If you die without a will, the state will make one for you. Suppose
you die leaving a spouse and adult children. You wanted your husband
to inherit everything, assuming that your kids would receive the
remainder upon his death. But that may not happen. In many states
your spouse will get only one-third to one-half of your estate while
the kids receive the rest.
Also, when preparing a will, you can appoint the guardian who, at
your death, would be best suited to care for your children. Most
people pick a family member - a parent or sibling or sometimes a
Be sure to choose an alternate guardian in case your first choice
cannot or will not serve. Let the individuals you plan to name know
that you have chosen them so that they can agree to be guardians.
What happens if you die before making a will that names a guardian?
Your kids will be at the mercy of family members, friends and the
probate court. Keep in mind that any interested person can ask to
become a guardian, and that this critical decision would then be
made by a probate judge-who probably doesn't know your family.
Fund a Revocable
living trust is similar to a will-both are legally binding
documents that leave money and property to loved ones at your death.
However, a trust requires that you appoint your-self or someone
you choose, a trustee, to manage and distribute assets in the trust
during your lifetime. You may put some or all of your money and
property into the trust. If you name yourself trustee, you'll be
in control of the assets.
If you do choose to serve as your own trustee, you will still need
a backup to take over should you become incapacitated or die. Pick
someone who is capable, trustworthy and willing-usually a spouse,
relative, close friend or professional trustee. Professional trustees
can be found at local banks and trust companies. Compare the results
of their investments over the last few years. Even after choosing
a trustee, you can replace that person at any time.
Creating and funding a living trust often saves you money, since
the cost and time required to distribute assets held in a trust
are usually significantly less than transferring assets under a
will. Many people think a will avoids probate. This is not true.
Assets passing under a will must go through probate. Probate involves
filing and verifying the will with the local court, appraising property,
paying debts and taxes, and distributing the remaining assets to
Besides avoiding probate, living trusts can provide other benefits
that a will can't. Suppose you leave your estate to your son in
your will. What happens if he later divorces or dies? His wife ends
up with much or all of your funds. Your son's wife (or ex-wife)
could then leave your money to anyone she chooses at her death-omitting
your son's children (your grandchildren) entirely. With a living
trust you can guard against such a scenario, making sure your grandchildren
benefit from your estate. You would name your son as your successor
trustee, allowing him to draw income (and possibly principal) in
his lifetime. At his death (or when he reaches a designated age)
the trust would end and the funds would be distributed to his kids.
A living trust can also protect your children's or grandchildren's
until they are responsible enough to handle it themselves. You can
name a more responsible family member as successor trustee to keep
control of the funds for children or grandchildren until they are
25, 30, 40 or even older. You decide when the time is right. In
the meantime, the heirs can get money from the trust as they need
it for school, health care, and other worthwhile purposes.
Finally, if you are remarried and wish to leave money or property
to children from a prior marriage, a living trust is invaluable.
In some states, assets in a living trust that pass to children at
death cannot be intercepted by a surviving spouse. But if you have
only a will, chances are your spouse will receive a sizable portion
of your estate-even if the will leaves everything to your children.
Have a Durable
Power of Attorney
This may be the most important planning tool you can give to your
family. Let's say you suffer a stroke and can't handle your financial
affairs. Your bills still need be paid, and to do that, some of
your CD's must be cashed in and stocks sold. Since you're too ill
to sign, can your husband or children help? Unfortunately, the answer
is no. No one else is automatically authorized to handle your finances.
A power of attorney can give the agent either specific, limited
powers or broad powers. For example, it can authorize someone to
sign the deed to sell your house when you are out of town or to
endorse checks, pay bills or make withdrawals from your accounts.
A durable power of attorney
is almost exactly the same as a regular power of attorney, but with
one key difference. A regular power of attorney becomes ineffective
the moment the principal becomes incompetent; a durable power of
attorney remains valid even after debilitating illness or mental
What happens if you become incapacitated without having given anyone
a durable power of attorney? Typically, your financial affairs would
have to be managed by a guardian appointed by the probate court-a
more expensive and more complex procedure than a durable power of
Provide a Health
The durable power of attorney permits you to appoint a trustworthy
individual to handle your financial matters. Most states now allow
specialized durable powers of attorney for health-care decisions,
too. This document lets you appoint a trusted relative or friend
to make decisions about your medical care in the event that you
are unable to make or communicate them yourself.
For example, suppose a doctor would like to try a procedure (non-emergency)
to diagnose your illness. You are unconscious, so you are unable
to authorize it. The doctor can't just go ahead with the procedure
and your family can't authorize it. However, if you have given your
family durable health care power of attorney or they have obtained
guardianship through the probate court, then they can authorize
the medical procedure.
Massachusetts has a specific statutory provision for this useful
tool and calls it a Health Care Proxy.
Create a Living
A Living will informs others what medical treatment you desire if
you become permanently unconscious or terminally ill and are unable
to make or communicate decisions regarding treatment. All but three
states-Massachusetts, Michigan and New York-have passed living will
laws to protect a patient's right to refuse medical treatment. In
the majority of states, a living will is a legally enforceable document
and can insure that a doctor who abides by a patient's wishes will
not incur any liability.
Even in states without living will laws this document is useful
to a judge trying to decide what an unconscious patient would want.
Prepare a homestead (Massachusetts)
Filing a Declaration of Homestead in Massachusetts gives you protection
against creditors for up to $300,000 in the equity in your home.
Single persons are eligible to file homesteads. Disabled persons
can be entitled to EXTRA protection as are persons over the age
Own your Home by Tenancy
by the Entirety (Massachusetts)
This form of ownership affords in many circumstances excellent protection
against creditors for married couples. Consult with your attorney
about this form of home ownership.
There are many more sophisticated weapons for a
savvy person to protect his or her assets from Creditors including
Family Limited Partnerships, Limited Liability Corporations, and
a wide selection of Estate
Planning Techniques that are excellent tools to protect