Five Things You Need to Consider When Preparing a Will

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Would you like to set up a trust in Massachusetts? Whether you’re looking to manage your assets or want to ensure you leave assets to your children, establishing a trust is an excellent choice. A trust is a legal arrangement where the grantor assigns a trustee to manage assets on behalf of the beneficiaries of the trust.

Many people prefer to have a trust account as part of their estate plan because it is an excellent way to protect their assets and property and ensure everything is distributed accordingly. With that said, read on to learn what steps you need to take when preparing a will in Massachusetts plus three key things to know before establishing a trust. 

Preparing a Will in Massachusetts

If you would like to set up a will in Massachusetts, there are specific steps that you will need to follow. These steps include:

1. Choose Between a Single or Joint Trust

The first thing that you will need to do is choose between a single and a joint trust. If you are unmarried, a single trust account will likely make the most sense. A joint trust is generally more beneficial for married couples with shared assets. 

2. Make Note of Your Assets

The next thing you’ll need to do is review your assets. At this point, you will be deciding what you would like to include in your trust. This may be real estate, investment accounts, jewelry, and other assets. 

3. Choose Your Beneficiaries

While many people select their children or other close relatives as heirs, you can also elect to have your assets transferred to an entity such as a charity.

4. Choose a Trustee

Every trust account will need a designated trustee. You will need to choose someone whom you would want to retain control of your trust and everything that you put in it. Due to the control that the trustee has, it’s best to choose someone who you can trust, such as a close family member. You can even choose yourself. But, be sure that you have a successor if you pass away. 

5. Find an Experienced Lawyer When Preparing a Will

Working with a Worcester trust lawyer gives you the peace of mind that the type of trust you have chosen is best for your needs. Additionally, your lawyer will ensure that the trust is enforceable and comprehensive.

6. Prepare and Sign Documents

All of your decisions will need to be in writing. Be sure to have written documentation of the type of trust you’re choosing, assets and property you’ll be including, and who your trustee is.

7. Fund Your Trust

The last step in the process is to begin transferring your assets to your trust. 

The 3 Things You Need to Know Before Preparing a Will

Before establishing a trust account, there are a few things you will need to establish. This can help improve the outcome of your trust account and help you achieve your long-term financial goals. 

Goals of the Trust

The first important thing to consider before establishing a trust account is the goal of creating one. If you do not establish clear goals for your trust account, this can potentially compromise your legacy later on as your beneficiaries may not do what was intended with the assets and/or property.

If you are preparing a will to leave assets and/or property to your children, it’s a good idea to establish when they will receive it. For example, you might want them to receive assets from the account every year, at a certain age, or when they’ve reached a certain milestone in their life, such as graduating college.

Types of Trusts

There are many types of trusts that have their own uses and benefits. Some common trusts include: 

  • Special Needs Trust: This is designed for beneficiaries with a disability, such as children with special needs
  • Bypass Trust: This allows married couples to bypass estate taxes on specific assets when one spouse passes away.
  • Revocable Trust: This gives the grantor freedom to revoke the trust at any time. 
  • Irrevocable Trust: This is a set trust where no one can revoke it without the authorization of the beneficiaries. This type of trust has special tax benefits.
  • Grantor Trust: This is a trust where the grantor is the owner of the assets and property for the purpose of income and estate taxes. 

Taxes

Taxes and trusts often go hand-in-hand and can become even more complicated depending on the type of trust you have and the value of the assets and property. With that said, there are three types of taxes to think about before you prepare a will. 

  • Estate Tax: If a person has a large estate, it’s possible that they will owe federal estate tax when they pass away. It’s important to note that this tax can be up to 40%. Additionally, some states have their own estate tax. For instance, Massachusetts charges an estate tax on estates worth more than $1 million. Furthermore, Massachusetts levies its estate tax on the entire estate, not just the amount above the threshold.
  • Inheritance Tax: Some states charge an inheritance tax different from an estate tax. In Massachusetts, inheritance tax is charged based on the size of the estate. 
  • Income Tax: Some assets and property within a trust generate income. This could lead to an income or capital gains tax.

How a Lawyer Can Help When Preparing a Will

Preparing a will is an excellent way to protect your assets and property and ensure that your beneficiaries can receive your wealth when you pass away. If you want to move forward with setting up a will, a dedicated Worcester estate planning attorney will walk you through the process and help you lay the foundation for a successful estate plan. Reach out today to schedule your strategy session.