Many people are unsure if, or when, they should seek the advice of a lawyer as they begin the process of Estate Planning. If you own property, have children, have recently been married or divorced, or wish to make a special bequest to a friend or relative, you should make or update your estate plan.
We insure that your personal matters and financial affairs are appropriately handled and structured to avoid expensive probate. We strive to provide you with the peace of mind that only a well planned out and prepared estate can provide.
Our firm offers assistance in all aspects of Estate Planning and Asset Protection, including:
- Living Wills & Med Directives
- Financial Powers of Attorney
- Medical Powers of Attorney
- Trust Administration
- VA Planning
- LLC & Series Organization
- Family Limited Partnerships
Estate Planning: An Overview
An estate is the total property, real and personal, owned by an individual prior to distribution through a trust or will. Estate planning distributes the real and personal property to an individual's heirs.
Estate planning is the process by which an individual or family arranges the transfer of assets in anticipation of death. An estate plan aims to preserve the maximum amount of wealth possible for the intended beneficiaries and flexibility for the individual prior to death.
Wills and trusts are common ways in which individuals dispose of their wealth. Trusts, unlike wills, have the benefit of avoiding probate, a lengthy and costly legal process that oversees the transfer of assets.
Wills are the most basic of estate planning documents. First introduced in medieval England, wills are basic instructions to a court how a deceased person wanted to distribute money and property. Everyone who is concerned how their estate will be divided should (at the very least) have a current and valid will.
While its simplicity is a definite benefit, a will has serious disadvantages. For instance, a will is only an instruction to a court of law; it can be contested. Once entered into court, your will is public record, eliminating any privacy. Relatives, friends, and associates can be reading a newspaper, read about your death and petition the court to share in your wealth.
A will can be found to be invalid for several reasons including: improper execution; the grantor was not mentally competent and able to understand what they were doing when they executed the will; and, the will was the result of undue influence from another person.
If the will is found to be invalid for any reason, the court will usually treat it as though you had died intestate, or without a will. At that point, the particular state you reside in will decide how your property will be distributed.
Wills only become effective when you pass away. Wills do nothing for you while you’re still alive. For instance, if you should become incompetent, and not have named a trustee or given power of attorney to someone else, the court will decide your proper medical care and distribution of assets.
Wills do nothing for estate taxes. As of January 1, 2019, individuals that have assets, including real estate, over $11.4 million are subjected to extreme estate taxes that climb up as high as 40%. Plus, if you’re married, a will may not maximize the Estate Tax Credit exemption for both individuals.
Living Trusts are one of the most common estate planning tools in use today. This legal arrangement, usually drafted by an estate attorney, creates a separate entity called a Living Trust. A Living Trust is called that simply because it is created while you’re alive.
The Living Trust document itself names three different parties. The individual (or couple) that establishes the Trust—the Trustor; the person named by the Trust as the controller of the Trust’s assets—the Trustee; and the person or persons on the receiving end—the Beneficiaries.
Almost anyone with an estate of $100,000 or more can benefit from having a living trust. Estates of $100,000 or more are often subjected to probate in their state of residence, which can cost several thousand dollars in court and legal fees.
Living trusts can be structured for complicated family situations. Re-married spouses, with children from a previous marriage, can use a trust to ensure kids receive their proper inheritance.
Living Trusts avoid probate and are completely private. Because a trust is recognized as a separate legal entity, distributions can be made by a Trustee to named beneficiaries without any involvement from the courts.
The courts maintain no control over the Trust’s assets, and do not tie up the assets in a lengthy (and costly) probate process. The Trustee simply distributes assets to named heirs, but only if those assets have actually been placed inside the Trust.
Once established, almost anything can be placed in a trust: savings accounts, stocks, bonds, real estate, life insurance, and personal property. In “funding” the trust, you simply change the name or title on your assets to the name of your Trust. Many people worry about losing control of assets; however, that is not the case within a carefully-constructed Living Trust.
If you’re institutionalized or unable to care for yourself anymore, the Trust can still function and make distributions as needed. The Trustee has a fiduciary responsibility to see that your requests are fulfilled exactly. He or she can even provide care and protection for disabled relatives or children in accordance with your wishes
The Living Trust also minimizes estate taxes by fully utilizing every individual’s Unified Credit. The Estate Tax Credit, as mandated by Congress, will shelter up to $11.58 million per individual and $23.16M for couples from estate taxes. THIS AMOUNT MAY BE LOWERED BY CONGRESS AT ANY TIME.
Any amounts over that the combined Unified Credit will be subject to estate taxes, with federal rates currently at 40%. THIS RATE MAY BE INCREASED BY CONGRESS AT ANY TIME.
Living Trusts are easy to start-up and require little on-going maintenance. They afford an extra measure of protection against loss of control, and ensure that your assets remain out of the public record even after your death. However, they do not provide protection against creditors or divorce, and do not reduce estate taxes for estates over the combined Unified Credit.
POWER OF ATTORNEY
A power of attorney is used for situations where an individual cannot be present, but that individual has entrusted someone to do the job in their place. When someone holds “a power of attorney,” they are able to enter into contracts, negotiate, and settle matters as if they were that other person.
Durable Power of Attorney. A Durable Power of Attorney can act on a person’s behalf even while that person is incompetent. People suffering from dementia or senility, who are no longer competent to make their own decisions, need to continue to make financial and medical transactions long after they have the capacity to do so. A Durable Power of Attorney allows them to do that.
Setting up a Durable Power of Attorney is as easy as signing a single legal document, naming who you would like to appoint as your agent. There are no hearings or court proceedings to go through. Individuals granted Power of Attorney must, by law, act in good faith at all times on behalf of the person.
Medical Power of Attorney. A Medical Power of Attorney is so critical, because it allows a trusted agent to make healthcare decisions on your behalf. The Medical Power of Attorney helps your doctors determine when life-supporting measures should be stopped. If your wish is to not use life-sustaining measurer, you can convey this to the person you’ve named, and they will be able to fulfill your wishes on your behalf. A Medical Power of Attorney only has this responsibility to you for healthcare decisions, and cannot make financial or other decisions on your behalf.
HEALTH CARE DIRECTIVES
Health Care Directives (Also known as a “Living Will”). A legal document that allows you to set out written wishes for your medical care — and to name a person to make sure those wishes are carried out. The document takes effect if you can’t communicate your own health care decisions.