Tax Planning and Compliance. Estate Planning. Business and Investment Planning.
Tax Planning and Compliance. Estate Planning. Business and Investment Planning.
We believe that we can get the best results for our clients if we consistently utilize a sound and proven client service strategy. Our service strategy is a simple one, and it works--especially in estate planning. Thus, throughout our work with you on your estate plan, we will attempt to do the following:
1. We will Listen.
Do not look for quick answers. We need to ask you questions (including the ones in this website), and we need to hear your answers.
2. We will Understand Your Objectives. This is critically important. You will see questions throughout this list that are meant to assist you in defining your own objectives--and to assist us in understanding them.
3. We will Develop the Right Solutions to achieve those objectives.
These may involve gifts to family or charities, use of trusts (during your lifetime or at your death), use of the “marital deduction,” charitable gifts or bequests, educational funds for children or grandchildren, powers of attorney, etc. Our understanding your estate and your objectives will help us make recommendations that are right for you.
4. We will Do the Job.
We will try to give you an estate plan that meets your objectives and makes you feel a sense of comfort and security.
The legal profession has become appropriately concerned about joint legal representation of clients. A husband and wife may have different interests in estate planning that concerns their property interests. If we are to act as attorneys for both of you, we will try to explain the consequences of the decisions you make and balance all of the factors. We cannot, therefore, be an advocate for either of you against the other. This process could favor one of you to the detriment of the other.
In assisting you in your estate plan, we must necessarily obtain confidential information from each of you. However, if we represent both of you, we cannot keep that information confidential from either of you.
We will probably make recommendations that affect your property interests after your deaths. Our recommendations may be more beneficial for one of you than for the other. The possibility of a divorce must also be recognized. Consequently, our recommendations could affect the income, property and support provisions in any such divorce or after the death of either or both of you.
You are each, of course, welcome to have your own counsel for any part or all of the matters to be discussed.
A. If you fail to plan your estate and die without a will, the laws of the Commonwealth of Massachusetts will create an estate plan for you. The entire system of “intestate” succession or “descent and distribution” is set forth by statute and is too complex for a detailed discussion here, but some surprising and frequently undesirable results can occur. The law prescribes both the persons to whom your property will pass and the division of your estate among those persons. The distributions provided by law are inflexible and may not satisfy your desires as to distribution of your estate. In addition, the amount to be distributed to your children will require a cumbersome and costly legal guardianship if the children are minors at the time of your death.
If you die without a will and if your descendants and the descendants of your marriage to your spouse are your only descendants, then your spouse will receive all of your intestate property.
If you die without a will and you are survived by your parents and do not have any descendants, then your spouse will receive $200,000 and 3/4 of the balance of your intestate property.
If you die without a will and if all of your descendants are also the descendants of your surviving spouse and your surviving spouse has descendants that are not your descendants, then your spouse will receive $200,000 and one half of the balance of your intestate property.
If you die without a will and if one or more of your descendants are not descendants of your surviving spouse, then your surviving spouse will receive $100,000 and one half of the balance of your intestate property.
If you die and are survived by your children only, leaving no surviving spouse, your entire estate will pass to your children. If they are minors, a guardianship will be necessary to manage their property.
A. Administration of an estate involves the collection of assets, payment of liabilities, and distribution of properties to the beneficiaries or heirs. Administration of an estate is conducted under some degree of probate court authority and supervision, but different procedures are available.
A. A Personal Representative, also known as Executor, is a court appointed fiduciary who will serve as the primary representative of your Estate.
A. A trustee is one to whom property is transferred for the benefit of someone else (the beneficiary).
We find that our new estate planning clients frequently misunderstand trusts. Many of our clients have heard a horror story about a trust, and the story often involves an impoverished widow-beneficiary who cannot extract enough money from the well-funded trust to maintain herself.
Present law, well-drafted trustee powers and professional trustees now make this concept of trusts obsolete. A trust can be designed to produce almost any result desired by the client if the client gives the trustee sufficient funds with which to work. We usually recommend that trustees be given very broad and adaptable powers to provide flexibility for future events. The trustee should be empowered to do what is best for the beneficiary, without being curbed by inappropriate restrictions.
If a trust appears suitable for your estate plan, you will need to exercise care in the selection of a trustee. The family member who comes to mind as a logical first choice may prefer not to deal with the management of your properties. If a corporate trustee appears appropriate, we will suggest that you have a conference with the representative of your bank's trust department. Further, you should consider giving someone, such as a committee, the power to change trustees.
A. Massachusetts law allows you to authorize another individual or entity to manage your affairs. It allows you to sign a document known as a durable power of attorney. A durable power of attorney is a written document in which you, as the principal, designate someone you trust, such as your spouse, another family member, a friend or a professional, as “your attorney in fact” or “agent.” Your attorney in fact is authorized to perform certain acts on your behalf. You may give as much or as little power to your attorney in fact as you desire. For instance, you may authorize your attorney in fact only to have the power to transfer your assets to a trust set up for your benefit, or the powers could be very broad and authorize the attorney in fact to do anything with respect to your assets, including having access to your safe deposit box, manage your investments, run your closely held business, sell and transfer your assets. The powers you give your attorney in fact will be in effect when the document is signed. Generally, a power of attorney terminates on the disability of the principal. If the power of attorney is “durable”, it will not be terminated automatically if you become disabled or incapacitated. Not all powers of attorney are durable.
We have found that many of our clients want to appoint someone to act for them in the event of their disability.
Who should be the attorney in fact? In view of the significant authority and discretion conferred by a general durable power of attorney, the attorney in fact must be someone in whom the principal has complete trust and confidence. If the durable power of attorney is a springing durable power of attorney (that is, one that is effective only when the principal becomes disabled or incapacitated) the attorney in fact should not also be the person who determines the incapacity of the principal.
A. Your will could be drafted to be no longer than one page. Indeed, any lawyer could produce an abbreviated will for a relatively small fee.
The problem, however, is that such a will may not accomplish your objectives for your beneficiaries. We prefer to draft wills to cover all the various factual and legal situations that reasonably may be expected to arise. The alternative is to hope that, by coincidence, the will may fit the facts at your death.
Accordingly, the will that we draft for you may be a lengthy document. The burden to you of reviewing and approving a long will may be a blessing to your family when they later find that you have anticipated and resolved what might have been cumbersome problems.
A. Louisiana, Texas, New Mexico, Arizona, California, Nevada, Washington, Idaho and Wisconsin are community property states (or use a marital property regime very similar in effect to community property). These nine states use a marital property law scheme that differs from the laws in effect in Massachusetts. Under the community property system, marital property generally is deemed to be owned one-half by each spouse, regardless of the legal title to the property. In common law jurisdictions, legal title generally controls the ownership interests.
Even though you are now domiciled in Massachusetts, if you ever lived in a community property jurisdiction while married, we will perform a special review of your estate plan to account for the community property consequences.
A. Your estate may be subject to at least two taxes: the federal estate tax and the Massachusetts estate tax. In addition, if you own real estate (or tangible personal property) in another jurisdiction there may be an additional estate tax due in that jurisdiction.
The federal and the Massachusetts estate tax are based on the fair market value of your “gross estate” at the time of your death. At the option of your executor, an alternate valuation date of six months from the date of your death can be used.
Your gross estate will include the value of all the property in which you own an interest at the time of your death. Additionally, your gross estate may include property that you do not own, but over which you have retained or received certain rights or powers.
The estate tax scheme provides you with a “marital deduction” for bequests of property to your surviving spouse. The marital deduction in effect allows interspousal transfers to pass tax free because they are deducted from the value of the gross estate. In order to qualify for the unlimited marital deduction, property must be transferred to the surviving spouse in a fashion that satisfies the technical requirements of the Internal Revenue Code, such as an outright transfer or in certain types of trusts. It is important that you let us know if either spouse is not a U.S. citizen.
For federal gift, estate, and generation-skipping transfer tax (GST) purposes, the amount that an individual can pass tax-free at his or her death is $12.92 million in 2023. This amount is adjusted annually for inflation and, under current law, will be cut in half in 2026.
The Massachusetts estate tax filing threshold is $1 million. The Massachusetts marital deduction is unlimited. If your estate plan is structured properly the Massachusetts and federal estate taxes will all be deferred until both you and your spouse die and, at that time, the Massachusetts gross taxable estate will have been reduced by approximately $1 million.
A. A bypass or credit shelter trust is a trust that is designed to be excluded from or “bypass” the surviving spouse's estate for federal or state estate tax purposes. It enables a couple to utilize the applicable exclusion amount of each spouse. The surviving spouse can be a beneficiary of the bypass trust even though the bypass trust property is excluded from the surviving spouse's estate for federal or state estate tax purposes.
The federal estate tax allows for "portability" of the exclusion amount, meaning that any portion unused by the first estate could, under some circumstances, be added to the exclusion amount available to the surviving spouse's estate. Thus, a total of $25.84 million in 2023, indexed for inflation in later years, could be could be left to the combined heirs of a married couple free of federal estate tax under current law.
However, the use of bypass trusts is still recommended because the Massachusetts estate tax filing threshold remains at $1 million and, if a couple's assets exceed $1 million, then utilizing the bypass trust will reduce the overall amount of Massachusetts estate taxes the beneficiaries will pay when both spouses die. In addition, under current law the federal exemption will be cut in half in 2026 and current law could be changed at any time to accelerate that date or reduce the exemption amount.
A. The generation-skipping tax is a federal transfer tax that is separate from the gift and estate taxes. Generally, it applies to a transfer of property to a grandchild (the transfer skips the child's generation). It also applies to a transfer in trust for a child's lifetime with the property being distributed to grandchildren upon the child's death without having been taxed in the child's estate.
The federal generation-skipping transfer tax exemption is now the same as the federal estate tax exemption.
A. Proceeds from life insurance policies, retirement benefits and IRA's will pass in accordance with the beneficiary designations. In addition, property held in certain joint tenancies with a right of survivorship will pass to the surviving joint owner. Bank accounts and brokerage accounts can be subject to Payable on Death or Transfer on Death designations which will also determine who inherits the money and property. Therefore, you should review the beneficiary designations and account agreements to be sure they are coordinated with your will. We are happy to assist you in this process.
A. If you die leaving minor children or disabled or incapacitated adult children, the other parent ordinarily will raise and support them. If the other parent is not able or willing to do so or is not living, however, your minor children and disabled or incapacitated adult children will require a “guardian.” A guardian is an individual who is appointed by the court primarily to care for the person of a minor. You may appoint a guardian for your children in your will. If you fail to do so, the court will make the selection of a guardian. We recommend that you assume the responsibility for this important decision, rather than leaving it to a judge unfamiliar with your family situation.
Clients frequently tell us that they have chosen one of their parents as the guardian in the event of both clients' deaths, but in many situations we believe that such a selection is unwise. For example, assume that the youngest child of the client is three years old and the client's parent is 68. When that child is 15 (a time when child-adult communication can be difficult under the best of conditions), the grandparent will be 80. Under these circumstances, another choice may be better for your child. You should look first to your contemporaries in your families (such as brothers, sisters, or cousins). If such family contemporaries are not appropriate, then consider friends with children in the same age range as yours. In any case, you should consult with the proposed guardian to ensure that the person is agreeable to assuming the significant responsibility.
If both parents die, your minor children or disabled or incapacitated adult children may be left with substantial property interests that need management and protection. In that instance, the court will appoint a conservator to care for those property interests. Given that the guardian has only limited power over the minor's property, protective proceedings may be initiated in which the court will appoint a conservator to administer the children's property and affairs. In some instances, the conservator may fulfill the duties of making decisions concerning the child's medical care and personal concerns as well. A court appointed conservatorship can be a cumbersome and expensive manner of dealing with the property of the minors, however, and it should be avoided. The conservatorship for financial affairs can be avoided by proper planning for the use of trusts or custodianships.
If you have planned your estate properly, the guardian should not experience financial strain in raising your children. We usually suggest that upon the death of you and your spouse, a trust be established for your minor children or incapacitated or disabled adult children. The trustee should be encouraged to make generous distributions to assist the guardian, and the trustee can be authorized to provide funds to pay for any necessary expansion of the guardian's home.
Please be sure to inform us of your choices of a guardian (either one person, or a husband and wife together). (Note that if you are designating a husband and wife to serve as co-guardians you may want to specify that both are to serve only if they are married at the time of the appointment of the guardian).
A. A health care proxy is a document in which you may designate an individual to make decisions concerning your health care. While you are competent you are in charge of decisions which pertain to your health care. If you wish to designate an individual who will make decisions concerning your health care if you are unable to do so, please be sure to provide the name, address and telephone number of the person who will make health care decisions on your behalf .
A. Under the Health Insurance Portability and Accountability Act, known as HIPAA, doctors and other health care providers can disclose information only with the patient’s consent. Please be sure to provide us with the names and addresses of anyone in addition to your health care proxy whom you wish to authorize to receive your medical records and other health information.
A. As a general rule, we suggest that you contact us every few years for a conference to review your estate plan to update the information in your permanent file. We also recommend that you contact us in the event of a dramatic change in your finances or in your family situation. For example, a substantial increase in your estate (through increased life insurance, inheritance, gifts, or successful investments) may create opportunities for tax savings, as well as necessitate further family financial planning. A substantial decrease in your net worth may also necessitate a revision in your estate plan. A divorce, marriage, or second marriage, of course, will re-open completely the matter of planning your estate. Likewise, do not hesitate to contact us any time you have questions as to whether or not changes in tax or other substantive laws may affect your estate plan. While we sometimes send information to our clients on changes in law, we do not assume the responsibility of doing so.
Under current law federal estate, gift and generation-skipping transfer tax purposes, the per person exemption is $12.92 million in 2023 (adjusted annually for inflation). The Massachusetts estate tax threshold level for filing estate tax returns is $1 million per person. Massachusetts currently has no gift tax or generation skipping transfer tax. A married couple can effectively transfer double the amount of these exemption amounts tax-free if their estate plans have been properly set up. Under current law, until 2026 the highest federal gift, estate, and generation-skipping marginal tax rates are 40%.
A. FidSafe is a cloud storage system created by Fidelity Investments for important documents. You do not need to be a client of Fidelity Investments to use FidSafe. Files are protected by a password and by two factor authentication.
When documents are shared with you on FidSafe, you will receive an email requesting that you create a password protected account. We will not have access to your password. We recommend that you chose to use two factor authentication for FidSafe and for all of your other online accounts. The documents on your FidSafe account can be accessed at any time through the link on the navigation bar on this www.kohenlawfirm.com website or directly on the www.fidsafe.com website. Your FidSafe account can also be accessed with an iPhone app which can be downloaded and used to view your documents on your phone. This can be useful in an emergency when you don’t have your documents with you.
We are happy to use any other cloud storage system for important documents that you may prefer, or to use none at all. Whatever cloud storage system and online accounts you have, you must feel confident with their privacy protection and follow the strictest security instructions.
A. While we believe that the technology for cloud based document storage sytems like FidSafe should be reliable and secure, there is always potential for risk. If the FidSafe system is compromised, there is the possibility someone could gain unauthorized access to these files. If you are not comfortable with this risk please, let us know and we can remove any documents we have placed there for you.
You can use your FidSafe account to upload and store any other documents. We will not have access to these other documents unless you choose to share them with us. We recommend that you upload copies of any older estate planning documents that are still in force.
A. Certain original paper documents are important to keep accessible, as the law may require the original to perform certain actions. For example, to “probate” a will after someone has passed away, the original signed and witnessed will is required. In fact, if the original cannot be found, the law may presume you intended to revoke that will. The same issue might arise with respect to a revocable trust. Therefore, all of your original documents should be kept by you in a secure, fireproof location. We do not retain any original documents whatsoever. Your fiduciaries should be informed of the location of the original signed documents. If key people cannot locate your documents in an emergency they will not be able to assist you in the manner you wish. Bear in mind that documents kept in a bank safe deposit box may not be readily accessible.
A. All original documents are returned to our clients. We do not retain originals. In addition, you can download the electronic copies of the documents from FidSafe or other cloud storage service and retain them on your computer. We may retain any access granted to us for client document on FidSafe or other cloud storage system for a former client in order to provide you time to access and save the documents wherever you or your new advisers wish.
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