Benjamin Franklin got it right, as he so often did, when he wrote that “in this world nothing can be said to be certain, except death and taxes.” This is the reason why Living together estate planning is a necessary step for every person to take, regardless of their life situation. But when a person lives with someone else, the need for considered and thoughtful estate planning rises considerably. This is why Living together estate planning is important.
Massachusetts Division of Estate Assets
The first element to consider is how assets are to be divided.
The simple truth is that monetary assets can be split up evenly, but personal property–such as a house or a boat–cannot.
If a person wants to leave financial assets and/or personal property to the person they are living with upon their death, an arrangement to this effect can be made through a joint tenancy with right of survivorship (or JTWROS).
However, when there are assets–financial or otherwise–to be shared among the decedent’s children, siblings, or parents, the contours of that distribution need to be set forth very clearly. The monetary value of all assets must be disclosed, or some way of calculating their fair worth must be provided. The more something is worth, the harder it can be to divide it to everyone’s satisfaction.
Massachusetts Heirs, Different Priorities
Let’s say, for example, there is a cabin for either generating rental income or for use on personal getaways. If the cabin is left to a number of children, some may want to sell it and pocket the proceeds, some may want to use it themselves during vacation season, and some may want to simply rent it out. Each solution will have its own challenges and expenses, including what is a fair price to receive, or who is responsible for finding a rental agent? The cabin could also have a sentimental attachment that different heirs will feel in different ways.
The likelihood that all heirs will agree on dividing up such a property to everyone’s satisfaction is small. The cabin could also be left to a surviving spouse, or to the other person in a cohabiting arrangement. But since the cabin cannot be parceled out or cut into several small pieces, estate planning can determine what will ultimately become of the cabin.
Massachusetts Surviving Spouses
In the estate planning process, it is important to determine what to do about any surviving spouse(s). If one or both of the cohabiting parties is still legally married to someone else at the time of their passing, the surviving spouse has legal standing, in matters where no will has been identified. If a surviving spouse(s) have agreed-upon ownership rights in any personal property, those will need to be memorialized in any estate planning documents.
Common law marriage is not recognized in Massachusetts, and has not been for centuries. This puts a greater emphasis on the role of estate planning by unmarried couples, so that their final wishes will be carried out as they want them to be. Ambiguity will lead to conflict, whenever competing interests dig in their heels. Death is an emotional experience to begin with, and uncertainty over who receives what only makes matters worse. Living together estate planning makes so much sense when you start to consider all the variables.
Planning for Massachusetts and Federal Estate Taxes
Thorough Living together estate planning has the additional benefit of saving financial obligations to state or federal governments. Few people have an estate the size of Prince, who left behind an estimated $300 million when he died in April of 2016. But his lack of estate planning will cost his heirs more than half that amount in estate tax payments. That is a rather heavy, and ultimately unnecessary, burden for his heirs to bear.
Massachusetts has a well-defined estate tax applicable exclusion amount of $1 million, which is well below the federal level of nearly $5.5 million. Estate planning can work within these existing thresholds, in order to minimize the amount of estate taxes that will be due.
It goes without saying that bureaucrats and government agencies in both Boston and Washington, DC will gladly accept some share of an estate’s proceeds. Careful estate planning, however, can be used for keeping a larger share for the estate and those who will benefit from it.
Contact the attorneys at the Living Together Law Center today for a discussion of estate planning issues, to help you decide what happens to your assets once life’s certainties come into focus. Living together estate planning why wait?