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Why Have an Estate Plan?

 

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An estate plan can do a varietSignature6y of things depending upon your circumstances.  An estate plan can help you plan for unknown future events, save your family estate taxes upon your death, appoint a guardian for minor children, protect assets from law suits and divorce proceedings for future generations, minimize family conflicts and provide peace of mind to you and your surviving family members.

Our estate plans generally include powers of attorney and health care directives.  These documents help people of all ages plan for disability.  They avoid future conflicts by specifying people to make health care and financial decisions. 

When people think about estate planning, they generally consider who they want property to pass to at death.  Wills do more than this, though.  Besides designating the person or persons to receive your property, a will can name a guardian for minor children, save expenses and formalities that some probate proceedings require, and create trusts for asset protection.

Probate

After a person dies, the estate may need to be probated.  Probate is the process by which a decedent’s claims are resolved and remaining assets are distributed as directed under the decedent’s will.  Not all assets require a probate proceeding to transfer title.  Some probate proceedings can be informal, depending on the directions under the will.

The proceeding involves the appointment of a personal representative or executor to carry out the instructions under the decedent’s will.  The will may nominate the person whom the decedent would trust to carry out his or her directions.  This person will generally need direction from an attorney on filing court documents, notifying creditors and the public about the death, determining the beneficiaries under the will, changing title to assets and distributing property to creditors and beneficiaries.

If the decedent dies without a will, the property ownership transfers based on beneficiary designations, whether property was held with another with survivorship rights, and the law of the relevant state.  Sometimes multiple states’ laws apply depending on where the property is located.

Revocable Trusts

Many of our clients would rather avoid the expense and delay of probate.  These people choose to fund a revocable trust with their assets and pass other property by beneficiary designation.  A revocable trust can be an effective tool in the case of a person’s incapacity as it allows another person – the trustee – to act on his or her behalf in managing financial matters.  The trustee can usually pay bills, sell or purchase assets, or make gifts.

While the Grantor (the person who sets up the trust) is alive, the Grantor will typically serve as a trustee.  The trust uses the Grantor’s social security number so income tax is handled the same as it would if the Grantor never created the trust.