Estate planning is the creation of a definite plan for managing your wealth while you’re alive and distributing it after your death. These assets may be owned by you separately or jointly with Estate planning is one of the core responsibilities of adulthood. You should definitely have a plan in place to preserve your legacy and protect your loved ones, regardless of your age. There are multiple components to consider, and there are different approaches that can be taken. Personalized attention is key, and this is exactly what you receive when you work with our firm.
Last Wills & Living Trusts
When you plan your estate, you arrange for the distribution of your assets to your heirs after you are gone. Many people assume that a last will is the document that should be utilized unless you are very wealthy. In fact, once you understand all the details, you may decide that a revocable living trust is a better choice.
If you were to use a last will as your primary vehicle of asset transfer, it would be admitted to probate after your passing. The executor or personal representative that you name in the will would handle the estate administration tasks, and the probate court would provide supervision. This process is not inherently negative, but there are drawbacks that go along with it.
Probate is a lengthy process that can take approximately 8 months to a year, even if there are no particular complications. The heirs that are named in the will do not receive their inheritances while the estate is being probated by the court. Speaking of complications, disgruntled parties can come forward to challenge the validity of a last will during the process, and this is another pitfall.
Costs will accumulate during probate, including the executor’s remuneration, legal fees, court costs, accounting expenses, appraisal and liquidation charges, and various incidentals. All of these expenditures reduce the value of the estate that will eventually be passed along to the inheritors.
Another probate drawback is the loss of privacy. Probate is an open proceeding, so anyone that is interested can access probate records to find out how you distributed your assets. This can be disconcerting in a general sense, and this information can also create acrimony among interested parties.
All of these negatives can be avoided through the utilization of a revocable living trust as your primary asset transfer vehicle. If you establish this type of trust, you can act as the trustee and the beneficiary while you are living, so there is no loss of control. When you are creating the trust agreement, you would name successors to assume these roles after you pass away.
When the time comes, the successor trustee would follow your instructions and distribute the assets to the beneficiaries in accordance with your wishes. These distributions would take place outside of the process of probate, so the drawbacks that go along with it would not be a factor.
There are more advanced asset transfer strategies that can be utilized when certain circumstances exist. For example, high net worth individuals can be exposed to the federal estate tax, and there are irrevocable trusts that can be used to gain estate tax efficiency. If you get remarried and you want to protect the interests of your children from a previous marriage, you could do this through the creation of a qualified terminable interest property trust.
There are also special needs trusts that can be established to set aside resources for the benefit of a loved one without impacting eligibility for Medicaid and Supplemental Security Income.
These are a few examples of the types of situations that can call for the implementation of more advanced estate planning techniques, but there are others.
Schedule a Consultation Today!
We would be glad to gain an understanding of your objectives and help you craft an estate plan that ideally suit your needs. If you would like to schedule a consultation, we can be reached by phone at 570-270-6524, and you can click this link to send us a message electronically.
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