What is estate planning?

  • An estate plan ensures that a person’s property and health care wishes are honored, and that loved ones are provided for in their absence. A comprehensive estate plan can resolve a number of legal questions that arise whenever anyone dies: What is the state of their financial affairs? What real and personal property do they own? Who gets what? Does a personal guardian need to be appointed to care for minor children? How much tax will need to be paid in order to transfer property ownership?

How can an estate plan help?

  • Regardless of your age, or the size and complexity of your estate, an estate plan can accomplish the following:
    • Identify the family members and other loved ones that you wish to receive your property after your death.
    • Ensure that your property will be transferred to those you have identified, as quickly and with as few legal hurdles as possible.
    • Minimize the amount of taxes that will need to be paid in order for your property to pass to others after your death.
    • Avoid the time and costs associated with the probate process by utilizing specific estate planning documents.
    • Dictate the kinds of life-prolonging medical care you wish to receive should you be unable to make your wishes known when the time comes.

How do I begin the estate planning process?

  • Call us for a personal questionnaire and schedule an appointment with us to get the estate planning process on its way. Deciding whether to avoid probate depends on a number of factors, most notably your age, health and financial status. A younger person with fewer assets may be better off with a simple will, and in that situation, adopting a sophisticated probate-avoidance plan now may mean you’ll have to re-do it as your life situation changes. But if you’re older, or in poor health or own a significant amount of property, you will probably want to do some estate planning to avoid probate.

What is a revocable living trust?

  • A revocable living trust can hold title to property for the benefit of an individual. Since title is held in the name of the trustee (usually the person who set up the trust) and a beneficiary is named for the property, the property is not part of the estate for probate purposes. Similar to a will, a trust document directs the trustee how to distribute the trust property at the time of death and to whom.

What is an “estate”?

  • Your “estate” consists of all property owned by you at the time of your death, including:
    • real estate
    • bank accounts
    • stocks and other securities
    • life insurance policies
    • personal property such as automobiles, jewelry and artwork.

What documents should I have for a comprehensive estate plan?

  • Will
  • Durable Power of Attorney
  • Health Care Proxy
  • Living Will
  • Living Trust

What is a trust?

  • A trust is a device for holding property. There are generally three parties to a trust: the settlor, the trustee and the beneficiary. The settlor is the original property owner who transfers the property into a trust. The trustee is the legal owner of the property who holds and manages the property for the benefit of the beneficiary (or beneficiaries). The trustee is under a legal obligation to act fairly towards the beneficiaries. Property in a trust is nonprobate property, meaning it does not go through the probate process when the settlor dies.

What is the federal estate tax?

  • When a person dies, their assets get transferred to his/her heirs. The federal government imposes a tax on these after-death transfers. The value changes annually.

How can probate be avoided?

  • Assets that avoid probate are called nonprobate property. The use of trusts. Because the terms of the trust dictate how the property will be distributed, there is no need for trust property to pass through probate. The use of life insurance policies. Because the beneficiary is explicitly named in the policy, there is no question as to who gets the property at the owner’s death, and thus probate is avoided. Property held by joint tenancy. Joint tenancy is a form of ownership in which two (or more) persons share undivided ownership of property during life. When one owner dies, his or her share automatically passes to the other owner(s).

What is a living trust?

  • A living trust is a trust that was established during the settlor’s lifetime, sometimes referred to as an Intervivos Trust.

What is a health care proxy?

  • A health care proxy is a document that you execute to give another person (known as the agent) the right to act on your behalf regarding your health care decisions in the event that you become incapacitated.

Who should I appoint as my agents in my health care proxy and my durable power of attorney?

  • People usually choose to appoint a spouse, a close family member or a close friend as their agents in their health care proxies and durable powers of attorney. However, some people prefer to appoint a professional, such as a lawyer. Either way, you should choose somebody who is trustworthy and competent.

Can’t I just give all my property away before I die and avoid estate taxes?

  • It depends. If you give away your property during life, you may be subject to a “gift tax.” While making smaller gifts which are not taxable during life can yield substantial estate tax savings, you should be wary of giving away all your possessions during your lifetime, as you may run the risk of needing the assets for your care later in life.

Why and how should I change my will once it has been signed?

  • You should review your will every three to five years, to ensure that it remains current and reflects your wishes. It may be necessary to review it more frequently if:
    • You marry, divorce or separate, (marriage revokes a will entirely, while divorce revokes the provisions concerning the spouse)
    • A child or grandchild has been born
    • You have sold or bought a house or other significant asset
    • There is a change in tax laws
    • Your assets have substantially increased or decreased in value
    • Your relationship with a beneficiary has changed or a beneficiary’s needs have changed.

    A will can be changed, revoked or replaced by a new will at any time, so long as you are competent and you follow the formalities of signing a valid will. To be considered competent, you must understand the nature of your act. You can also change your will through the use of a codicil, which is an amendment or supplement to a will.

Will my estate have to pay taxes after I die?

  • It depends. The federal government imposes an estate tax at your death only if your property is worth more than a certain amount, and that amount depends on the year of death. But, because of the unlimited marital deduction, all property left to a U.S. citizen spouse is not subject to tax. Estate tax is also not assessed on any property you leave to a qualified tax-exempt charity. Your estate may also have to pay income taxes after your death.

Should I try to create a plan that will avoid probate after I die?

  • Probate can be an expensive and time-consuming process. It can be a useful process if you anticipate having complicated issues in your estate, such as numerous debts that can’t easily be paid from the property you leave. Deciding whether to avoid probate depends on a number of factors, most notably your age, health and financial status. A younger person with fewer assets may only require a simple will, because adopting a sophisticated probate-avoidance plan now may only require that you re-do it as your life situation changes. But if you’re older, in poor health or own a significant amount of property, you will probably want to do some estate planning to avoid probate.