Frequently Asked Questions

Contents


Estate Planning Generally

Wills & Trusts

Elder Law & Planning for Incapacity

 


 

What is Estate Planning?

Estate planning is a field of law which attorneys use to help people plan for their futures and the futures of their family, whether life turns out as planned or the unexpected happens. Estate planning is heavily involved with several diverse areas of law, including tax, wills & trusts, probate, healthcare, and real estate. The usefulness of estate planning is different for every person, but some of the more common uses are:

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Wills & Trusts

What is a will?

A will is a document in which you express your wishes about who should get your property when you die. This alone is an important reason to have one, as the government's rules will decide who gets your property (in CT and MA, a math formula splits your estate between your spouse and your children in most cases), and what the government wants to do is often not what you would do yourself. Even if the government's rules do happen to be in line with your wishes, going through probate without a will (called intestacy) can make the courts take much longer to actually get your property to your family.

There are additional reasons for having a will that vary from person to person. For many young people, naming a guardian for their children is the will's most important feature; for older people, planning their charitable gifts, assigning family heirlooms, and dictating funeral arrangements may all be pressing concerns. Married couples may draft matching wills to ensure the family has a single plan no matter which spouse passes first, and people who have created trusts to handle most of their property may simply want a pour-over will that adds whatever is left to the trusts.

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What is a trust?

Normally when you give gifts to people, you offer them the gift, they accept it, and if you want them to do something particular with it, all you can do is cross your fingers and hope that they respect your wishes. A trust is an arrangement that solves this problem, by adding a middleman who is obligated to enforce your wishes. When a trust is created, a gift giver (called the settlor or grantor) has the middleman (called the trustee) agree to hold the gift "in trust" for one or more gift recipients (called beneficiaries). The trustee then distributes the property to the beneficiaries in accordance with the rules laid out in the trust.

A trust can be made at any point during your life, or created in your will. If it doesn't involve real estate, it doesn't have to be witnessed or notarized or even written down to be valid; an oral agreement is sufficient to make a trust. However, all estate planning attorneys will usually insist on these formalities, to ensure complicated terms of the trust are clearly expresses, and to make sure there is clear evidence of the trust in case a court needs to review it.

What are trusts used for?

Trusts have the flexibility to do something as simple as creating a delay between when you give property away and when the intended recipient actually gets it, or complex enough to manage a wide array of assets for many people and organizations over several generations, giving everybody involved different things at different times. Trusts can come in two distinct forms: revocable and irrevocable. A revocable trust creates a legal fiction to hold a person's property, usually so that it can go directly to their families when they die instead having to pass through probate. The most common form is called a living trust, and is discussed next. The more common type of trust, an irrevocable trust, places property in a permanent, separate entity, and has many uses. The most common ones are as follows.

Simple Trust

Often, a person may want to give a sum of money to his or her children or grandchildren, but doesn't want the money to be squandered, or you'd like to make a charitable gift in your will, but you want them to use the money for a very specific purpose. By creating a basic trust, you can dictate when the recipient gains access to the money ("when he reaches the age of 25," "when she graduates from college"), and/or what the money is used for ("for graduate school tuition and expenses" or "for research into experimental breast cancer drug therapies").

Sometimes you may trust a recipient completely, but there are tax benefits to giving money away sooner rather than later, giving away smaller amounts over a longer period of time, or limiting a gift to specific uses like educational expenses or charity. A simple trust can help you to reap these tax benefits.

Discretionary Trust

A discretionary trust helps you with similar situations to a simple trust, but with more flexibility. Instead of structuring exactly how and when your beneficiaries get trust funds, you arrange for someone whose judgment you trust to be trustee, and give them complete control over how much money they give to the beneficiaries (or spend on their behalf), when, and for what.

A type of discretionary trust called a spendthrift trust makes absolutely sure that the beneficiaries have no right to demand payments from the trust. This is important because it means the funds in the trust won't be counted against a beneficiary if they apply for or are getting government benefits and services. It also prevents any trust assets from being seized by a beneficiary's creditors. Because of this, spendthrift trusts are common when creating funds for a disabled person or special needs child, when preparing for a senior to eventually qualify for nursing home care under Medicaid/Title 19, or when one or more beneficiaries of a trust fund may have financial troubles.

Trusts with Multiple Beneficiaries

As I mentioned earlier, trusts can have multiple beneficiaries at multiple levels. A trust might have three siblings as beneficiaries, and it might give them each an identical share with identical conditions, it may give each beneficiary a different share or different conditions, or it may be a discretionary trust that allows the trustee to apportion the assets among them as he sees fit. A trust may allow, or even require, that they don't get anything, and that at some point another person, people, or charity start receiving property/money from the trust instead. For example, a people who are married but have children from a prior marriage will often place a trust in their will that leaves all of their property (or just the use of it) to their spouse, but passes whatever is left to their children when the spouse dies. For some affluent people, more complicated trusts containing assets like stocks, bonds, business interests, and real estate holdings are often created with two sets of beneficiaries. One set will receive all of the profits/dividends/income from the assets (or a fixed percentage of the trust's value) for a period of time or as long as they live. The other set will get the property itself when that time comes.

Marital Deduction Trusts

A marital deduction trust (also called an "AB trust" in CT or "A-B-C trust" in MA) is an arrangement of trusts that allows couples with a high net worth to spread their property more evenly amongst themselves so that they can make use of any "free passes" the federal government and state provide on estate taxes.

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What is a living trust, and what is it used for?

A living trust, which you may also hear called a "nominee trust" or "grantor trust," is a type of trust that a person creates with their own property and for their own current use, and allowing them to revoke the trust and put the property back in their name at any time. A living trust is normally used as a means of keeping property, in particular a home, out of probate court when you die. Because it can be withdrawn at any time, the trust is generally ignored by tax and transfer laws, and the person creating it can generally go about using the property just as they always have. When they die, however, the property will go directly from the settlor to the remainder beneficiaries, instead of passing through probate.

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Elder Law & Planning for Incapacity

What is a power of attorney? What types are there?

A power of attorney is a legal document that allows the recipient of the power, called an attorney-in-fact, to stand in for the giver (called a principal) of the power, and act on the giver's behalf. Aside from getting married or signing a will, an attorney-in-fact can be permitted to do almost anything for you that you could do for yourself, but they may only perform the functions written down in the document itself. For example, if you want your son to be able to sell a piece of property in another state and to open a bank account for you, a power of attorney can be drafted that allows them only to do those things. If you wish, you can execute multiple powers of attorney and have multiple attorneys-in-fact; each may be limited to different functions, or their authority may overlap.

A power of attorney allows the principal and attorney(s)-in-fact to act concurrently. That is, both you and the recipient can perform the activities listed, and each can undo actions of the other (unless the power is revoked). Because the two operate in tandem, a traditional power of attorney ceases to be valid if the principal becomes mentally incompetent or incapacitated. Obviously, this would defeat the purpose of creating a power of attorney for estate planning purposes, where one may designate a child or trusted friend to help manage their affairs if they lose their faculties to old age. Because of this, a more common variation called a durable power of attorney is normally used. A durable power permits the attorney-in-fact to continue transacting business even if the principal becomes incapacitated. A third variation, called a springing power of attorney does not become effective until the principal is incapacitated. However, this often would require a loved one to track down your medical records and prove your incompetence to a court just so that they can step in and help you, and because of the great hassle a springing power is usually not advisable. If you are concerned about your attorney-in-fact using the power prematurely, many estate-planning lawyers will agree to keep the form safe for you and not turn it over to your family until you are in need of help.

Powers of attorney are regulated by state law. Usually they must be signed, witnessed, and acknowledged (notarized) like a will or deed, and many states require certain language to be included. Many offer a statutory template for powers of attorney, and while they're optional they are often worth using because banks and other institutions will be familiar with the form and accept them more readily than one with unique language.

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What are advance healthcare directives?

An advanced healthcare directive is any legal document used to give you a say in the medical care you will someday recieve if you are unable to express your wishes at that time. The two most common forms of this are the health care proxy and living will. A Do Not Resuscitate Order, or DNR, is not technically a type of advanced directive, though it has a similar role. All three are discussed below.

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What are health care proxies and living wills, and what is the difference between them?

Health care proxy is the most common term for a document giving another person the ability to make medical decisions for you, or to the person with that authority. In Connecticut, this document is called an "Appointment of Health Care Representative;" still other states call it a "health care power of attorney." A health care proxy only takes effect when you are unable to make decisions for yourself for whatever reason - whether you are suffering from dementia or were knocked unconscious in a car accident, your proxy/representative can make decisions about your care. While a health care proxy is limited to healthcare decisions, it normally covers all health care choices - from the doctors you see, to the procedures they perform, to the treatments you get, and the facilities you reside in - unless the document states otherwise. Like a power of attorney, states have detailed execution requirements, mandatory language, and model forms for health care proxies.

A living will is a letter written by you to your family and doctors indicating the type of medical treatment you wish to receive in a given situation. While this letter can express your wishes for any particular medical situation, in almost all cases it specifically addresses whether you wish to remain on life support systems if you are nearing the end of a terminal illness, or if you have entered a persistent vegetative state (are "permanently unconscious" or "comatose"). A living will does not need to be drafted by an attorney, but in Connecticut it must be witnessed and should be notarized.

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What is a DNR (do not resuscitate) order, and how is that different?

A DNR order is an agreement between you and your doctor that instructs health care personnel not to attempt to revive you if you stop breathing or your heart stops beating. A DNR does not and cannot prevent health care personnel from treating you for injury or illness; it only prevents them from using CPR, artificial breathing, and defibrillation to revive your heart and/or lungs. Unlike a health care proxy or living will, creating a DNR Order does not require you to draft any special documents or to hire an attorney. Instead, you must sign the form provided by your healthcare facility, doctor, or VNA service, and wear the orange bracelet provided to indicate your DNR status. While it is not required, it is often advisable to talk with your family, attorney, clergy, and other confidants before deciding whether or not to sign a DNR.

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What are Guardianships and Conservatorships?   What is the difference between them?

Guardianships and Conservatorships are both situations where a court determines that an individual is unable ("incompetent") to make the decisions and arrangments necessary for their own wellbeing, and gives the power to make those decisions and arrangements to someone else. This occurs most often when an elderly individual is suffering from Alzheimer's disease or other dementia, and either did not designate decisionmakers in advance with a power of attorney or advanced healthcare directive, or person(s) named are taking insufficinet or improper steps for their wellbeing. It is also customary when children with mental illness or severe developmental delays reach adulthood.

Guardianships and conservatorships occur through an adversarial litigation process. Both CT and MA do allow an individual to petition for their own guardianship/conservatorship, but in most cases the petition is filed by a family member or social services agency, with lawyers for both the petitioner and the allegedly incompetent person attending a hearing before a probate judge, and the judge issues an official ruling, appointing a guardian or conservator if she finds any incompetence exists.

The selected person may be given full responsibility for the incompetent person, now called their "ward", but often they will only be responsible for one area of decision making (home life, healthcare, financial, e.g.), and may be further limited in areas where the ward is able to handle matters alone. Sometimes muliple people will be selected to handle multiple areas of need. Guardians and conservators must then make decisions in the best interests of the ward, keeping records and updating the court on a recurring basis.

The difference between guardianship and conservatorship is only a distinction of terminology that varies from state to state. In Connecticut, conservatorships apply to adults and guardianships apply to minors, and both are subdivided into "...of the person" (lifestyle & medical) and "...of the estate (financial). In Massachusetts, lifestyle & medical always fall under a guardianship and financial always falls under a conservatorship, regardless fo the ward's age. Florida only uses the terms limited and general guardianship to cover all of the above. Those looking for help with this type of situation should not be overly concerned with knowing the difference.

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How much does estate planning cost?

Most work performed by estate planning attorneys is billed at a flat fee based on the documents the attorney is required to draft for you.  Normally, this includes an initial consultation, a strategy meeting to decide on a plan, and a final meeting to review and execute the prepared documents, as well as the attorney's time required to draft the documents.  However, if your estate plan requires significantly more or less work than usual, an attorney;s fee will often change to reflect that. For example, a couple requesting matching estate plans will usually be charged much less than two individuals would be. At the same time, attorneys will often bill additional time at an hourly rate if you have specialized needs that require more time than normal to research and draft the documents, or if you are having them review an existing plan.

Each attorney sets his or her own rates, and these rates are based on a number of things, including their own experience and expertise, the complexity of the work you need done, the comprehensiveness of their services, the quality of their facilities, equipment and support staff, and the location of their offices.  As a solo practitioner with a low overhead, my rates often fall at the low end of the scale.

The following reflects the range of fees you can expect to find from most smaller firms or a family lawyer.  Keep in mind, however, the most important considerations in choosing an attorney is finding a firm that makes you comfortable and is responsive to your needs with attorneys that you feel you can trust, and not necessarily with the cheapest rates.

Basic Will:
Complex Will:
Basic Test. Trust:
Active Trusts:
Power of Attorney:
Health Care Proxy
& Living Will:
Quitclaim Deed:
Couple's Joint Plan:
Establish Conservatorship:
Trust, Conservatorship,
Probate Estate Management:
Litigation:
$250 - $400
$350 - $800
$500 - $1,000
$2,000 - $4,000
$75 - $100

$ 75 - $200
$150 - $250
130% - 160% of single rate
$2,000 - $3,000

$125 - $150/hour
$150 - $250/hour

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