This doesn’t mean a videotape  is useless.   Your attorney might ask that you videotape your will signing, not to serve as a video will, but documentation of the event.  There are two reasons why having this event videotaped can be helpful:

1)       It shows you were of sound mind at the time you signed your will, a requirement for it to be valid, and;

2)      It shows that you signed your will voluntarily, another requirement for it to be valid.

By videotaping the signing of your written will, you bolster its validity and make sure that your final wishes are carried out the way you expected.

*Idea for this post is courtesy of David Shulman of the South Florida Estate Planning Law Blog

For starters, think about all the other documents, like bank statements and official letters,  that you expect to be typed up.  Why?  For starters, these are documents you expect to be legible, and that’s much more likely to be true if they’re typed up.  It’s also true that a document that’s been typed up is more likely to have been thought out before it was printed and signed.  Your will is an important document, it dictates your wishes to those who are left behind when you pass.  Do you really want to risk it being invalid because your handwriting was messy?

The truth is that when it comes to writing a will, seeking the advice of an attorney comes highly recommended.  Even a will you’ve typed up yourself might not be entirely valid, or address everything you really need to consider.  An attorney can help not only with drafting the actual language contained in your will, but can help explain what a will should contain so you can be certain that your wishes will be carried out.  It may cost money now, but could save your friends and loved ones years in court fighting with the state or each other over a will that is unclear or invalid.

In 2009, the estate tax exemption was $3.5M.  If you had $3.5M or less at the time of your death, you wouldn’t have to pay any estate taxes, but if you had more, you would have to pay taxes on the amount over the exemption.  In 2010, the exemption is unlimited so therefore no estate taxes.

This all applies to the federal estate tax.  Massachusetts has its own estate tax that is not related to the federal tax.  So while in 2010, the federal exemption is unlimited, Massachusetts still has theirs set at $1M.  This means that if you have more than $1M at the time of death in 2010 and you also lived here in Massachusetts, then you will have to pay Massachusetts an estate tax (arguably a lot less than if you also had to pay the Federal government).

But this generous lapse in tax in 2010 does not come for free.  Estate taxes are gone but so are the inherited step-up in cost basis of inherited property.  In the past, if your mom left you a house valued at $2M at the time of her death, when you inherit that property, your cost basis for tax purposes would automatically go up to $2M.  That means if you turned around and sold the property that day, you would have to pay no estate tax or capital gains tax.  In 2010 however, the step-up in cost basis is limited to only the first $1.3M.

Keep in mind however that the gift tax is not repealed in 2010.  The generation-skipping tax is repealed.

With all these changes in the estate tax laws, if you’re doing any sort of wills and trust planning, you need to see an estate planning attorney to make sure everything is set up correctly.  A pre-packaged will and trust kit from a stationary store or a $20 computer program will not be sufficient to plan around all these changes and be property tailored to your individual circumstances.

For those that have estates larger than $1 Million dollars, you are going to be subject to the estate tax.  If you’re not that far over, there is a way to decrease your taxable estate and that is by gifting some of it away.  In this year, you are allowed to gift $13,000 per person gift and estate tax free.  If you’re married, you and your spouse can both gift $13,000 each, making each per person gift worth up to $26,000 per person, per year.

Take for example, if you and your spouse have 2 children and 4 grandchildren and your entire estate is $1,250,000 (that’s $1.25M).  You and your spouse can gift to each one of them $13,000 each, making that a total of  $156,000.  You can then gift to them again in January for the new year another $156,000.  In 2 months, you have effectively rid your estate of $312,000!  That brings your estate below $1M and neither you or your spouse is in any danger of incurring estate taxes.

As they say, give a gift that matters this year.

Most people immediately think of their closest family member – whether that be your parents, your children or your spouse.  However, that might not be the best person to be making medical decisions for you in case of your incapacity.

Family members have the hardest time letting go.  One of the big responsibilities of a health care agent or proxy is to possibly stop life-sustaining medical care if you’re ever in a persistent vegetative state or coma.  This responsibility can be extremely hard for a close family member to carry out even if you have had a discussion about it with them in the past and/or you have it written down in a health care directive or living will.

Perhaps it would serve both you and your family better if instead of a close family member being your health care agent, you nominate a very close friend instead.  Not to say that some friends aren’t like family, but generally speaking, friends might be less emotionally affected with making a decision such as ending life-sustaining medical procedures than a very close family member would.

• Most recent statements from all bank and brokerage accounts
• Most recent statement reflecting all retirement accounts
• Most recent statements of any stocks, bonds, mutual funds, ETFs held outside of brokerage accounts
• Any life insurance policies
• Most recent pay stub
• Copies of tax returns for at least the last 3 years
• Most recent statements from all credit card or debt obligations
• Information regarding any real property, including but not limited to: fair market value of the home (tax accessed value), total mortgage amount, names of people on the mortgage and title
• Information regarding any automobiles and motor vehicles
• Copies of any previously drafted wills, trusts, power of attorney, health care proxy, health care directive or living will
• Copy of your prenuptial agreement, if any
• Any and all of the above documents for your spouse

We’ve heard about Pet Trusts in other states and in the news (Leona Helmsley) and you might think that that’s a good idea for your pets. Unfortunately here in Massachusetts, a Pet Trust is not an option because there is no statutory authority to create one.

A pet trust traditionally is when a sum of money is left to a pet. The beneficiary of the trust is the pet and there is a caretaker/trustee that manges the trust and takes care of the pet. Massachusetts defines pets as personal property and therefore, you can’t leave money to your pet, just as you can’t leave money to your toaster. Someone should tell our legislature that our pets are not simply property – they’re our loving companions and best friends. When was the last time you snuggled with your microwave?

So what can we do here in Massachusetts instead?

We can still create something that we call a “pet trust” but it won’t be a pet trust in the traditional sense. In the Massachusetts version, instead of designating the pet as the beneficiary, you would name the caretaker/trustee as the beneficiary of the trust with a duty to own and take care of the pet.

What’s the difference you ask?

In the traditional pet trust, the caretaker has an obligation to take care of the pet because the pet is the beneficiary of the money in the trust. In the Massachusetts ad hoc version of the pet trust, the caretaker is the beneficiary so they really can do whatever they wish with that money – including not taking care of your pets.

Until the legislature statutorily authorizes the creation of pet trusts here in Massachusetts, we will all have to suffer the uncertainty that comes with setting up the ad hoc version of the pet trust. It’s still better than nothing.

Click here for Part 2: Over the Counter Divorces

When I went to waste money buy the first packet – Over the Counter Wills kit – I also picked up a General Power of Attorney kit made by the same people. It cost me about $10.00 and when I opened it just now, there were actually 3 Power of Attorneys (POA) in there. 3 for the price of 1 – again! They give great deals apparently.

Their POA is 3 pages in total. My POA that I draft for my clients are 8 pages. Maybe I just ramble too much (or maybe their POA is leaving out 5 pages of good legal material).

There are 15 spaces, all lined up, for you to put your initials next to. If you want to grant the power holder these specific powers, you must initial next to each power. If you don’t want your power holder to have those powers, you cross out the line and don’t initial next to it. This looks an awful lot like a New York POA Short Form. Here in Massachusetts, we don’t use a short form of our POA like New York residents can, but I guess this company didn’t know that.

These 15 or so powers don’t really have a description of the powers either. It simply says for example, “Real estate transactions” or “Banking transactions”. Those look like headings of my POA rather than the actual legal text of it. Specificity is the key to good legal drafting and “Banking transactions” is not nearly as specific as

To open and close accounts, make, receive, and endorse checks and drafts, deposit and withdraw funds, acquire and redeem certificates of deposit, in banks, savings and loan associations, and other institutions, execute or release such deeds of trust or other security agreements as may be necessary or proper in the exercise of the rights and powers herein granted;

which is the exact language of the POAs that I write for my clients.

Here in Massachusetts, I have witnessed many financial institutions that are very nit-picky about anyone coming into their bank with a POA. They don’t like it and they don’t trust it. And quite frankly, they have a right and duty to be skeptical. A POA gives the power holder extremely broad powers and authority. As such, I have seen banks refuse to accept a POA that is many years old; or one that is ripped; or one that had multiple staples on it; etc. How do you think a bank or other financial institution will treat a $10.00 POA if presented with one here in Massachusetts that was clearly not drafted by an attorney?

One of the good things about their POA is that it includes an incapacity clause that allows the POA to stay in effect, even if you were to become incapacitated (which really is the main purpose of a Durable General Power of Attorney after all). However, the bad thing about their POA is that you must specifically initial next to it in order for the power to be granted.

But the main problem with all these cheap, over the counter, legal forms is not their substance (although it lacks a lot of be desired). The main problem really is that they expect the consumer to know exactly what it is they need. Notice that I didn’t say “want.” Because I have found that many of my clients come to me to ask me for what they want and my job as their attorney is to tell them what they need.

These forms will never substitute for good legal advice. It will never substitute for the thought and insight and individualized planning that an estate planning attorney will give to their clients. It will however, give you 3 cheap (and possibly useless) power of attorneys for the price of 2 happy meals. Enjoy!

1. You are penniless, homeless and have no family or friends to speak of.
2. You are 100% sure that you’ll never become incapacitated.
3. Your spouse, children and family are taken care of even if they don’t have access to any of your property or money.
4. If you are in a permanent vegetative state, you’d like to stay that way – forever.
5. Your child has a special need and is receiving government benefits – but you want to leave all inheritance to your child anyways despite the fact that it’ll disqualify him from all his government benefits.
6. Your entire estate is worth over $1 Million dollars and you have no problem giving 45% of it to the government when you die.
7. You have minor children and you’re comfortable with them inheriting all your life insurance and property because you think your 8 yr old has the financial capability and know-how to invest it and use it wisely.
8. You love the idea that if you were to become incapacitated, your family would have to spend months and thousands of dollars to ask a judge to get guardianship over you.
9. Your friend/neighbor/coworker got one done for $300 and you too want the cheapest possible deal you can get – having the best or an estate plan that works is not an issue.
10. You are invincible and immortal.

If on the other hand, you realize that a “simple will” is not all you need and that you need to at least have a General Durable Power of Attorney, Health Care Proxy and Health Care Directive (and possibly a trust), then you should talk with an estate planning attorney.

And no, I don’t do just simple wills and I charge a lot more than $300 – but what I do do for you will work when you need it to.

Government benefits however are notoriously underfunded and provides the individual with the minimum required to live. You, as a parent, want more for your child and that’s where a Special Needs Trust comes in.

A Special Needs Trust is a specific type of trust that is set up for disabled children usually by their parents or grandparents for their benefit. This trust will hold money or an inheritance for their benefit without disqualifying them from their government benefits. How is this accomplished? Well, the trust money is not controled by the child or individual receiving the income from it. They don’t get a say on when and how much they get. That decision gets left to a third party – a trustee. Since the child or individual has no control over the money, it is not considered a countable asset for governmental benefit purposes.

In doing your estate plan, think about any disabled children you might want to benefit and set up a Special Needs Trust for them. Also, if you know of any grandparent or aunt who is thinking of leaving money or property to your disabled child, let them know that leaving the money or property outright to them will disqualify them from government aid and that they should set up a Special Needs Trust as well.