Estate planning involves living trusts, wills, a general power of attorney, healthcare power of attorney, and living wills.
In recent years, living trusts have grown increasingly popular as substitutes for wills in estate planning. They are sometimes called revocable trusts or inter-vivo trusts. Living trusts can have several advantages over wills, including avoiding probate, avoiding guardianship, maintaining liquidity, and keeping privacy.
Wills & Probate
A will avoids costs and complications for your heirs when you die. Besides providing instructions about gifts of your property – like your home, car, investments, and jewelry – your will can provide instructions for payment of your debts, selection of an executor for your estate, and appointment of a guardian for your children. Without a will, your property will be distributed according to state law and a court may select an administrator for your estate and a guardian for your minor children. Your lawyer can help you prepare a valid will that minimizes taxes and reduces the time and expense of handling your estate.
In addition to ordinary wills that state your wishes for your property when you die, the laws of some states permit “living wills” that instruct your doctors to withhold life support equipment while you are alive. A living will is important if you become comatose with no hope of regaining consciousness. Your “living will” should be written in a document separate from your ordinary will and you should re-sign and re-date it every few years to comply with your state law and to reaffirm your preferences. Give a copy of your “living will” to your doctors and to a close family member. Your lawyer can help you write a “living will” and advise you about re-signing it every few years to keep it valid.
Reducing Costs on your Estate
Federal and state taxes may be deducted from your property before it is transferred to your heirs. A federal estate tax applies if the value of your property exceeds a “unified credit”. In addition, most states impose an inheritance tax. Your lawyer can help you prepare an estate plan that will reduce these taxes. For example, your lawyer may suggest that you make gifts before you die to reduce taxes, hold property in joint tenancy with your spouse, transfer ownership of life insurance policies to your spouse or heirs, or use a trust arrangement. Your lawyer can also help you shift the tax responsibility among heirs if you would like some of them to receive their shares without being taxed on it.
Reducing Probate Costs
Probate costs include court fees, bond premiums and the fees of professionals who assist your executor with the administration of your estate. Your lawyer can help you reduce probate costs with estate planning tools like joint ownership, living trusts, lifetime gifts, and business recapitalizations. For example, your lawyer can prepare a living trust in which you appoint a trustee to distribute your property when you die. Some estate planning tools can help you reduce probate costs, but they may not lower your estate taxes.
Estate Planning Checklist
Estate Planning Tools
- Joint tenancy
- Living trusts
- Lifetime gifts
- Business recapitalizations
Selecting Your Heirs
- Other relatives
- Charitable organizations
Identifying Your Debts and Liabilities
- Credit cards
- Home mortgages
Listing Your Property and the Heirs to receive it
- Automobiles and boats
- Bank accounts
- Computers and electronic equipment
- Home and household goods
- Rental property
- Stocks and bonds
We highly recommend contacting us for a free consultation to help guide you through the process.