What is Estate Planning? Estate Planning is one of the most crucial steps you can take to protect yourself and your loved ones. Without a proper estate plan in place, your wishes may be carried out contrary to what you desired and may be subject to estate taxes. Estate Planning involves designating what would happen with your home, investments, business, life insurance, employee benefits and other property in the event of death or incapacity. It will also involve strategies to minimize estate taxes and other costs associated with handling your estate as well as directions regarding health care matters. The goals are to maximize your enjoyment of your estate during your lifetime and the beneficiaries' enjoyment of the estate after death. With the proper plan for you and your family, you can be in charge of your finances and spare your loved ones of the expense, time, and frustration in managing your affairs when you pass away or become disabled.
What is Probate? If you use a Will to leave your assets to your loved ones, your estate will pass through probate. The process is a legal proceeding to validate someone's will and designate who should receive the assets. The process can take nine to eighteen months to settle one's estate and the fees associated with it are determined by law and based on a percentage of the value of your assets. Statutory fees usually amount to 5% of the estate's total value.
Why should I avoid probate? This process is expensive, time consuming and public. The probate court can freeze your assets for weeks or months while your estate is settled and distributed. You would want your family to have immediate access to cash to pay for current living expenses while your estate is being settled.
What is a Living Trust? A living trust protects your assets from probate after your death and gives you control and the freedom to handle your own assets during your lifetime (or until you become incapacitated). You would be the trustee and beneficiary of your trust during your lifetime. You can appoint a successor trustee in the event of your incapacity or death who will take over and distribute your assets or keep them in trust for your beneficiaries according to your instructions. The living trust is revocable and you can make changes to the trust or terminate it at any time. One of the advantages of a living trust is that your assets can immediately transfer to your beneficiaries without having to go through the probate court process.
What is a Will? If you do not have a trust, a Will tells the probate court what will happen to your assets and appoints an executor to carry out your wishes. If you set up a trust, you will only need a Will for the assets that you may have forgotten to put into the trust. This is called a "Pour-Over" Will, meaning that you want all assets that you forgot to put into the trust during your lifetime to be put there upon your death.
What's included in my estate?
Your house or any other real estate
Your checking and savings accounts
Your share of any joint accounts
Life insurance policies
What is a Durable Power of Attorney? If you should become incapacitated, this document officially allows the person you designate to handle non-trust business affairs for you (ie. sign checks).
What is an Advance Health Care Directive? This document gives you the opportunity to make your own choices about your health care in advance in the event that you are not able to communicate those desires in the future. You would appoint someone to carry out your wishes. Rather than have a court appoint someone, you can nominate a conservator to handle both your personal care and your business affairs in the event you become totally incapacitated.