Three facts about estate planning in Massachusetts that you should know

Estate planning in general means that you are engaging in financial planning focused on the laws of property, wills, and trusts. Here are three facts about Massachusetts law that you should know.

Estate Tax. Federal taxes levied against the deceased’s estate in Massachusetts are extremely high. The rate can be as steep as as 55%. Moreover, these taxes must be paid in cash. They must also generally be paid within nine months subsequent to the date of death.

However, preplanning your estate can lessen or even dismiss these taxes. Both the federal government and Massachusetts allow a certain amount—up to $1 million–to be tax free. The creation of an estate plan means that one can use allowed exemptions to reduce or eliminate large estate taxes, and protect one’s family from having to use cash and assets they have inherited to pay the tax. [Read more…]

Is a Trust Right for You? Distinguishing Trusts and Wills in Estate Planning

Most people understand the concept and importance of a Will. A Will is a legal document that transfers assets at death and allows a person to name an executor to transfer those assets. A trust is similar in that a grantor transfers assets to the trust and names a trustee to distribute trust assets. You must understand the differences between the two documents before you can decide if a trust is suitable in your situation.

A Will takes effect at death. A trust, however, can be set up to manage assets during the grantor’s lifetime. A Will is a public record that can be viewed by anyone. A trust provides privacy. Other benefits of a trust are probate avoidance and providing protection for a handicapped or disabled relative.

The use of a trust in estate planning is not the best approach for everyone. A sound estate plan is created based upon many factors including the size of the estate, types of assets, and personal objectives of the owner. You should consult a professional to determine if a trust is right for you.