Page 6 - White Paper-Estate Planning for Young Families

however, and you’re not sure how independent your child will be ten years from
now, a testamentary SNT drafted into your Will, is an excellent precaution.

Planning to Minimize Estate Taxes

Many young families do not believe this is an issue for them, as the federal estate
tax threshold is currently over $11 million. It is important to remember, however,
that the threshold in Massachusetts is $1 million, and that the government counts

things that don’t pass through probate, like life insurance and interest in jointly held
real estate, in determining the value of your “taxable estate.”

This means for purposes of the Massachusetts estate tax, you are most likely richer
than you think. If, for example, you have a life insurance policy with a $500,000
payout, own a home with $300,000 in equity, and have $200,000 in retirement

savings, you are already there. If your taxable estate is worth $1,000,001.00, the tax
applies to the entire amount, not just the extra $1.

In addition, as a young family starting out you likely expect to increase your
earnings, savings, and equity in your home as the years go by, and having a structure
in place that shelters some or all of these assets will save you from worrying about
it later.

There are a number of ways to do this, including setting up certain trusts for married
couples that allows them essentially to pool their individual exemptions, placing
certain assets in irrevocable trusts, and planning lifetime gifts to your heirs to reduce
the value of your taxable estate.

Minimizing Expense and Conflict for your Family

The more decisions you can take care of ahead of time through your will, trusts, or

other instruments, the simpler, faster, and less expensive it will be for your family
to finalize your estate and distribute your assets. The probate process can take a full
year to resolve, and assets could be held in the meantime that could otherwise be

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