Frequently Asked Questions About Estate Planning

Estate planning is the process of anticipating and arranging for the disposal of an estate during a person’s life.  Given the many aspects and considerations that go into a comprehensive estate plan, clients often have questions.  Below are some of the frequent questions we are asked about estate planning.

What is a simple will?

Simple wills are primarily for small to moderate sized estates. Estate tax planning is not the primary focus of a simple will. Instead, a simple will’s primary focus is to avoid intestacy, appoint an administrator of the estate, appoint a guardian for your minor children, appoint a Trustee if necessary, and relieve the parties of the cost and hassle of being bonded. A carefully drafted will is the most reliable way to ensure that the distribution of your assets distributed as you wish. In addition to distributing your assets, a will:

  • Allows you to designate who will become guardian of your children (care for them) and setup a trust to provide additional support to the guardian while protecting the assets in the trust;
  • Communicate special intentions, such as who will care for and how to care for a pet or pets;
  • Provides a reliable manner by which to distribute sentimental keepsakes, pictures, and other items that are dear to you and your family.

What is a living trust?

Very briefly, a living trust is designed to avoid probate proceedings, reduce estate taxes, protect your privacy (probate proceedings are a public matter), and regulate the use of assets. A living trust may be very beneficial if one owns property in more than one state or in a state other than the one in which they reside. A trust is an arrangement under which one person, called a trustee, holds legal title to property for another person, called a beneficiary. You can be the trustee of your own living trust, keeping full control over all property held in trust. A “living trust” (also called an “inter vivos” trust) is simply a trust you create while you’re alive, rather than one that is created at your death.

What is an estate plan? Is it mostly about reducing taxes?

Many think of estate planning as will and tax planning strategies that may or may not benefit them. However, an estate plan is much more than a will or tax saving techniques, it includes every aspect of your life – financial, personal, family, friends. A properly drafted estate plan ensures that legacy is left the way you vision it. Further, it incorporates documents that protect you for times when you may become disabled, incapacitated or otherwise unable to act for yourself. An estate plan is for everyone, for without it your simplest last wishes may not be carried out – an estate plan is for you.

What documents should I include as part of my estate plan?

Generally, we advise clients to include as part of their estate plan the following documents:

  • Durable Power of Attorney
  • Medical Power of Attorney or Power of Attorney for Health Care
  • Living Will or Advance Directives or Directive to Physicians

If necessary or prudent, a trust will become part of your Estate Plan. Typically, a trust is drafted into your will and becomes operational or effective upon certain conditions, such as the beneficiary being a minor child.

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

Yes. Even with a living trust, a will is still a necessary component of an estate plan. A will should be in place to transfer property that was not transferred to the living trust – including proceeds from insurance policies you do not own or have the right to name the beneficiary of.  Further, you need a will to name a personal representative and guardian of your children.

Do I need to leave my property equally among all my children?

No. There are many reasons to treat children or other beneficiaries differently in your will. Children or other beneficiaries may have different financial needs, personal needs, or other situations that call for different treatment among your beneficiaries in your estate plan. As such, you may design your estate plan to meet those specific needs and your desires.

What if all of my property is held jointly, do I still need a will?

Yes. Joint tenancy is a great estate planning tool, but it does not account for all contingencies or situations, such as what happens at the death of the surviving tenant. Further, it is not available for all assets or property.

What if I die without an estate plan or without a will?

If you die without a will, you die intestate. Your state will distribute your property in accordance with the state’s intestacy laws. The state does not “get your money and property” unless you have no heirs. However, the state will distribute your money and assets according to their laws. Generally, the laws will give the property to the right people, but not always in the manner you would like. This is especially so for mixed families – divorced and remarried parents. If you die without a will, the court will appoint an administrator for you whereas you can appoint the administrator in your will. Additional costs may be incurred if the court has to appoint a guardian for your minor children.

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