Getting old sucks. There is no way around it. We can eat as many antioxidants and exercise every day, but the fact of the matter is we all are getting older every day. And we all age at different rates. In the modern days, women have statistically outlived men. Traditionally, the men took care of the finances and the women took care of everything else. These traditional lines have been more blurred in the younger generation, but the greatest generation still comes to our office with their traditional dynamics still in place. So the struggle is, what do you do when your husband passes away and he was the one who handled all of the finances?
It is a true struggle. When you’ve just lost your spouse of 50-plus years, the last thing you want to do is meet with an attorney to handle the legal side of things, and many women do think they need to meet with an attorney. They think or believe that everything is all taken care of and that may be the case, but there are things that need to happen, especially if you live in Massachusetts.
In Massachusetts, if you have more than $1,000,000 to your name, you will owe an estate tax. That being said, if you and your husband did your estate plan and set up trusts, you may believe that you are “all set.” And yes, having a trust can avoid probate and you may be all set but if your trust has tax sheltering language in it, you will need to meet with an attorney after the first spouse passes away. We call these types of trusts “Credit Shelter Trusts” or “CST.” They are established while you are alive, but when the first spouse passes away, we need to do some legal work to actually shelter trust assets from the estate tax. It doesn’t happen on its own.
In Massachusetts, upon the first spouse to pass, no estate tax is owed if all assets are left to the surviving spouse. It is deferred to the second spouse’s passing; however, when the surviving spouse inherits all of the assets, he/she still has the same $1,000,000 threshold of whether or not an estate tax is owed.
When spouses do estate tax planning that incorporates a CST, upon the first spouse to pass, we fund the CST with up to $1,000,000. This is preserved in the estate of the first spouse to die. Then when the surviving spouse dies, he/she will have the total estate, minus the assets in the CST. So by following up with your attorney after your husband (spouse) passes away, you can reduce your taxable estate by almost $1,000,000. In addition, some trusts are drafted with language that requires action to be taken within nine months from the date of death. Not all trusts have this language, but how would you know unless you make that appointment? Attorneys won’t know that your husband passed away unless you call our office.
Please understand, this is an oversimplified explanation. Everyone has different types of CSTs, as I mentioned above, and the type of assets in the trust can dictate what actions need to be taken, among other factors. Estate planning, reducing taxes, and keeping the process simple for your kids are actually quite complicated. If it was always cut and dry then attorneys wouldn’t be needed!
If you recently lost your husband or father and you want to make sure you are “all set,” please give us a call to schedule a time to review where things stand if anything needs to happen to make sure your investment in your estate plan has not gone to waste. You can always reach out to our office at 508.532.8689 or email us at firstname.lastname@example.org.
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Natick, MA 01760
Ladimer Law specializes in estate planning. We protect our clients, their heirs, and their assets by listening closely, knowing the law, and executing estate plans that fit and evolve.