Estate Planning Legal Information
Estate lawyers can help families plan and arrange for the transfer of their property and assets to the chosen beneficiaries. This is done by creating an estate plan, will, or trust. Employing an estate lawyer will help ensure that your property is transferred to the people you have specified, minimize the taxes and fees, avoid the probate court process (the legal process for dividing property), decide the type of life supportive medical care you wish to receive, and make funeral arrangements when the time comes.
If you want a skillfully drawn up estate plan that can save your family money in the long run then you should have an estate lawyer draft your estate plan. Having an experienced estate lawyer can help your family limit the involvement of the probate court, thus saving them time and money. In addition, if one of the following items describes your situation, you will need to employ and estate lawyer to help you write an estate plan or will:
- You expect to owe estate taxes at the time or your death (you have more than $2 million in assets).
- You own your own business
- You want to have strict control over your property after you die (i.e. you want to leave some property in a trust for your child or have your property go to your grandchildren when your child dies).
- You have a child with a disability and wish to address their needs in your will.
- You have children from a prior marriage and do not want your property and assets to be an issue of conflict for them and your current spouse.
- You believe someone may contest your will.
There are numerous issues that can be resolved at the time of your death if you have a well written estate plan. Your estate consists of your bank accounts, real estate, stocks and securities, life insurance policies, and personal property. Here are just 10 things an estate plan can do for you.
- Provide for your immediate family. This includes provide enough money for your family to continue their lifestyle as well as ensure your children’s education and upbringing is provided for.
- Provide for relatives who need help or guidance. If you have a relative whose life would become more difficult in your absence then an estate plan can establish funds and support for them.
- Transfer property to your beneficiaries quickly. An estate plan can help avoid or ease the length of the probate process. An experienced estate lawyer will know the best methods for transferring your property through your estate plan.
- Minimize expenses. Keeping costs down while your property is transferred to your beneficiaries will allow you to leave more money to them after your die. Good estate planning can greatly reduce these expenses.
- Reduce the taxes on your estate. A well written estate plan can limit the amount of federal estate tax paid to the government. This will ensure your beneficiaries receive the maximum allowed by the law.
- Ease the strain on your family. Your estate plan can take care of your funeral arrangements, limit the cost, designate a burial place, and decide what happens to your body (cremation, burial, donation to science, etc).
- Plan for incapacity. Most estate plans have a section written in them that make decisions about your medical treatment and life support options if you become physically or mentally incapacitated.
- Choose an executor for you estate. Having a competent executor can reduce the burden to your loved ones, save money, and reduce the involvement of the probate court.
- Make sure your business goes on smoothly. In your estate plan you can provide an orderly succession and can spell out what will happen to your interest in your small business after your death.
- Help your favorite cause. Your estate plan can help local charities, schools and education, and support churches. This can take advantage of tax laws that encourage donating to worthy causes.
Yes, but it is only advised under certain circumstances. Estate plans are the most common way for people to make their wishes know about how their property and assets will be handled after their death. If your estate plan is well written, the transfer of property to your beneficiaries can be done quickly while avoiding heavy tax burdens. Creating a basic estate plan is probably enough if:
- You are under the age of 50
- You are in good general health
- You don’t have assets in excess of $2 million, thus will not owe estate tax when you die
If you are unsure of the validity of your estate plan you should seek the assistance of an estate lawyer. With that in mind, there are a few requirements that an estate plan must have to be valid.
- Your estate plan must be written down.
- You must be of “sound mind” when you draft your estate plan. This means that you understood what you were doing when you are drafted your estate plan.
- You must sign your estate plan. If you are unable to then someone may sign for you as long as there are witnesses.
- Your estate plan will then remain valid and enforced until you rewrite it.
If you decide to write your own basic estate plan then you should make sure your estate plan:
- Leaves your assets and property to the people you choose.
- Names the people who will be taking care of your minor children after your death.
- Names someone to manage your property until your children come of age.
- Names your executor. This is the person who has the authority to make sure that your wishes and the terms of your will are carried out (usually a family member or friend).
If you do not have an estate plan at the time of your death then the state will decide what happens to your property and a judge will decide who gets to raise your children. If a person dies without leaving an estate plan their estate will become “intestate” and a probate court must divide up the estate. This process can be extremely time consuming and costly. The court will begin by paying off the deceased’s debts and will then divide property among only surviving relatives. If no relatives of the deceased can be found then the estate will typically go to the local government.
When creating your estate plan, a trust is one tool that can be used to supplement or replace your will. Trusts can also help manage your property during your lifetime. A trust manages the distribution of property by transferring the benefits and obligations of your property to different people.
To create a trust, the property owner (grantor) transfers legal ownership to a person or institution (trustee) to manage the property for the benefit of another person (beneficiary). This transfer of property creates a legally recognized fiduciary relationship between the trustee and the beneficiary. A fiduciary relationship means that the trustee must act only in the best interests of the beneficiary in regards to the trust property. If the trustee does not act in the best interests of the beneficiary then they become legally responsible for any damages to the beneficiary’s interests.
Trusts have important tax, governmental assistance, probate, and personal ramifications so an experienced estate lawyer should be employed during all stages of the trust process.
The two broad categories of trusts are testamentary and living trusts.
Testamentary trusts transfer property into the trust only after the death of the grantor. Many people prefer to use a testamentary trust in their wills because they allow the grantor to specify the conditions for receipt and benefits of the trust. This may also include spreading the payments of the trust over a certain period of time instead of making a single gift. Before a trust is created, the trust property must go through probate after the grantor’s death.
Living trusts begin during the lifetime of the grantor and can continue after their death. These types of trusts avoid probate because the property is transfer before the grantor’s death. A living trust may be either revocable or irrevocable. With a revocable trust, the grantor can change the terms of the trust anytime after the trust begins. If a person transfers all their assets to a revocable trust then at the time of their death they will own no assets and their property will not need to go through probate.
Probate is the legal process of transferring property and assets at the time of a person’s death. This is a court supervised process that is suppose to distribute property owned by a person at the time of their death, which does not pass to others by designation of ownership. Probate exists to protect all parties involved when a person dies. There are three ways to avoid probate, joint ownership with the right of survivorship, gifts, and revocable trusts.
The probate process can be either contested or uncontested. Probate cases can be contested by a disgruntled beneficiary who is seeking a larger share of property than they are entitled to. However, the majority of probate cases are uncontested and the process includes:
- Collecting all the probate property of the deceased
- Paying all debts, claims, and taxes owed by the estate
- Collecting all right to income, dividends, etc
- Settling any disputes
- Distributing or transferring the remaining property to the beneficiaries
The probate process has a number of costs associate with it, which is usually paid from the estate assets of the deceased. These costs include the fees for personal representative, court costs, and lawyer fees.
There are three different types of probate, each with its own benefits and limitations.
- Supervised probate is the most formal and expensive method. This method is often used when estates are contested and the court must approve each transaction of property.
- Unsupervised or independent probate is a simpler and cheaper method and the court’s role is reduced or eliminated. This method is used when the assets exceed the limit for small estate probate, but the court supervision is not required and the beneficiaries agree about the distribution of property.
- Small estate probate is the simplest and fastest probate method. This method is used only for small estates, ranging from $1,000 to $100,000.
If you are going to use an estate lawyer they will usually give you an initial consultation for free. The price of your will or estate plan then depends on the size and complexity of your estate and your lawyer’s experience. Lawyers will often have a written fee schedule for different types of estate plans. If your lawyer doesn’t, ask them to give you an estimated cost before they begin to draft your estate plan.
Legal clinics can provide a low cost alternative to people who want to draft an estate plan and will. Your legal costs can be greatly reduced because legal assistants do much of the work under the supervision of a lawyer. These types of estate plans often involve adapting computerized forms to fit your needs. If you have a simple estate then a legal clinic can be a low cost way to ensure your estate plan meets the legal standards of validity.