The passing of the new Massachusetts Uniform Probate Code should prompt Massachusetts residents to evaluate whether and how their estate plans may be impacted by the new law.

After two decades of debate, the new Massachusetts Uniform Probate Code (MUPC) finally became effective in its entirety on March 31, 2012. The MUPC is designed to simplify, streamline, and clarify the process of settling a decedent’s affairs in a manner consistent with the decedent’s intent. This major legislation brings significant changes to the probate process and procedures. It increases uniformity with other states,* eases the administration of probate matters for judges and court personnel and reduces delays in the estate settlement process.

(* To date, 18 states have adopted the Uniform Probate Code, including states in which many Massachusetts residents own property, such as Florida and Maine.)

The MUPC revises the rules of “intestate distribution,” which is how one’s estate is distributed when one dies without a will. This new law especially impacts “blended” families (i.e., second marriages where the spouses may have children from prior unions and may have children together).

Terminology has also been streamlined. Previously, probate forms and terminology were different for those who died with a will (testate) and for those who passed without one (intestate). The confusing distinction between Executor and Administrator is gone; the term now used to identify the person appointed by the court to manage the estate is Personal Representative.

The following comparisons of the old and new rules of intestate distribution illustrate the significance of the changes:

Under the former law, if a person died without a will and was survived by a spouse:

• If the decedent had descendants (children or grandchildren), the surviving spouse took only half the estate, and the descendants took the remaining half.

• If the decedent had no descendants, the surviving spouse took the first $200,000, and then split the remainder with the decedent’s heirs at law (blood relatives).

Under the new law, for intestate estates with surviving spouses:

• If the decedent is not survived by parents or descendents, the surviving spouse takes the entire estate. There is an exception, though: If the surviving spouse has descendants from a prior relationship (i.e., not of the decedent), the surviving spouse takes the first $100,000 plus half the remaining estate, and the other half goes to the decedent’s nearest heirs at law (blood relatives).

• If the decedent is survived by descendents, the surviving spouse takes the entire estate. The exception to this rule is: If any of the descendants are not common to the decedent and the surviving spouse (i.e., either the decedent or the surviving spouse has descendants from a prior relationship), the surviving spouse takes the first $100,000 plus half the remaining estate, and the decedent’s descendants take the other half.

Although the MUPC does not invalidate a current will, the new terminology, changes to the legal interpretation of certain will provisions and the new MUPC inheritance rules (for wills that point to default intestacy schemes, by way of example) may call for revisions to existing wills. Additionally, the new MUPC rules of how marriage and divorce affect existing wills may bring about unintended consequences.

The bottom line is that if you’re not sure whether or how your estate plan is affected, have it reviewed by an estate planning attorney. At Estate Preservation Law Offices, we are pleased to conduct this analysis at no cost.

As you move through different life stages, chances are that your estate planning needs will evolve as well.  As your life goals and familial circumstances change, they will need to be incorporated into your estate plan. Estate planning is not a one time endeavor.  The following guide will help you understand when you need an estate plan, and when it’s time to review your existing plan with an estate planning attorney.

Young/single

• A durable power of attorney, health care proxy, HIPAA release and living will enable you to designate who will make decisions for you if you become incapacitated

• Create a will to control who will inherit your assets, and consider a trust for minor beneficiaries

Engaged

• Consider whether a prenuptial agreement is appropriate. Factors may include children from prior relationships, disparity in net worth and expected future inheritances

Married

• Update your durable power of attorney, health care proxy and HIPAA release to name your spouse

• Create a revocable living trust for marital estate tax planning and update beneficiary designations if you want to name your spouse as beneficiary of your 401(k)/retirement plans, life insurance policies and pension

• Look into life insurance to ensure each other’s financial security

Parents

• Update your will to nominate a guardian/conservator for your minor children

• Create a revocable trust, or amend your existing trust, to ensure your children’s inheritance is properly managed

• Establish an emergency guardianship proxy that nominates a guardian to care for your child if both parents are incapacitated

• Review/increase your life insurance coverage

• If you have a special needs child, be sure to include special needs trusts in your plan

• Update beneficiary designations on life insurance policies and retirement plans, being sure to name your trust(s) and not minor children directly

Starting a business

• Organize your business with the state to separate business and personal liabilities and maximize creditor protection

• Update your estate plan to ensure that the business is disposed of in accordance with your wishes

• Sign a buy-sell agreement with your business partners, if applicable, to establish the rights and obligations of the owners in the event of death, disability or voluntary exit from the business

Divorce

• Update documents, including beneficiary designations, and revoke durable powers of attorney and health care proxies that name the former spouse

• If you remarry, revise your will and trust documents to reflect the proper beneficiaries

Middle years

• Your trust should be updated as changes occur (e.g., divorce, additional children, changes in financial situation, inheritances or increase in net worth, or death of a beneficiary or trustee)

• Consider purchasing long-term care insurance

Retirement years

• Review your estate plan

• Review designations on your durable power of attorney, health care proxy, and HIPAA release (be sure the people you’ve named are still in your life and willing and able to serve in that role)

• Add provisions to your trust to make distributions to your children or grandchildren, taking into consideration beneficiaries’ creditor exposures or special needs concerns

• Consider charitable gifts

• Consider reducing the size of your estate through gifting or creating an irrevocable life insurance trust or charitable trust

• Evaluate your exposure to long-term care/nursing home costs and consider protective planning to safeguard your estate

• Establish a prepaid funeral arrangement

If you do not have an estate plan or if you have a plan and have reached one of the life stage milestones mentioned above, you should carefully consider contacting an estate planning attorney to get you on track to total asset protection for you and for your loved ones.

Proper planning for either disability or death is one of the most thoughtful things you can do for your family.  In an article Helping Families Survive after Death or Disability, you will learn valuable information from Attorney Cammuso who walks readers through the essential and important estate planning documents that you need to pull together to make things easier for your family in the event of your disability or death.

Similarly, when it comes to estate planning selecting an attorney who specializes in this field should be your starting point. In EstatePlanning: The Right Attorney uses a Personal Approach, Attorney Cammuso guides you through a selection process to help you make the right choice.

With many seniors already apprehensive to consider a reverse mortgage, the exit of two major financial institutions from the market may reinforce the perception that reverse mortgages are a risky endeavor.  However, as with any financial product, it is important to understand the parameters and purpose of a reverse mortgage before dismissing it.  Seniors should also bear in mind that the recent regulatory developments with reverse mortgages, which prompted these institutions to stop offering them, were actually implemented to safeguard seniors in the lending process.

Reverse mortgages allow homeowners over the age of 62 to receive either a lump sum of money or a regular stream of income by converting a portion of the equity in the property to cash. Borrowers must continue to pay the property taxes on their homes, as well as keep the property insured and maintained. When the homeowner either moves or dies, the property is sold, the bank is paid back from the proceeds of the sale and left over funds go to the homeowner or his/her estate.

A reverse mortgage, as with a traditional mortgage, is a lending instrument and subject to government regulations and qualifications. There are also costs associated with originating the loan.

Reverse mortgages have traditionally been used as a retirement fund for seniors who have limited sources of income beyond social security. With the many unforeseen increases in costs of living coupled with the hit to many people’s retirement accounts with the market performance in recent years, many seniors find reverse mortgages to be the solution that allows them to maintain a comfortable standard of living.

Because a reverse mortgage can impact your existing estate plan and affect your planning options in the future, you should consult with your estate planning attorney and financial advisor if you’re considering a reverse mortgage.

Avoidance behavior is easy and we all practice it to an extent; but delaying important estate planning decisions can have profoundly negative consequences for you and for your loved ones. Four Common Estate Planning Mistakes, written by Linda Cammuso for Fifty Plus Advocate, discusses four of the mistakes that people make even before they begin the estate planning process. If this sounds familiar to you – “I don’t need an estate plan because I don’t have enough money”, you’ll want to read the article to hear about other very common misconceptions, and learn what you can do to avoid the consequences that inaction is sure to trigger.