Loren Callan Rosenzweig - Attorney at Law

Estate planning addresses, in varying degrees, wealth preservation.  Some clients are satisfied with implementing straightforward techniques to minimize estate expenses and decrease estate taxes.  Other clients are willing to use more complicated strategies, such as Irrevocable Life Insurance Trusts ("ILITS") and Spousal Lifetime Access Trusts ("SLATs.")  I summarize these in the link on this website.

If you do not have a Will, Power of Attorney, and Health Care Proxy, have you ever considered:

1. Who would make decisions regarding your health care needs and manage your savings and retirement accounts during your life if you are unable to do so?

Answer:  Unless you have a properly executed Health Care Proxy and Power of Attorney, the Probate and Family Court would appoint a Conservator and Guardian (probably the surviving spouse, if you are married) to act on your behalf.

2. What would happen to your children under the age of 18 upon your passing, if you are not married or your spouse is deceased? 

Answer: Without a Will naming a Guardian and Conservator for your minor children, the Probate and Family would most probably appoint the other parent (if living) as the Guardian and Conservator.  However, if the other parent is deceased or unable to serve, the Commonwealth could place your minor children into Protective Custody until the Court appoints a Guardian and Conservator who would hopefully be selected from your family or friends.

3. How would your assets be distributed upon your death if you do not have a Will?

Answer:  A court-appointed Administrator would distribute your assets under Massachusetts law which might not reflect your wishes.

4. Would your family and friends be arguing with each other and the Probate Court to resolve these problems?

ANSWER: Possibly.  Even in the best of circumstances, each of your family members and friends may believe he knows better than anyone else what you would have wanted.

It is easy for you to address these issues now, by having a Will, Health Care Proxy, and Durable Power of Attorney drafted pursuant to your wishes.  

Under your Will, you can appoint a guardian and conservator to care for your minor children and manage their finances.

You can name anyone to inherit whatever your own, from jewelry and household items to financial accounts and real estate.  

Your Personal Representative is responsible to follow your wishes in the Will. He will pay the bills of your estate and file any tax returns.  

If you are unable to make health care decisions, your Health Care Proxy will "step into your shoes" to do so.

You can authorize your Health Care Proxy to make end-of-life decisions for you under a Living Will (which is also known as an Advance Directive.)

While you are alive, your Agent under your Power of Attorney would manage your finances when necessary.

A trust can own assets for many purposes: Managing an inheritance for your heirs, eliminating probate, minimizing taxes, and planning for incompetency. Trusts can be relatively simple or complex. In order for a trust to accomplish its goals, it must comply with the probate and trust laws and, when appropriate, the state and federal tax statutes. You, the client, determine the purposes and goals of your trust, and you name the trustee who, as a fiduciary, is responsible for fulfilling the terms of the trust.

Estate Taxes:  At the current time, the federal government exempts  $11,700,000.00 from an individual's estate taxes.  An estate greater than this exemption is subject to a 40% tax rate.

Be prepared for a more difficult planning environment when new tax legislation passes Congress. You should expect a new estate tax exemption ranging from $3,500,000 to $6,000,000 per person. Estate tax would start at 40% for assets above this exemption, ratcheting up to 65%. 

The tax rates in Massachusetts progress from 6% to 40% after $1,000,000 of assets.

Gift Taxes: 

Massachusetts does not tax gifts.

The Federal government taxes gifts greater than certain exemptions from 18% to 40%.

The Generation-Skipping Transfer Tax Exemption (also known as the GST exemption):  It is possible to fund long-term trusts ("Dynasty Trusts") which avoid estate taxes as each generation passes away. Even though there are limits on the initial size of a GST trust, it is still a tax-efficient method to benefit your heirs. However, the Senate's tax proposal is limiting the usefulness of these trusts to 50 years.

ILITS:  By transferring a life insurance policy into an Irrevocable Life Insurance Trust, it is possible to remove the policy's death benefit from the insured's estate. Please note that the usefulness of life insurance trusts might be extremely limited under the new legislation.

SLATS:  A spouse makes a gift to a Spousal Lifetime Access Trust for the benefit of the other spouse while indirectly benefitting from this gift.  When the beneficiary spouse passes away, the remaining trust principal is exempt from both spouses' estates.

The rising incidence of autism and related disabilities have made Special Needs Planning essential for many families. The underlying goal of these estate plans is to maintain the disabled person's eligibility for entitlements while preserving his inheritance or lifetime gifts for additional expenses. Trusts must be drafted to satisfy specific legal requirements.

Personal Representatives and Trustees are responsible for following the decedent's wishes in his will and trust.  I advise and assist Personal Representatives and Trustees as they fulfill their responsibilities which include:  Filing probate documents, collecting the decedent's assets, preparing and filing income and estate tax returns, funding trusts, and making distributions to heirs and beneficiaries.   

Federal and state governments are increasingly auditing income and estate tax returns. I have represented many taxpayers at the Internal Revenue Service and the Massachusetts Department of Revenue. I work with taxpayers to prepare for audits and other examinations. In addition, I have negotiated Offers in Compromise and payment plans with the Internal Revenue Service and the Massachusetts Department of Revenue.