Your personal property and financial accounts will pass to the people that you love after you die. Your estate plan lets you control who receives what from your estate. In theory, you could earmark certain assets for specific people.
Unfortunately, many people become so focused on deciding who gets what that they don’t stop to think about protecting those assets from outside claims. The property in your estate is vulnerable unless you plan ahead to keep others from making claims that could disrupt your intended legacy.
Any creditor you owe money can claim assets from your estate
When you die without having repaid all of your financial obligations, your creditors still have certain rights. They can go after any cosigner on the loans or lines of credit for payment. When there isn’t a cosigner, they can bring a claim against your estate. While Massachusetts law limits how long companies have to bring such claims, a timely claim could mean that your executor must sell off assets to pay those debts.
Medicaid could come after your property or even your house
Massachusetts has a Medicaid estate recovery program. This program will make a claim against the estate of anyone who receives Medicaid benefits. The goal is the recovery of any funds paid on behalf of an individual.
The state can claim not just liquid assets but also physical property including real estate. Provided that it is in your name and part of your estate, your property is vulnerable to claims by Medicaid just like it is vulnerable to private creditor claims.
Bigger estates could face tax liabilities
While federal estate taxes only apply to estates worth more than $11 million, the Massachusetts state estate tax applies to estates worth a million dollars or more. Far more estates will have to pay the Massachusetts estate taxes than federal estate taxes. The greater the value of the estate, the more your executor will likely have to pay in taxes.
Asset protection planning can limit creditor claims and Medicaid liability for your estates. In fact, careful estate planning could also limit what estate taxes apply to the assets you leave behind when you die. Thinking about these potential liabilities now will help maximize what you leave behind for the people that you love.
