Wills, Trusts, and Estate Planning
Many people think that estate planning is only for people with assets. That is not true. Estate planning is for everyone.
The critical elements of an estate plan include a Will, which can name a guardian for your children, gifts to loved ones, even describe how your debts will be paid if necessary. It also includes an Advance Health Care Directive, often referred to as a “Living Will” or “Health Care Power of Attorney,” which names the person(s) you want to make health care decisions for you if you are incapacitated, as well as sets out your wishes for end of life treatment. Finally, a Power of Attorney for financial affairs, to give your chosen agent the ability to deal with your finances, should you be unable to do so.
If you have significant assets, a Living Trust can be an important tool for tax planning, avoiding probate, and can pass your assets to your beneficiaries more efficiently. There are many different types of trusts, which are specifically designed to accomplish your goals and encompass different types of assets. Federal estate taxes and state inheritance tax are considerations, as well as real property tax basis adjustments. You are able to name a successor Trustee, who will be able to seamlessly take over administration of the trust upon your incapacity or demise.
PROBATE AND TRUST ADMINISTRATION
After the death of a loved one, there must be a process of administration of their estate. If they leave assets, debts, and either a Will or no estate plan at all, the process will be court supervised. This is court supervised process is called probate. Depending on the size of the estate, the probate process may be shorter or less formal than a full probate, however, someone must be appointed by the court to have authority to handle the estate.
Probate is a court supervised process of gathering and valuing the assets a decedent leaves behind and distributing it to the heirs or beneficiaries named in a Will. Contrary to popular belief, probate does not mean that assets will be lost or forfeit to the government. It simply provides a legal process for paying the last expenses of the decedent and transferring the remaining assets to the decedent’s heirs. If there are no assets, and only expenses, it provides a mechanism for determining which debts will be paid.
Trust administration is an alternative to probate, if the decedent had the foresight to have their assets placed in a trust. There is no court involvement in trust administration- it can be handled entirely by the attorney, in office. This provides a level of confidentiality that probate does not. A will becomes a matter of public record when it is submitted to a probate court, as do all the other documents associated with probate — inventories of the deceased person’s assets and debts, for example. The terms of a living trust, however, need not be made public. A trust can also be structured to provide for beneficiaries with special needs.
A competent estate planning and administration attorney can help you evaluate your needs, your family’s needs, how to appropriately plan for incapacity or death, and assist after the death of a loved one.