Estate Planning FAQ:

Why should I bother with estate planning?

There are many reasons why everyone should consider estate planning. Having a good estate plan in place will make sure your assets are managed and disposed of in the manner that you prefer when you die or become incapacitated. Estate planning also helps to defer the occurrence and the burden that families suffer from with the wealth transfer tax system. It also protects any inheritances that you pass on to your heirs from any creditors to whom they owe money. You do need to have a plan in place because if you die without a will or living trust, the job of managing and disposing of your assets, even the custody of your children, passes into the hands of the courts.

What sort of factors should I consider when trying to determine whether I need to do estate planning?

There are several questions that you could ask yourself when you are wondering if this is right for you. These include:

• Does the combined amount of assets you have and the gifts you have given exceed the allowable amount of applicable exemption?
• Does it matter who receives any of your possessions and assets after you die?
• Would you like to maximize the value of your total estate?
• Would you like to minimize the amount of taxes your heirs have to pay on any assets they receive from your estate?
• Does it matter who gets custody or guardianship of your children?
• Do you want your children to receive their inheritance after they reach a certain age?

If you answered “yes” to any of these questions, then you do need to consider estate planning.

What does it mean to have a living trust?

As part of an estate plan, you can have a living trust. This means that you keep possession of your assets while you are alive and you direct the disbursement of the assets at the time of your death. The main benefit is that you avoid probate. Probate refers to the court supervision of the disposal of your estate and could mean that the ones you want to get something are not even considered. In avoiding probate, you also avoid court costs and legal fees, in addition to making sure that your heirs receive their inheritance right away.

Do I need to review my plan?

This depends on whether there have been any changes in your financial circumstances. One of the most common mistakes that people make in estate planning is that once they establish the plan, they do not review it on a regular basis to include any additional assets that they acquire. For example, if you only had a bank account with enough money to cover your funeral expenses and then you win a lottery, you will have to have plans in place for the disbursement of the funds, so that this money is not subject to taxes and that each of your heirs will get equal amounts. You may want all of it to go to a specific charity, but if this is not detailed in your estate plan, it will not happen.

Couldn’t I just put my home in joint names with my child and not bother with a will or estate plan?

Some people believe that having the title of property jointly held with the children is a good substitute for a will. This is not the case, because once you transfer the title of your property to someone else, it is irrevocable. This means that no matter what happens you cannot get back the title and the person that holds the title has the power to dispose of the property as they see fit, even before you die. If, for example, you transfer the title of your home to your son or daughter and he/she falls into tax default, the IRS could actually seize the home and sell it to get back the tax money owed because the title is not in your name. If you transfer the title to your child and his/her spouse, you also have to plan for divorce. This property may have to be sold as part of the divorce settlement.

What is estate transfer and heir planning?

Estate transfer and heir planning is one of the major parts of any estate plan. This part of the place specifies each heir and the portion of your estate each one is to receive. It will also dictate the manner and timing of when and how the heirs are to receive the inheritance. For example, if you have a substantial amount of money you wish your minor child or grandchild to receive, you can name the child, the amount and at what age he/she is to receive any monies. You can have the money disbursed in a full amount or as a yearly amount. Although this can be done in a will, in order to avoid probate and the loss of some of the money through court and legal fees, the best way to do this is to establish a trust. A trust will also protect the estate from any judgments and liens and also minimize the taxes due upon your death.

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