Many of us spend our earthly lives accumulating assets which, unfortunately, upon our death, will not go with us. The top 2 reasons for having an estate plan:
1. So you can transfer your wealth to your chosen heirs, in your chosen manner;
2. So you can plan for and effectively limit the taxation of your estate;
If you die “intestate” (which is without a will) or without an estate plan, lots of things can happen, such as:
1. Intestate Succession: When someone dies without a will, the government will step in and decide who gets what.
2. Probate: The estate could go to probate, a costly and very public process. (See below: What is Probate?)
3. Guardianship of Minor Children: If both spouses pass away, it is a good idea to list who they want as a guardian.
4. Higher Estate Taxes. Higher estate taxes = less for beneficiaries.
What is Probate?
Probate refers to process of legally validating a person’s will. Such a procedure takes approximately 9-12 months. The court appoints a person designated as an “executor” to handle the assets and to administer the estate. The fees that the executor and attorney receive are set by law (a percentage of the value of the assets which go through probate.)The total fees can be approximately 5-6% of the estate assets.
How Do I Avoid Probate?
In Washington Utah, the first $100,000 of an estate is exempt from probate, meaning that the first $100,000 can be collected without a formal Probate procedure. All else is subject.
Some probate-avoidance techniques are:
• Revocable Living Trusts;
• Joint Tenancy;
• Life insurance and retirements accounts which name a beneficiary;
• “Pay-on-death” accounts
• In Washington, Utah, “spousal confirmation proceeding”, where a petition is filed with the court, notice is given to certain parties, and if no one objects, the court approves the assets as going to the spouse. This procedure can only be used for husband and wife.
Is Probate Always Bad?
Nowadays, people tend to associate “probate” with the bad and ugly. However, there are some instances that probate can provide benefits. For example, if your estate owes a lot of debts, to a lot of creditors; or if you believe someone may challenge your estate in court. You should discuss these issues with a qualified estate planning attorney.
Wills v. Trusts
As explained above, wills do not avoid probate. Even if you have a will, upon your death, the will becomes a public document. A will is subject to probate, which can be a painful, drawn-out process that most people would want to avoid. A living trust, however, avoid probate. The principle behind a Revocable Living Trust is this: When you establish a Living Trust, you transfer all your property into the Trust, and then name yourself as trustee (or spouse as co-trustee). You will also name “successor trustees”, who will take over your assets and handle them pursuant to your instructions. Since the “successor trustee” will be following your decisions, the probate courts needs not be involved.
The trustees maintain complete control over the property, the same control you had before your property was placed in trust. You can even discontinue the Trust if you choose. Another important difference between a trust and a will is that a will is not effective until you die. A trust, however, is effective as soon as you make it, and can offer protection if you become disabled or incapacitated.
How Do I Transfer My Assets to a Trust?
In order to fulfill the purpose of your estate plan, you should fund the revocable trust you have by transferring your assets to the trust. For all transfers, title should be transferred to the trust.
1. Real Property In Washington: It will be necessary to prepare and record a new deed in order to transfer title of real property to your trust. It is also necessary to submit a Preliminary Change of Ownership Report with the deed notifying the local county assessor as to whether the property is subject to reassessment. A transfer to a revocable living trust is exempt from reassessment. Please note that if there is a mortgage, you should contact your lender and request a waiver of enforcement of any due-on-sale clauses contained in the loan documents.
2. Real Property Outside of Washington: Laws vary from state to state regarding transfer s of real estate. Best to consult with an attorney located in that state who is familiar with local rules regarding property taxation, income taxation, and law regarding mortgages as it affects such property.
3. Cash Accounts: You should contact all banks and let them know that you have a living a trust and wish to transfer assets to it. You should change the name on the bank accounts and CD’s by completing new signature cards as the Trustee.
4. Stocks and Bonds: Your broker should help you with this.
5. Life Insurance: The beneficiary should be changed to the trust; however, if it’s a small policy, you may wish to continue the designation of your original beneficiary.
6. New Assets: All new assets should be acquired in the name of the trust.
If I Have a Living Trust, Do I Need a Will?
Yes, most trusts will have a “pour over” will, which simply provides that any assets held in your name alone at death, which were not in your living trust, will be transferred to your living trust. However, these assets not originally in the trust will not avoid probate.
Should I Change or Update My Will?
Congratulations, you’ve made your estate plan. When should you make changes or update the documents? It truly depends. Generally, if something major happens, such as a death of spouse or beneficiary, divorce, adoption of new child, or winning the lottery. Please consult a qualified estate planning attorney.
Estate Planning Lawyer: How They Help
Estate Planning Lawyers are those who assist others in creating the last will. Not only that, the estate planning lawyers also help to establish a trust in the event of death of an individual by protecting the assets of inheritance. When you are preparing a will, it is really important and necessary to take help from a probate law attorney as they will listen to your needs and preferences and will provide you with helpful advices so that you can develop strategies which will help you in estate planning accordingly and will benefit the selected beneficiaries.
An estate planning lawyer can assist those who need to create a will. For example, if you have an ailing parent or a relative, you can take help from the estate planning attorneys.
Even though your family might not be super wealthy and might not have a mansion, the attorneys can help you and the individual making the will in so many ways. They can help an individual by looking at all kinds of assets you have, your house, your auto mobiles, your financial portfolios, life insurance policies and so forth. According to the wish of the individual taking the service, the attorney can help the individual to disinherit one of the heirs by taking all kinds of strategies so that the certain asset or assets cannot be passed on to that certain person. Also, when individuals are mentioned in a will to inherit the assets, the attorneys work their best so that the mentioned individuals get what they have inherited through the will without much problem. However, when you are taking help from estate planning lawyers, make sure that you talk with them about everything. It is often seen then when the will creator passes away, chaos is born due to all the misunderstandings and stuffs. Therefore you should take precautionary steps even before the will is created and convey every detail to the lawyer and discuss about it thoroughly.
When the planning of estate is done in final stages, it should be initiated when the individual is in good health or the disinherited individuals might contest for their share of inheritance. If you really want to make sure that your final wishes are followed through and through, take help from lawyers who are well adept in planning of estates. It is because they will help you to ensure that your final wishes about who will inherit what will be followed as your wish when you pass away.
They can help you create your will without any mistake. Precision has to be maintained as one missing initial, name or a word that has been misconstrued can change the complete document of the inheritance of your estate. As the laws maintaining the passing of assets and estates are technical, you will have to take help from the lawyers who specialize in planning of estates. Be sure to check what you state requires as these laws vary from one state to another. One minuscule mistake can make the documents that you have created to be void and null and therefore you have to make thorough arrangements with your estate lawyer to make sure that everything is right.
Do I Trust Trusts?
Trusts are all the rage and for good reason. In general, you can avoid the probate court by transferring property to trust. When someone places property into a trust, they transfer ownership to a trustee, who manages and disposes of the property in accordance with the instructions in the trust agreement. Usually, in the case of a fully revocable trust (which means that the trust can be readily amended or revoked) the originators of the trust (called the “trustors” or the “settlors”) are also the trustees. In effect, the trustee in such a case manages his, or her, own money.
When you own your own property outright, you can obviously sell it, lease it, spend it, or save it. Depending upon how it is drafted, the same is true in the case of a settlor who places his property in a fully revocable living trust — the property in such a case may also be sold, spent, or leased. For all practical purposes, the settlor in such a case still owns the property. However, when the settlor dies, his or her successor trustees take over management of the trust, passing the property to the beneficiaries and usually avoiding probate court. A revocable trust of this type, by itself, confers no tax benefit even though there are certain types of trusts, and estate plans, which sometimes can provide such benefits.
Whither Will or Trust?
Like anything, there are pros and cons when choosing between a will and a trust. Most of the pros and cons relate to cost:
• Wills are generally less expensive than trusts to prepare. Trusts are usually more extensive documents, and require property transfers when “funding” them.
• Trusts are usually less expensive to administer than wills. However, probating a will can be expensive, depending upon the size of the estate. While there are costs associated with trust administration, it is usually less expensive than filing a petition to probate a will.
Depending upon the circumstance, trusts can provide similar benefits as certain types of conservatorships. If a settlor becomes unable to handle his or her own affairs, the successor trustee can step in and make the necessary decisions to manage the settlors’ financial affairs. Wills do not offer this benefit. However, if a person suffers from dementia, for example, a conservatorship “of the person” may still be necessary. There are benefits to each approach. Also, the law governing wills and trusts may vary from state to state. You should consult with a competent estate planning attorney to choose the right approach for you.
Free Initial Consultation with Lawyer
It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
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West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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