Frequently Asked Questions
Estate Planning FAQ
What is Estate Planning?
Estate planning is planning for what will happen if you are no longer able to manage your affairs and for after you pass away. Your estate consists of all your property, including real estate, tangible personal items, such as furniture and cars, and intangible personal items, such as bank accounts, stocks and Social Security benefits. Estate planning involves determining how to best preserve your assets, how to minimize the amount of taxes your estate will have to pay when you die, who will inherit your assets, how they will inherit them, and how your assets will be managed if you are no longer able to manage them yourself.
Do I need a will?
That depends! A will is a document that spells out your wishes of how your estate will be divided after your death. For some people this method of estate planning is sufficient. But for many, a living trust in addition to a will may be more appropriate. It is best to speak with an attorney to make this determination.
What is a trust and do I need one?
A trust is a legal relationship between three parties: a grantor, a trustee, and a beneficiary. The grantor transfers his/her property to a trust. The trustee manages those assets for the benefit of the named beneficiary. During life, one person will often play all three roles. Upon your death, the assets will be managed or distributed as you specified in the trust document, by the person you designated and to the beneficiaries you chose. The assets in the trust are not considered to be part of your estate and thus do not go through the probate process. This helps to minimize expenses that would otherwise be associated with distributing your estate.
Whether a trust is appropriate for you depends on the purpose of the trust and the size of your estate. An attorney can help you decide if a trust is in your best interest.
What is probate and should I try to avoid it?
Probate is the mechanism to distribute your assets and is supervised by the court. It is used to make sure your will is valid, it collects and distributes your assets, it ensures creditors are paid, and it puts a time limit on when creditors can make claims against your estate. The fees your estate will have to pay to go through the probate process will depend on the size of your estate. The bigger the estate, the larger the fees. And these fees are determined by law. Depending on the size and complexity of your estate, you may wish to avoid probate. This is an individual decision to make and we advise you consult with an attorney to determine the best estate plan for you.
Taxes! Do I have to pay them once I am gone?
Your estate will be responsible for paying taxes. There are ways to minimize the amount of taxes due and maximize the amount of assets your beneficiaries will inherit. Speak with an attorney to find what works best for your situation.
Are there other ways to plan my estate?
There are and these include, among others, life insurance, retirement accounts, payable-upon-death accounts, and gifts while you are still alive. We would be happy to discuss all the various estate planning tools and options available to you.
Do I need to plan for my healthcare and other expenses if I become incapacitated?
Yes! It is very important to plan for your medical and financial affairs if you become unable to manage them yourself. There are legal documents you can prepare now to plan for who will take care of your affairs later. This document is called a durable power of attorney. In this document you will appoint who will be the person to handle your finances should you no longer be able to and it will ensure that your assets will be well managed in the event of your incapacity.
It is also important to prepare an advanced healthcare directive to state who will make medical decisions on your behalf if you are no longer able to make them yourself. In this document you will state the specific type of health care decisions you would like made on your behalf. You may also be able to state specifically which type of medical care you do and do not want to receive.
Preparing for the possibility of your incapacity will ensure your wishes are followed and remove a lot of stress from your loved ones who will be left to make these decisions for you.
For more in depth answers to these questions and others you may have, please contact us for a consultation with one of our attorneys to determine the best estate planning for your particular situation and goals.