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What is Estate Planning?
Estate planning is a process designed to avoid probate upon the disability (living probate or guardianship) or death of an individual and to make sure that your heirs receive the property that you want them to receive and when you want them to receive it. The avoidance of probate is the fastest and most cost effective way to transfer property to your loved ones. For those with large estates, the revocable living trust can be written to reduce or eliminate the Federal Estate Tax.
How does a living trust avoid probate upon disability or death? With a living trust most, if not all, of your assets are owned by your trust rather then owed by you in your individual name. Probate handles only those assets that are in your name at the time of disability or death.
What should be a part of my estate plan? Any individual that owns more than $75,000 in assets, or any real estate, in his or her name should have a living trust. In addition, there should be a pour-over will, a durable power of attorney, a designation of healthcare surrogate, a living will and, perhaps, an anatomical gift form. These documents and others protect you during disability and at death and leave full instructions for your successor trustee.
Can I do my own living trust? The best answer is no. Many attorneys are not qualified to prepare a living trust and a proper estate plan. The forms available in the office supply store would not help you either, since it takes many years to truly develop the expertise needed to develop the proper estate plan for an individual's particular situation.
Aren't living trusts expensive? Not when you consider the savings that can be produced. As an example, a guardianship proceeding for an adult can range from $2,500.00 to $5,000.00 or more depending upon whether it is contested or non-contested. And the costs continue after the guardian has been appointed. There should be no guardianship proceeding if the incompetent individual has a living trust. The statutory attorney's fees for probating at estate at death for an estate of $100,000 to $1 million are three per cent of the value of the estate. By switching one of my clients from wills to a living trust, it initially provided $1 million in savings to the clients' estate at death. I always say "it's not what it costs to get into the proper estate plan that matters, but rather what will it cost my family if I have don't have the proper estate plan".
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