insurance Trust is funded either with life insurance policies purchased by the Trustee on the life of the Donor for the benefit of the Trust, or with the policies gifted to the Trust by the donor. Upon the death of the donor, the life claim is made payable to the Trust. This trust is useful for reducing the gross taxable estate and for providing funds to pay for potential estate tax liability.
A Charitable Trust is yet another type of Irrevocable Trust which allows your favorite charity to benefit at your death while during your lifetime you may receive favorable tax status as well as the enjoyment associated with charitable giving.
Note, however, that the provisions set out in each of these trusts are different and should be examined closely, as they are each created for a specific purpose. (Click here for more information about trusts.) IF YOU WOULD LIKE MORE INFORMATION ON HOW AN IRREVOCABLE TRUST, A LIFE INSURANCE TRUST OR A CHARITABLE REMAINDER TRUST FITS INTO YOUR ESTATE PLANNING OBJECTIVE, PLEASE CONTACT ME. I CAN HELP.
A Power of Attorney is a document executed by one person containing specific or general language authorizing another person to act on his or her behalf should he or she become incapacitated. The level of authority contained in the instrument is based on the wishes of the person who executes the Power of Attorney. The person nominated to hold such authority under the provisions of the documents is known
