Estate Planning

A Note About Estate Planning

When people hear the term "Estate Planning", they usually associate it with their mortality. Therefore, it is generally an uncomfortable subject to talk about let alone do the necessary planning. 

The goal of Estate Planning is to give your assets to who you want, the way you want and when you want, while also saving every tax dollar, attorney fee and court cost possible. An Estate is everything you own - residence(s), car(s), personal property, boat(s), cash, bank accounts, stocks, business, pension plan(s), IRAs, CDs, life insurance policies, etc. 

Surprisingly, a Will is not an effective Estate Plan. A Will, by law, must proceed through Probate Court which costs approximately 3% - 10% of the gross value of the estate. If you think about it, you probably have more assets than you realize. For example, if your home is worth $150,000, you have $100,000 for your retirement (pension plan and savings) and personal property valued at $25,000 (which is a low figure considering most families have 2 cars today), your gross estate would be valued at $275,000. Based on the probate cost of only 3%, this would be $8500 and 10% would be $27,500. Why would anyone not want to give this money to their heirs? 

Fortunately, probate can be entirely and legally avoided by having a Living Trust. This is a written document that enables you, or you and your spouse, to appoint yourselves as trustees to manage your property for the benefit of yourselves because you are the beneficiaries of your Trust. This document is revocable, cancelable and amendable during your lifetime. Upon your death, the Trust will provide for the transfer of your assets to your heirs the same as a Will but without Attorney fees, court costs, etc. 

Furthermore, if one of your goals is to protect yourself and your family should you become incapacitated and can no longer handle your affairs, a Will is of no help. The only time a Will comes into play is at death. One of the important advantages of having a Living Trust is that your family will not have to obtain a court appointed, highly paid Guardian to manage affairs should you become incompetent. Your spouse/Trustee will already have the authority to do it. 

Joint Tenancy is not an effective estate planning option either. True, joint tenancy allows the property to pass automatically, without probate, to your spouse upon your death. However, upon the death of the second spouse, the property will be distributed to your heirs through probate. The consequence of joint tenancy is that your heirs will pay the maximum in taxes and costs rather than the minimum. Furthermore, if a joint property owner/spouse becomes incapacitated and cannot sign a deed, etc., the other spouse must go to court to have a Guardian appointed in order to sell the joint property. Once again, the solution to this situation is a Living Trust created while both spouses are alive.

In conclusion, a revocable Living Trust meets all the criteria for effective Estate Planning. It allows you to control your assets and affairs during your lifetime, if incapacitated and after your death. It minimizes taxes, Attorney fees and costs, thereby preserving your wealth for your loved ones. Do not think that Trusts are just for the wealthy. As the example regarding probate costs illustrated, Trusts are valuable estate planning devices for anybody that wants their heirs to receive the full value of their estate. Most importantly, a Trust is not expensive. 

If you do not have a Will, make arrangements to have a Living Trust prepared immediately. If you currently have a Will, replace it with a Trust, NOW. If you do not have either, contact us, we specialize in cost saving Living Trusts. You and your family deserve this kind of planning and protection. Do not procrastinate!
 

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