Estate Planning
Maximize your value and minimize your tax burdens
What is Estate Planning?
It is how an individual or couple will manage their assets while they are alive and how those assets will pass to their heirs when they die. Estate plans allow you to maximize value and minimize both litigation costs and tax burdens.
Dying without a will or estate plan is called intestacy. When the intestacy laws of the state pass property, it may not be distributed as the decedent would have wanted it to be and court probate could be very expensive. This can cause families to lose property to the state or to family members who were not close to the decedent.
Estate planning can and should include wills or trusts, living wills, healthcare directives and power of attorney designations. Giving someone power of attorney and specific instructions for executing the terms of the will or trust will mean that the property is less likely to end up in probate court because it will be distributed as directed.
Beneficiary designations are another form of relatively quick distribution of assets. Bank accounts, insurance policies, and some other financial instruments can be passed on with just the provision of a death certificate of a decedent. Bank accounts are often caught up in litigation when someone dies and having a beneficiary is an easy fix.
An estate plan can include guardianship instructions for children, funeral arrangement directions, and prenuptial agreements. It’s important to plan for blended families because intestacy can cause the property to be passed outside of the family when there is remarriage. Estate plans can also include how estate tax will be paid. For example, money could be set aside for charitable donations to lower the estate tax burden.
Wills can also include trusts.
Trusts are used to manage the distribution of the funds after death, they are used as a way to ensure that the heirs aren’t being wasteful with the money or they are following the plan of the decedent.
What is a Trust?
A Trust can be formed under state law. This is the process of giving someone else the title to your assets, subject to your ability to keep or use the property for the benefit of the people of your choice. The three primary types of trust are revocable trusts (aka living Trust and can avoid estate taxation), irrevocable trusts (when assets are placed in Trusts and can’t be removed or amended after they’ve been placed there and testamentary Trusts (to become active after your life. Do not have to immediately fund). Trusts are more favorable than simple wills because they're not subject to probate. The information and documents will remain private and the client will be able to save money.
What is an advanced healthcare directive and living will are often grouped together, such as a power of attorney and healthcare proxy. A living well tells the doctors how you would like to be cared for if you are unable to speak for yourself. For example, do you want to receive CPR? Be placed on ventilators or breathing machines? Dialysis? Artificial nutrition or a feeding tube? A durable power of attorney for healthcare will allow you to choose who will make medical decisions for you.