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Estate Planning – Most important items!

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Estate Planning, Things You Must Do!

The most important items in estate planning!

Estate Planning Must Haves

This Estate Planning Guide article covers the the most important, must haves in estate planning. It will provide you with an overview of what you will want to keep in mind as you begin your estate planning journey or try to tighten up what you already have in place. There are a great many benefits of having a comprehensive plan for your estate developed . Some of the benefits include:

  • The minimization of taxes, court costs, and legal fees
  • The naming of an executor to handle the affairs of your estate
  • Instructions for your care and financial affairs, should you become incapacitated before death
  • Avoiding the need for probate
  • The ability to keep your estate matters private as opposed to publicly assessable
  • The naming of a guardian for the care of any non-adult children or children with special needs
  • An of course, specifying how and to whom you would like your assets will be distributed

So where do you begin and what are the most important items to consider when creating an estate plan?

Inventory of your estate

Always begin with the fundamentals! In estate planning, one of the primary fundamentals is having a complete list of what assets you own.  You will want to make a complete inventory of all of your assets. Begin by creating a list to document your personal effects, insurance policies, stocks, bonds, bank accounts, automobiles, real estate and business interests. You can find a sample of an estate planning inventory spreadsheet in the tools section of our website located here. Make you listing of assets as complete as possible. Doing so will be both helpful for you and whomever you will designate as the executor of your estate. For personal effects such as jewelry, furniture, heirlooms, collections…. we suggest including an item description, item location, estimated item value, and the name of the beneficiary(s) that you would like to transfer to item to at the time of your passing. When creating an inventory of items such as bank accounts, bonds, stocks, retirement funds, insurance policies… We suggest documenting the financial institutions name, address, representative you work with (if any), phone number, account number, policy number, account type, balance and in what portions you would like to have these assets distributed to your beneficiaries. You may want to add notes for any items that could benefit from additional clarification. For motor vehicles such as cars, boats, and or real estate such as your primary residence, a second home, land; we recommend documenting the address, how title is held, the purchase price, the estimate current value and how you would like the assets to be distributed to your beneficiaries. You may also want to consider including information about your property tax assessment as well. In states such as California, you may be able to transfer a low property tax assessment to the child or children who you are leaving the home to.

Create a list of your liabilities

When a person passes, any debts they had when they were living will need to be paid or settled. Without a living trust, an estate will likely enter probate. During the probate process debts and liabilities will need to be settled. If you have a trust and your estate is able to avoid probate, the executor of the trust / estate will still need to pay-off your debt or settle with creditors. If you create an organized and complete list of your existing liabilities, it will make the process far easier for whomever is handling the debt settlement aspects of your estate.

Much like with the estate inventory assets list you created, you should be as detailed as possible with your estate liabilities. You will want to list items such as credit cards, personal loans, auto loans, judgements and real estate mortgages. On your list you will want to include information such as the creditor name, contact person (if any), phone number, address, account number and the amount of outstanding debt. Any supporting documentation for the debt, such as a mortgage note or contract should also be included / kept with your list of liabilities. You may also want to include information for your home utilities, to simplify the maintenance of your home during the probate / distribution process.

Seek professional assistance with your estate planning

Depending on your family situation, the amount / type of assets you own and your directives for finances and health care, estate planning can get pretty complicated at times. Making a significant mistake can be costly. At this phase of the estate planning process, it likely will make sense to seek the assistance of an estate planning professional such as an estate planning attorney.

In the United States, each individual state decides how it handles its own estate and probate matters. For this reason it makes sense to find an estate planning lawyer familiar with the laws of the state you reside in. A good estate planning professional will be able to give you guidance and advice on all aspects of your estate planning needs. Some examples may be if a last will and testament or a living trust makes more sense for your situation. Should you have powers of attorney drafted? How long does the probate process typically take in your county? An estate planning attorney will be able to answer all of these questions as well as draft legal documents for you.

Determine if a will or trust is best for you

You are going to want to determine if it makes more sense for you to utilize a last will and testament or perhaps a more elaborate estate planning tool such as a revocable living trust. A will or last will and testament, is a legal document that provides instructions for what should happen to a person’s assets after his or her death. The term “last will and testament” is commonly used to mean the same thing as a “will”, but to be exact, a last will and testament refers to the most recent version of a will. A will is commonly used to distribute a personal property, real estate and investments. It may also be used to appoint legal guardians for minors or people with special needs. If a person dies without a will, they are said to be intestate, and state intestacy laws govern the distribution of the property of the decedent. A revocable living trust is a legal arrangement that allows a person’s assets to be held and managed by a third party. This third party is known as a Trustee. The Trustee is the person or group of people that are responsible for ensuring that the estate is handled in the manner specified in the trust documents. There are several purposes for an estate planning living trust, but one of the more common reasons people choose to use a living trust is to make sure their assets are distributed how they wish and to avoid the need for probate.

Deciding on a trust or will for your estate planning needs often boils down to a few things. With a trust, the information about your estate stays private and confidential. When a will is used, information about your estate is made public during the probate process. Another factor is cost. A living trust is typically more expensive to setup and maintain over time than a will. A will can be created very inexpensively and even potentially at no cost. You can find samples of wills online with the help of online resources (just make sure the will meets the minimum requirements of your state to be deemed valid in court). Lastly, depending on the state you reside in, if you have very few assets, a will may be sufficient to avoid the probate process. A capable estate planning lawyer can help you decide what the best option for your situation is.

Establish your directives and power of attorney documents

A comprehensive estate plan accounts for more than just how your assets will be distributed. Advance health care directives are legal documents that provide guidance to your family, and medical providers regarding your health care when you are incapable of communicating this information yourself. For instance, if you are physically or mentally incapacitated, an advanced health care directive can specify your wishes regarding the medical care you would or would not want to receive in different situations. An advance healthcare directive may also communicate additional medical preferences such as if you wish to be an organ donor or wish to donate your body to medical science. Commonly, a medical power of attorney or health care agent form is used in conjunction with an advance health care directive. A medical power of attorney is a legal document that allows you to appoint a person to make healthcare / medical decisions on your behalf in the event that you are unable to make them for yourself.

In addition to having a person to make difficult medical decision on your behalf, you should also consider having someone to make financial decisions on your behalf as well. In estate planning, you can utilize a power of attorney to authorize a person of your choosing to handle financial matters on your behalf if you become incapacitated. A power of attorney has some flexibility. For instance, you can design a power of attorney to become active only in the situation that you are incapacitated. You may also choose to create a power of attorney that goes into effective immediately if you are in the early stages of a degenerative disease. A power of attorney only applies to the specific powers you authorize in the document and it is only valid during your lifetime. The rules governing directives and power or attorney documents change from state to state. We encourage you to have a conversation with an estate planning expert that is familiar with the laws of your state to determine what the best options for your personal situation are.

Designate a reliable estate executor, trustee or administrator

The naming of an estate executor is one of the most important purposes of a will. The executor is the one to carry out the final wishes of the decedent as specified in the will. For this reason, it is important to choose someone whom you trust and is competent to handle such an important and potentially difficult task. The executor of an estate must be at least 18 years old and mentally sound enough that the court will be comfortable letting them handle the estate affairs. A court can remove an executor for committing fraud, embezzlement or for the misadministration of as estate. For this reason, it is suggested that you choose someone who is honest, trustworthy and if possible respected by the beneficiaries named in your will or trust. We recommend that before selecting your estate executor, you speak with them. Make sure that they are willing to serve as your executor and that they understand how you would like the different aspects of your estate carried out.

List your beneficiaries

Selecting the family members or loved ones who will receive your property upon your passing is one of the most personal and important acts carried out by a will or trust. To do so, you will need to designate your beneficiaries and specify what property they will receive in your will or trust. A beneficiary is a person who will receive the benefit of personal or real property from a trust or estate on behalf of a benefactor (decedent) or settlor (the person who created the trust). For example, the beneficiary of a life insurance policy is the person who receives the payment of the amount of insurance after the death of the insured. If you are drafting your own will, you should be as detailed as possible when naming your beneficiaries. Do your best to provide a person’s full legal name, date of birth (if available), address, phone number and their relationship to you (brother, spouse, child, friend…). The more complete your information is, the more likely your property is to be distributed as you desire and the easier the task will be for your estate executor or administrator.

If a charity is important to you, you can also designate that charity as a beneficiary in your will or trust. What can you donate to a charity in your will? Most commonly money is left to a charitable organization since it makes it easier for the charity to accept the donation, but many will accept other forms of donation such as stocks, bonds, real estate or even a vehicle. Once again, be as thorough as possible when it comes to detailing the information about the charitable beneficiary. Try to list their full name, street address, phone number and Employer Identification Number (if available).

Keep your estate planning documents in a safe place

Even the best drafted will is useless if it is lost or destroyed. For this reason, once you have completed the creation of your will and estate planning documents, you should protect them and share copies with important individuals. The original, non-copy version of the will that contains the pen signed signature (sometimes called the wet signature) is the most important. The “original” is the version of the will that is validated during probate. If the original is not being maintained at your attorney’s office, you should consider keeping it in a safe place at home. If you choose to keep it in a fireproof safe, you will want to make sure that your estate executor and / or spouse have the ability to gain access to the safe and are aware of where it is being kept. You will want to provide a copy of the will and estate planning documents to your designated estate executor so that this copy can be verified and to serve as a backup in case the original is destroyed.

Review and update your estate plan annually

The world in constantly changing and the information in your estate planning documents can quickly become outdated. We recommend reviewing your estate planning information each year and making modifications to it when needed. In addition to regular reviews, it’s a good idea to update your plan when significant changes or life events occur. Here are some examples:

  • Marriage, divorce or the passing of a spouse
  • Purchasing a home or other significant asset
  • Paying off a mortgage or significant debt
  • The birth or adoption of a child
  • When a grandchild is born or new potential beneficiary enters your life
  • When a child becomes an adult
  • Death or change in circumstances of the guardian named in your will
  • Borrowing a large amount of money or taking on a significant liability
  • Significant changes in the value of an asset
  • The death or change of your executor, trustee or successor trustee

Keep in mind that the more up-to-date your estate planning documents are kept, the easier it will be for your estate to be administered. We hope that you found our estate planning guide useful. As we have mentioned, we highly recommend that you seek the assistance of an estate planning professional in your area to help you create or review your estate planning documents. We have also included a list of some online resources that you may find helpful in developing your estate plan and an estate planning glossary in case you need clarification on any terms.

What is a Financial Power of Attorney?

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What is a Financial Power of Attorney?

What is a Financial Power of Attorney?

Financial Power of Attorney

So what is a Financial Power of Attorney? In estate planning, A Durable Financial Power of Attorney is a legal document that lets you appoint someone to handle your finances on your behalf at a specific point in time or under a specific situation such as if you become incapacitated. The person you name in your Financial Power of Attorney to make financial decisions for you is referred to as your agent or attorney-in-fact. The financial agent you appoint can conduct a variety of tasks include paying bills, managing investments and making bank deposits or withdrawals.

There are different types of Power of Attorney legal documents. In estate planning, most people choose to make their Financial Power of Attorney, a Durable Financial Power of Attorney. The term Durable means your financial agent’s authority to act on your behalf remains active even if you should become incapacitated. This lets you select someone to look after your finances and property if you are ever suddenly unable to do so.

A Durable Financial Power of Attorney is similar to an Advance Healthcare Directive in many ways. One never know when something unexpected could happen, so it makes sense to have a plan in place for when something does. It is important to select an agent that you trust and whom you are confident can handle the responsibilities of managing your finances, should you become unable to do so.  People will often select a trusted family member to act as their agent, but it can also be a professional such as a CPA.

So what does incapacitated mean, and when does a Durable Financial Power of Attorney go into effect? Incapacitated means, that you are unable to take actions on your own behalf or you are no longer of sound mind. Some examples of incapacitation may include having a severe stroke an no longer being able to communicate, a car accident that leaves you in an unconscious state, an accident that causes significant brain trauma, later stages of Alzheimer’s or dementia.

What is trust administration?

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What is Trust Administration?

What is Trust Administration?

Trust Administration

What is trust administration? Trust administration is the process of managing and distributing the assets of a trust. When a person creates a revocable living trust and passes, that trust typically becomes irrevocable and enters a phase requiring trust administration so that the assets held in the trust can be distributed to the beneficiaries of the trust. The creator of the living trust, usually referred to as a trustor, settlor or grantor; transfers ownership of their assets to the trust. Typically while the trustor is alive, they also act as the the trustee (the person managing the trust) but designate a successor trustee (the person or people who will administer the trust when they pass or if they become incapacitated) in the trust documents. The successor trustee is responsible for carrying out the terms of the trust and managing the trust assets according to the instructions set forth in the trust document by the trustor. In the process of trust administration, the trustee has a number of duties. Common trust administration duties include:

  • Paying the expenses and debts of the trust
  • Managing the trust assets in a way that is consistent with the terms of the trust
  • Managing any investments held by the trust
  • Maintaining accurate records of all trust transactions
  • Filing any necessary tax returns on behalf of the trust
  • Distributing the trust assets to the beneficiaries according to the terms of the trust
  • Providing accountings to the beneficiaries as required by law or as specified in the language of the trust document

In some cases the administration of a trust can be complicated as well as time-consuming and a professional such as an attorney or trust administration company may be hired to handle or assist with the trust administration. Factors such as the number of beneficiaries, types of assets held in the trust, quantity of assets or the complexity of the trust accounting and taxes may all be considered when deciding if a professional trust administrator should be utilized.

What is a Successor Trustee?

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What is a Successor Trustee?

What is a Successor Trustee?

What does Successor Trustee mean?

A successor trustee is a person (or group of people) that takes over the management of a living trust (or a trust of any kind) when the original trustee has died, become incapacitated or is unable to act as the trustee. The successor trustee is typically named by the Grantor / Settlor (the person who created the trust) of the trust in the trust documents. The responsibilities of a successor trustee may also be specified in the language of the trust documents. The Settlor may name several successor trustee(s) in case one or more is unable to act as the trustee. In some cases a professional such as an attorney, fiduciary or trust company is named as the successor trustee.

Is a Successor Trustee and Trust Administrator the same thing?

Yes, typically when someone refers to a person as a Trustee or a Trust Administrator, they are referring to the same person. The trustee or successor trustee acts as the administrator of a trust.

Does a Successor Trustee have to be a relative?

No, a successor trustee does not have to be a relative of the Settlor. Commonly the Settlor chooses a relative such as a spouse, son, daughter, brother or sister to be their Successor Trustee, but it is also not uncommon for them to select an attorney, CPA, or licensed fiduciary.

Does a Successor Trustee get paid for their work?

Yes, in some cases a Successor Trustee or Trust Administrator receives payment for the work they do on behalf of the trust and the trust beneficiaries. Usually this occurs when the Successor Trustee is a professional such as a lawyer, licensed fiduciary or accountant. When the person serving as the Successor Trustee is a family member, it is common for them to decline compensation for the work they do on behalf of the trust. Trust Administration or Trustee compensation varies depending on the qualifications of the person, but annual compensation does not typically exceed 2% of the total trust assets.

What to do when a loved one passes?

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Steps to take when a loved one passes on

Steps to take when a loved one passes on

Regardless of how much advanced notice we may have had, the loss of a loved one is never easy. The responsibility or planning their funeral arrangements or handling the needs of their estate only make the situation more challenging, especially when you don’t know where to begin. So what do you do when a loved one passes away? This EstatePlanningGuide.org article will help you answer that question.

What should I do when a loved one passes away?

The following provides advice on what to do when a loved one dies. This step by step guide will help you with this challenging time and hopefully remove some of the stress.

Steps to take immediately after the passing of a loved one

1 – Obtain a Legal Pronouncement of Death: A legal pronouncement of death is a declaration of the time and date when a person was pronounced dead. The pronouncement of death is typically recorded in the patient’s medical record by the attending provider of health care if one was present. If your loved one passed away at a hospital or nursing home, the staff will handle this. If your relative passed away at home, you will require the assistance of a medical professional to declare their death. You should call 911 and inform them of the situation. They will transport your loved one to the hospital where a legal pronouncement of death can be made and you can request the document at that time. If your loved one passed away at home under hospice care, the hospice nurse can declare them dead and assist you with obtaining the legal pronouncement of death. The official declaration of death or legal pronouncement of death is the first step to obtaining a death certificate. The legal pronouncement of death is important for a variety of tasks involved with the handling of their estate. Without a legal pronouncement of death or death certificate you will not be able to access their bank accounts, filing life insurance claims or beginning their estate and probate process.

2 – Notify family members and close friends: Begin by notifying family members and close friends of the deceased. You may not have contact information for all of them or even know everyone who was important to them. Start with the person who you know that was closest to them. You may want to ask them for their assistance in notifying others, or at least ask them for a list of people who should be notified, along with their relationship to the deceased and their contact information so that you can make the notifications.

3 – Notify their employer and coworkers: If your loved one was employed at the time of their passing you should inform their employer as well as any close friends they worked with. For some our coworkers can be like a second family and they will likely be grieving the loss along with you.

4 – Assist with the needs of any dependents: If the person who passed away had dependents such as children, a person with special needs or an elderly person who is reliant upon them for their survival, make sure their immediate needs are addressed until long term care can be assessed and carried out.

5 – Make sure any pets are cared for: If the person who passed had pets, find them a proper caretakers until permanent arrangements can be made for them. Sometimes people will include requests for the care of their pets in their estate planning documents. The Executor of the decedent’s estate (if it is someone other than you) should be able to assist you with this. A dog or cat can die within just a few does of going without water.

Steps to take a few days after the passing of a loved one

6 – Secure the person home / property: As soon as possible, you should secure the person’s home. Make sure that all doors and windows are locked. Notify any trusted neighbors and ask them to contact you if they notice anything unusual. You should discard and perishable food and remove any trash from the home. You should water plants and tend to any immediate need for the care of the home. You should collect the decedent’s mail and if mail forwarding is needed you should contact the United State Postal Service here.

7 – Contact important organizations: If the person was in the military or had a close connection to a religious organization you should inform them of the passing of your loved one. The Veterans Administration may be able to offers burial benefits or conducts funeral services if requested. You can find out additional information regarding the US Department of Veteran Affairs Burial Benefits here. Additional information on applying for the VA Burial Benefits can be found here on their website. They can also be reached by phone at (800)827-1000.

8 – Employer assistance: If your loved one was employed at the time of their passing you can reach out to the employer to make arrangements for their estate to receive any outstanding compensation that is due and to see if the decedent was eligible for any company sponsored life insurance.

9 – Begin making funeral arrangements: Examine any estate planning documents such as a will or trust that was left by your loved one. In some cases they may have provided information on their funeral wishes or made plans in advance. If none exist, speak with other family members or close friends. Begin making arrangements for funeral, memorial service, cremation or burial. An obituary is a notice of a death, typically including a brief biography of the deceased person and published in a newspaper. You may want to consider writing one for your loved one. If you need assistance on writing an obituary, you can view this article on the NBC News Website located here. You will need to inform people about the service and invite the attendees. You should coordinate tasks like flower arrangements, food and refreshments.

Steps to take a couple of weeks after the passing of a loved one

10 – Obtain the death certificate and make copies: A death certificate is a legal document issued by a medical practitioner which states when a person died. A death certificate may also be issued by a government civil registration office that declares the date, location and cause of a person’s death. Death certificates are important when handling aspects of the decedent’s estate such as probate as well as obtaining government benefits. The death certificate is usually provided by the funeral home. You will want to create multiple copies.

11 – Locate your loved ones estate planning documents: If you have not done so already, you will want to locate your loved ones will or any estate planning documents and notify the declared estate Executor or Trustee of they are declared in the documents and that person differs from yourself. If you are unsure where these documents are located, you may want to search for them in a desk, filing cabinet or lock box. If you are unable to find them, ask family members, close friends or the attorney of your loved one if they are aware of the existence and location of them. If you are unable to locate any, the court will assist you with the handling of the estate during probate.

12 – Speak to an attorney or begin the probate process: If your loved one had a living trust, reach out to a trust and estate or estate planning attorney and review the trust documents for advice on how to proceed. You may be able to avoid the probate process. If there was not a living trust in your loved ones estate planning documents, contact your local county court office about beginning the probate process. Probate is a court administered process that transfers the estate of a deceased individual to named or remaining heirs. An estate is made up of the decedent’s real estate, personal property, life insurance, bank accounts, investments and personal belongings. The court will either approve the designated estate Executor or appoint one at the beginning of the probate process. The Executor will carry out the duties of the estate.

13 – Speak with your loved ones accountant or hire one for assistance if needed: If your loved one had been working with a CPA, you should reach out to them. Inform them of the passing of your loved one and ask for their advice on how to proceed. The estate may have to file a tax return, as well as a tax return on the decedent’s behalf as well.

14 – Complete the probate process if needed: If the probate process is required there are several steps involved that will need to be completed by the executor. Here is what you can expect during a typical probate process:

  • Stage 1 – Filing a petition in probate court and having probate initiated
  • Stage 2 – Issuing notices to heirs and creditors
  • Stage 3 – First probate hearing occurs and the proving of the will
  • Stage 4 – Collection of the decedents assets / estate assets
  • Stage 5 – Paying of creditor claims
  • Stage 6 – The filing of taxes for the estate
  • Stage 7 – Probate court closes the estate and any remaining assets are distributed to the heirs of the estate

Additional information and on the probate process can be found here.

15 – Cancel any services that are no longer needed by your loved one: You should close or cancel and service that are no longer needed by your loved one. Examples of services include health insurance, cellphone service, internet service, newspapers, magazines, streaming services, cable TV service and automobile insurance.

16 – Notify the Social Security Administration of your loved ones passing: If your loved one was receiving Social Security benefits, you must notify the Social Security Administration as soon as possible. You can view information on how to notify Social Security about the passing of a loved one here.  Family members of the decedent may be eligible for death benefits from the Social Security Administration. We suggest asking them for information on benefits when you call them to inform them of the passing of your loved one. The Social Security Administration can be reached at (800)772-1213.

17 – Consider closing your loved ones social media and email accounts: You can choose to have your loved ones social media accounts removed or left up as a memorial to them. If you choose to have the accounts removed, you will likely need to provide them with a copy of your loved ones death certificate. Many of the larger social media companies such as Facebook and Instagram will also allow a deceased person’s profile to remain online, marked as a memorial account. You can click here if you are interested in removing a loved ones profile from Facebook.

We hope that this checklist on what to do when a loved one passes is helpful. If we can provide you with any other information, please leave us a comment or contact us here.

Free Estate Planning Guide

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Free Estate Planning Guide

Free Estate Planning Guide

Free Estate Planning Guide Now Available Online

EstatePlanningGuide.org is pleased to announce that we have launched our free, downloadable and printable estate planning guide. This new estate planning guide will help educate you on some of the different estate planning options available to you. The complimentary guide on estate planning helps explain a variety of estate planning topics in a simple and easy to understand manner. This free estate planning guide is now available for download here.

What does the estate planning guide cover?

The estate planning guide covers topics such as wills, living trusts, probate, advance healthcare directives and power of attorney documents. The guide delves into what a will can accomplish and in what situation a living trust may be a better option for you. It provides you with a 10-part step by step guide on how to prepare your own estate plan. The estate planning guide also includes a comprehensive estate planning glossary to help ensure that your understand of all of the information included in the estate planning guide.

Who is the estate planning guide intended for?

If you are or have been considering creating a will, trust or estate plan, this is the guide for you. It begins by explaining what estate planning is and what can be accomplished with it. The guide also covers issues like probate, how long it can take and how it can potentially be avoided. The free estate planning guide even provides you with information on creating an inventory of your assets in preparation for drafting a will or creating a living trust. The estate planning guide also includes a section on how to find an experienced and capable estate planning professional in your area to assist you with your estate planning needs.

If you are ready to being you estate planning process, please visit the estate planning how to guide on our website located here. It is a condensed version of our free estate planning guide and will help you get started with your estate planning.

Estate Planning Questions and Answers

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Estate Planning Questions and Answers

Estate Planning Questions and Answers

Estate Planning Common Questions and Answers

The following is a list of common questions people ask when they first begin their estate planning research. For visit this page for a full list of our Estate Planning FAQ. We also have a estate planning glossary page if you have any questions about one of the terms you find here.

Here are some of the most common asked questions about estate planning:

What is an estate plan?

A good estate plan should be designed with several things in mind. It should determine how an individual’s assets will be preserved, managed, and distributed after death. An estate plan should strive to save on estate taxes, reduce court costs, protect assets and avoid probate. It should include a durable power of attorney, Advance Healthcare Directive and a will or trust.

What is a living trust?

A living trust is a legal tool for estate planning that allows a person (known as the Trustee) to hold another person’s (known as the Settlor or the creator of the trust) property for the benefit of someone else (the Beneficiary). It is an estate planning tool that can help family members and beneficiaries avoid a potentially lengthy probate process. A living trust is a legal document which lays out the terms of the trust and the assets that the grantor has assigned to it.

What is estate planning?

Estate planning is the creation on a plan and the preparation of tasks that serve to manage an individual’s assets in the event of their death or incapacitation. Estate planning includes the the distribution of assets to beneficiaries.

Who can help me create an estate plan?

Estate planning or the creation of an estate plan is commonly done with the help of an attorney experienced in estate law or an estate planning professional familiar with the estate laws of your state. There are also a variety of online resources that can help you design an estate plan. Typically the online estate planning tools are far less expensive but may not be ideal for more complex estate planning needs.

Is there a difference between a lawyer and attorney?

What is the difference between a lawyer and an attorney? All attorneys are lawyers, but not all lawyers are attorneys. The primary difference is that attorneys can represent clients in court but lawyers cannot.

Why do I need an estate plan?

Estate planning allows an individual to decide how their assets such as real estate, automobiles, personal property, life insurance policy, investments and cash will be distributed upon their passing. It also allows you to determine who will care for any non adult children or children with special needs. Some estate plans also allow you to determine how your medical care should be handled in case you become incapacitated.

What is an estate?

An estate is all property you own upon your death. Estates commonly include assets such as real estate, automobiles, collections, heirlooms, life insurance policies, investments and cash.

What is a will?

A will is a legal document that provides instructions for what should happen to a person’s assets after his or her death. This term “last will and testament” is commonly used to mean the same thing as a “will”, but to be exact, a last will and testament refers to the most recent version of a will. A will is commonly used to distribute a personal property, real estate, investments or business interests. It may also be used to appoint legal guardians.

What is probate?

Probate is a court administered process that transfers the estate of a deceased individual. An estate is made up of the decedents real estate, personal property, life insurance, bank accounts, investments and personal belongings.

In probate court, an executor (if there is a will) or an administrator (if there is no will) is appointed by the court as a representative to collect the assets, settle any debts and then distribute any remaining assets to the beneficiaries. All matters of probate are reviewed by the court. Each state has their own probate laws. Depending on your state, area and the complexity of the estate; probate can take anywhere for seven months to two years to complete.

Is probate public or private?

Probate cases are public and documents filed regarding the probate of a will are also available to the public. If it is your desire to keep the aspects of your estate private, you will want to consider speaking with a qualified trust and estate lawyer and look into having a living trust created.

Do I need to have a will?

Although there is no legal requirement to have a will, it is highly recommended that you create one. There are many benefits to having a will. A will provides instructions for what should happen to a person’s assets after death. A will is commonly used to distribute a personal property, real estate, investments or business interests. It may also be used to appoint legal guardians. If a person dies without a will, they are said to be intestate, and state intestacy laws govern the distribution of the property of the person who passed.

Do I need to have a will if I have a living trust?

Yes, although a living trust may cover much of the same things that a will covers, it is recommended that you create a pour-over will along with your Living Trust. A pour-over will covers any property that might not have been properly transferred to the Living Trust by the settlor. Without a pour-over will, property acquired after the living trust was created and listed in the Settlor’s name rather than in the name of the trust would normally pass to your heirs as determined under State law as opposed by the language of the trust. A pour-over will ensures that any such assets will be added to your trust and distributed to the beneficiaries named in the trust.

Do I need to use a lawyer to create a will?

No. Anyone can draft their own will, you will just want to make sure that it complies with all of your state laws to insure that it is valid. Although you do not need a lawyer to draft a will, it is advised that you consult a lawyer if you are not comfortable drafting your own, have a potentially complex estate or want to ensure that your getting all of the potential tax benefits that are available to you and your beneficiaries.

What is the difference between a will and a last will and testament?

The term “last will and testament” is commonly used to mean the same thing as a “will”. Although, to be exact, a last will and testament refers to the most recent version of a will.

What is a living will?

A living will is a written legal document that specifies the medical treatments you would and would not want to be used to keep you alive. A living will may also communicate additional medical preferences such as if you wish to be an organ donor or wish to donate your body to medical science. Often A medical power of attorney is used in conjunction with a living will. A medical power of attorney is a legal document that allows you to appoint a person to make healthcare / medical decisions on your behalf in the event that you are unable to make them for yourself.

What is an Advance Healthcare Directive?

An advance healthcare directive and a living will are terms that are commonly used interchangeably. An advance healthcare directive or advance directive is a legal document that explains how you would like to have your medical decisions be made if you are unable to make those decisions for yourself. An advance healthcare directive can be used as a guide for your loved ones when they need to make difficult decisions regarding your medical treatment options.

Do you have to pay taxes on an inheritance?

Inheritances are not considered income for Federal tax purposes, regardless of asset type. However, any subsequent earnings on an inherited assets are taxable. An inheritance tax is a state tax assessed to the beneficiary or heir, unlike an estate tax which is paid by the estate. As of 2022, only Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania impose an inheritance tax. An inheritance tax is not the same as an estate tax. An estate tax is assessed on the estate itself before its assets are distributed. The Estate Tax is a tax on your right to transfer property at your death. The fair market value of the estate assets is used to determine the total value of the estate; the total of all of these items is referred to as the Gross Estate. In 2022 (year of death), the Federal threshold requirement for paying an estate tax was $12,060,000. You can view the IRS Estate Tax Requirements here.

What is an estate planning trust?

A trust, estate planning trust, or sometimes called a living trust is a legal document that allows a person known as the Trustee, to hold the Settlor or creator of the trusts property for the benefit of someone else, referred to as the Beneficiary. A trust is an estate planning tool that can help family members and beneficiaries avoid a potentially lengthy probate process. A trust defines the Settlors wished and lists the assets assigned to the trust. The trustee of a trust is responsible for managing the trusts assets and handling the distribution of the trusts assets upon the Settlors passing. One of the greatest benefits of a trust is the ability to avoid the state probate process.  This can speed up the distribution of an estates assets and potentially save a great deal of money as well.

What is the person who creates a trust called?

The person who creates a trust, or a living trust is commonly referred to as a Settlor, Grantor or Trustor. These terms are commonly used interchangeably. The Settlor, Grantor, or Trustor of a trust decides how the trust will operate and contributes the assets to the trust. The Trustor, Settlor or Grantor is also the person who determines the beneficiaries, or people who will benefit and eventually receive the assets from the trust.

What is a trustee?

A trustee is referred to as the  person or firm that holds and administers the assets of a trust for the benefit of a third party known as a beneficiary. Trustees are required to make decisions in the best interest of the beneficiary.

Who appoints the trustee of a trust?

Typically it is the Settlor (also known as the grantor, trustor or creator) of a trust who appoints the trustee. Often times when the Settlor of the trust is still alive they designate themselves as the trustee. Upon their passing (and the trust becomes irrevocable), a new trustee who was typically previously determined by the Settlor becomes responsible for the trust. When the Settlor appointed trustee is unable or unwilling to carry out their duties, a court may appoint a trustee to manage the trust, its assets and distribution to the beneficiaries.