Estate,
Probate & Wills
Prepaid
Funeral and Cemetery Plans:
The Need for Caution
It's
Time to Consider a New Power of Attorney
WILLS AND ESTATE PLANNING
Q. I have no assets so why do I need a will?
A. Most of us do have some assets and sometimes we are not even aware of them. An example of this may be that you might inherit some assets and not have prepared to distribute them prior to going to your reward. The downside of having no will is to have the State decide, by law, who gets what. This is referred to as dying ''intestate." Simply put, everyone should have a will. If you do not have a will but you do have assets at your death, there will be several issues outside your control at death. If the assets exceed $650,000.00, your administrator will have to give the IRS a significant share. The Court will decide for you just who will be the guardian of your minor children. You administrator will sell any assets necessary to pay estate expenses. Your administrator will have to pay for a performance bond, even if the administrator is your spouse. You children may fight over the assets, causing increased expenses and bad feeling. And, perhaps of greater concern, the Court may decide to give your assets to your heirs even before they are mature.
Q. But my spouse and I own everything jointly, so why do we need a will?
A. It is true that in certain instances joint tenancy can avoid probate. But if you wish to sell any assets held in joint tenancy, you need the signatures of all the joint tenants. If a joint tenant is incapacitated, you cannot sell or transfer you assets. There may also be a problem with gift taxes if the joint tenant is added. Consider this: you and your spouse are finally going to take that trip to Paris. There is an accident and you don’t make it to Paris. There are no survivors. No Will. Enter the State as above.
Q. O.K., so I have a Will. How am I going to see to it that my heirs get their fair share without the State taking the bulk of my hard earned assets?
A. Plan your estate! Estate Planning is the arranging of your financial affairs so as to legally gain the maximum benefits you are entitled to under estate and tax laws. We can provide for our spouse and children by dictating how we want our estate to be distributed and reduce our estate taxes. Without proper estate planning you could have your estate taxed as much as 55 Percent! And your estate could be subject to creditors, your incapacitation, and relatives you never heard of. In reality, estate planning is for everyone!
Q. What is a Trust and should I have one?
A. A Trust is a document in which you ("as the grantor") designate a person or corporation to act as "trustee" whose duty it is to receive, hold legal title to, and administer the property in the trust according to your instructions in the trust. Persons who are on the receiving end of a trust are "beneficiaries".
Q. How do I keep control of assets in a Trust?
A. By creating a "living trust," which is a trust document created while you are alive and which you can terminate or amend. With a living trust, YOU can act as your own Trustee. Like a Will, the Living Trust contains your instructions for the distribution of your assets on your death. HOWEVER, when you are called to your reward, there is generally no reason to submit you estate to probate because the Trust is considered the "owner" of the assets and not you. This saves expenses and attorney’s fees, and the savings can be substantial!
Q. Probate?
A. Indeed, and it is a very long process in which the estate is opened in Court so the whole world of busy bodies can see what you had when you died. The executor of your Will administers your assets according to your Will. If there is no Will, then an Administrator is appointed by the Court and once again-enter the State. BUT A LIVING TRUST DOES NOT PASS THROUGH PROBATE AND YOUR ESTATE REMAINS PRIVATE!
Q. How do I save on taxes with a Living Trust?
A. One of the major goals in planning your estate is to avoid or defer as much of the taxes and for as long as you can. Using a living trust you can defer the payment of your estate taxes until after the death of your spouse. The trust will be structured to make certain that both spouses lifetime exemptions are used, while allowing the surviving spouse the use of all the deceased spouse’s assets.
Q. Sounds good, but how do I see to it that my playboy son doesn’t squander everything?
A. A "spendthrift trust." Under the provisions of your trust, you can give directions to the trustee on how to hold, distribute and administer the balance of the trusts for you children.
Q. What if I am single?
A. A single person can still take advantage of their own exemption and can lower their tax liability by arranging for assets to pass outside of the estate.
Q. Well, if I have a Trust, why do I need a Will?
A. You still need a Will to cover situations not contained in a Trust. For example, terms of guardianship for the children; any property which was not properly titled during your life can "flow" back into the Trust. This is called a "pour-over will" because it pours over into the trust assets which have inadvertently not been titled in the name of the Trust. It is a safeguard.
The type of planning that is appropriate for you will depend on many factors.
The value of your estate;
The type of assets;
Your marital status;
Children;
Relatives.
Life Insurance policies which, if structured properly can pass the proceeds of such policy to your beneficiaries outside of your estate and without being taxed.
Family limited partnerships;
Residence Trusts;
Annuities.
Estate Planning will relieve you of much concern as well as stress.
This article is intended to highlight areas of interest for our clients and others. It is not intended to be legal advice and it is not a substitute for advice and consultation with your lawyer.