What are common estate planning mistakes made by residents in MA?

Massachusetts residents often make several avoidable estate planning mistakes, ranging from complete procrastination to errors specific to state law, such as neglecting the state's unique estate tax threshold and failing to follow proper execution requirements for documents. 

Common mistakes include:

• Failing to Create an Estate Plan at All: The most significant error is not having a plan in place. Without a will or trust, Massachusetts intestacy laws determine how assets are distributed, which may not align with your wishes and often leads to lengthy and costly probate for your family.

• Relying on DIY Solutions: Using generic online templates often results in documents that do not meet Massachusetts' specific legal requirements, such as the need for two witnesses for a valid will, potentially rendering the entire plan invalid.

• Neglecting to Update the Plan: Estate plans should be reviewed every 3-5 years or after major life events (marriage, divorce, birth/death of a family member, buying property, etc.). An outdated plan may leave assets to an ex-spouse or exclude new family members.

• Improperly Designating Beneficiaries: Beneficiary designations on assets like life insurance and retirement accounts (IRAs, 401(k)s) generally override the terms of a will. Failing to keep these updated can lead to unintended recipients inheriting these accounts.

• Failing to Fund a Trust: Creating a living trust is only the first step. You must formally transfer asset titles (e.g., real estate deeds, bank account titles) into the name of the trust. An unfunded trust is an empty container and forces assets through the probate process.

• Overlooking Massachusetts Estate Tax: While the federal estate tax exemption is high, Massachusetts has a lower state estate tax threshold (currently an estate value over $2 million). Proper planning can help minimize or avoid this tax, an opportunity often missed in DIY or generic plans.

• Not Planning for Incapacity: Many people focus only on death, ignoring what happens if they become incapacitated. Failing to have a proper Healthcare Proxy and Power of Attorney in place can leave critical medical and financial decisions in the hands of a court-appointed stranger.

• Choosing the Wrong Fiduciaries: Appointing individuals (personal representative/executor, trustee, etc.) based solely on family ties rather than their ability to be organized, impartial, and responsible can lead to mismanagement and family conflict.

• Ignoring Digital Assets: In an increasingly digital world, access to online accounts, social media, and digital currencies can be overlooked. Specific provisions are needed to grant fiduciaries the authority to manage these assets.

• Misunderstanding Medicaid and Trusts: A common myth in Massachusetts is that a revocable living trust protects assets from Medicaid estate recovery for long-term care costs. This is false; an irrevocable trust is typically required for such planning and must comply with the state's five-year lookback period.