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Estate
Planning FAQs |
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is a Living Trust? How does it work? What if I become incapacitated? What about estate taxes? Proper estate planning is very important in order for each of you to build, maintain and preserve assets for your family and to provide for the security and support of family members in the event of your incapacity or death. Equally important, the knowledge that your personal planning is in place will provide you with comfort and peace of mind in your daily affairs. These questions that are frequently asked, and the answers to them, will help you understand why. Why is an estate plan so important? Your estate plan will provide exactly where your property will go after your death. If you are married, it will determine how your spouse will be provided for. If you have minor children, it will name the persons who will be responsible for their care and custody. If your children are too young to handle the assets they inherit, your estate plan will designate the persons to manage your property and use it to educate and support your children until they reach a suitable age to receive their inheritances outright. It will also permit you to designate the purposes for, and the ages at which your children will receive the assets you leave to them. The way in which your assets are left also dictates in large part the amount of estate tax that will have to be paid at the time of your death. With good planning, your estate plan can maximize the amount you leave for your family by minimizing the estate taxes payable at your death. Without a proper estate plan, all of these matters are left to chance. Back to About Estate Planning, Wills & Living Trusts How do I implement my estate plan? Your estate plan is implemented by the estate planning document or documents that you have. The normal estate planning document that you have would be your Will or Living Trust. Your Will or Living Trust will address all of the matters discussed above, including the manner in which your property will descend after your death, provisions for spouses and children, and minimizing or eliminating estate taxes. Back to About Estate Planning, Wills & Living Trusts If I have a will, does my estate have to go through probate? Yes. Although a Will can do all of the above very important things, just having a Will alone does not avoid probate. Back to About Estate Planning, Wills & Living Trusts Should I avoid probate? Normally, you will want to avoid probate if possible. Probate may "tie up" assets for a period of time, expose assets to creditors, result in a loss of privacy to your family and cause your family considerable expense. Back to About Estate Planning, Wills & Living Trusts What about a Living Trust? Will that help me avoid probate? Yes. A Living Trust (or Revocable Trust as it is known in the law)is used by many people as a way to avoid probate. Back to About Estate Planning, Wills & Living Trusts What is a Living Trust? How does it work? A Living Trust is a trust that you create during your lifetime and to which you transfer your assets. Once your assets are transferred to your Living Trust, it is the trust, rather than you, that is the legal owner of your assets. However, you still retain complete dominion and control over your assets. This is because the Living Trust document gives you the authority to do anything you want during your lifetime with the trust or your assets in the trust, including withdrawing your assets from the trust, changing the terms of the trust or revoking the trust. When you die, the assets in your Living Trust do not have to go through probate. Rather, the person that you designate in the Living Trust document to act as trustee after your death has full authority, wihtout any probate court interference, to manage and distribute your assets after your death in the manner in which you direct in the Trust document. The Living Trust also acts as a substitute for your Will. That is, you provide in the Trust document exactly where the assets in your Trust will go after your death. All of the planning that you desire for the care and support of your spouse, children and others, and to minimize estate taxes, can be done in your Living Trust. Back to About Estate Planning, Wills & Living Trusts What if I become incapacitated? Planning for incapacity is very important. If you become incapacitated and have not planned for it, no one else, not even your spouse or adult children, has authority to deal with your assets. This means that they could not sell the family home, access your bank accounts or trade your stocks and bonds. Without planning, the only way any of these things could be done would be for your family to go to the probate court to have a guardian and conservator appointed. This can be very time consuming, stressful, and expensive, and can seriously restrict your family's use of your assets. Fortunately, with good planning, these problems can be easily avoided. If you have a Living Trust, you can designate a person as trustee in the Trust document to act in the event of your incapacity, and to deal with all of the assets in your Trust without probate court interference. If you do not have a Living Trust, or if you have assets that have not been transferred to your Living Trust, you can execute a Durable Power of Attorney which designates an agent to act for you if you become incapacitated. Your agent can then deal with your assets without probate court interference. Back to About Estate Planning, Wills & Living Trusts What about estate taxes? If your net worth has reached a certain level, estate taxes payable at the time of your death can eat up a significant portion of your estate. Fortunately, with good estate planning, in many cases estate taxes can be eliminated entirely, and in all cases they can be significantly reduced. See Tax FAQs. Back to About Estate Planning, Wills & Living Trusts |
