When considering various aspects of your life as you know it, and how you want it to look now and after you’re gone, let’s review a few things to get you started. Have you decided to meet with an estate planning attorney to create an estate plan? Are you leaning toward drafting up a will with the help of anyone?
Probate
Probate is the court supervised process of locating and determining the value of assets in the individual name of the deceased person, referred to as a “decedent”, paying the decedent’s final bills and estate taxes and/or inheritance taxes (if any), and then distributing what’s left of the decedent’s assets to his/her heirs.” There have been many horror stories about probate (time involved, complications, etc) and in some states (like Utah) all property owned will go into probate automatically, unless there is an established Trust. Take a look at your state’s regulations and assess how you wish to proceed in protecting your assets as best you can.
Estate Taxes -what is this? Federal and of State, estate and/or inheritance taxes can take a chunk out of what’s left after we die. Prudent planning in advance by single and married people can reduce estate taxes.
Protecting beneficiaries – whether minors or adults, advance designation of a guardian and/or conservator in an estate plan will supersede a court appointed guardian/conservator. If the court appoints someone, even if you had an alternate desire, the court appointee will be the guardian/conservator, if there is no official advance designation. Protecting assets from unforeseen circumstances for the benefit of both you during your lifetime and your beneficiaries after your death. Lawsuits may occur, it’s best to prepare in advance, as it is too late, after one has been filed.
Common Estate Planning Mistakes – How to Avoid Them
• Misuse of Jointly Held Property – jointly held property may become a nightmare in terms of unexpected tax and nontax problems First, there is the potential for federal and state gift tax upon the passing of one joint tenant if the property is jointly held with a non-spouse or a non-citizen spouse;
• Second, once jointly owned property with a right of survivorship passes to the survivor, any provisions in the person who has passed away will pertaining to the property are ineffective – this is true even when the property is jointly held with a spouse.
• Third, titling assets in joint names can result in such property by-passing provisions of estate planning documents, potentially creating a host of other problems, like double taxation.
• Arranging Life Insurance Improperly – Life insurance is a great idea and can absolutely help your loved ones, but it there are things that must be considered, such as who should receive it, and when, and how? Proceeds from a life insurance policy are often paid to the wrong person at the wrong time, i.e. before that person is legally or emotionally capable of managing it. Proceeds can also be paid in the perhaps not the best way. For example, do you really think an 18 year old should receive a million dollars as a lump sum? Perhaps it would be better if the funds were held in a trust and paid out over a period of time?
• Inadequate insurance can also be problematic. How much is enough will vary depending on who is being insured and the situation of that person’s family and level of dependency on the person being insured.
• Failure to designate a back-up beneficiary is common mistake. When in doubt, always have two back-up beneficiaries listed. The insured is the owner of the policy, resulting in the proceeds being included in the insured’s estate at the time of his death. The easiest way to avoid this is to have a trusted, financially competent adult other than the insured (or a trust) purchase the policy and be named as the beneficiary.
• The policy names the estate as the beneficiary. This mistake results in the proceeds being part of the estate and needlessly subject to the claims of the insured’s creditors. Failing to update beneficiary designations to reflect changes to the estate planning documents.
Will Mistakes
Dying without a valid will is once of the biggest mistakes we see, and one of the easiest to avoid. Without a valid will, the result is “intestacy” which means the state will decide who gets what.
The second most common mistake involving wills is failing to update them. Review your will a minimum of every three years, and after any major life change (marriage, birth of child, divorce, move to a new state, etc.).
Sufficient Liquidity – most people fail to consider how much it will cost to settle their estate, including paying the associated taxes and other expenses. Failing to adequately plan for these costs can result in the forced sale of precious assets. Expenses your executor may have to pay (depending on the size of your estate) are: federal estate and income taxes, state death and income taxes, probate and administration costs, payment of debts, payment of cash bequests, generation-skipping transfer taxes, and funds to continue operation of a family business.
Failure to Maintain Adequate and Easily Accessible Records – More than one executor has been driven crazy trying to locate necessary financial documents. And the search for and/or inability to find the same can end up costing an estate thousands of dollars. Instead of hiding your important financial documents under your mattress or in various random places, take out a safe deposit box. Make sure your executor knows where it is and how to access it.
Estate planning is a term that is thrown around a lot. And although everyone agrees you should do it, what it is is never quite explained in thorough detail. Perhaps that is why so many people put off the task of planning an estate and writing a will until the last minute or, worse, until it is too late. Let’s detail not only what estate planning is but also what the end goals of planning your estate should be. Estate planning spans a range of fields, including the drafting of a will, establishing trusts, reducing taxes, advance medical instructions, instituting powers attorney, appointing trustees, and business succession planning. It involves creating a fully detailed plan that transfers your assets to their intended beneficiaries upon death. While it should be well-structured, it must also make room for flexibility.
Goals and Rewards
The goals of planning your estate and crafting a will are to reduce legal problems, avoid expensive litigation, and reduce taxes. This, for all its legal complexity, requires the assistance and guidance and expertise of seasoned legal professionals who specials in wills and estates. Comprehensive financial and asset management is offered during this process to ensure that no loopholes are left untied and no details are left out, which may prove to detrimental to these goals in the end.
Before You Start Planning Your Estate
You will need a lawyer whom you trust. If you do not already have a lawyer, find one in your area who specializes in estates and wills, specifically, to help you create a solid strategy that fits your unique needs. Don’t be timid! If you are not sure you have found the right legal representation, treat your first meeting with them as an interview. Ask questions and don’t be afraid to ask for references from current clients. In planning your estate and creating a will, you have a variety of options, which you can only utilize with the help of a legal team. It is wise to contact legal representation in your province and, more specifically in your region. Find a lawyer who specialized in the area of wills and estates in your area. Laws can differ from province to province so it is imperative to find one who knows local, provincial and federal laws, not to mention the loopholes that can either negatively or positively impact your efforts and goals. A great lawyer will help you to devise a strategy that is fully in your favour, and takes full advantage of all estate laws.
Getting Started
When creating an estate plan, it often starts with a listing of your assets your property, investments, and pensions. This should be followed by a list of liabilities and debt. There must be a main objective when making a plan whether to give to charity or to transfer properties to specific individuals. There should also be a list of conditions and events that you want to avoid at all costs, to prevent family disharmony. In filling the technical details of what to do for each step, the assistance of a lawyer is recommended.
Unfortunately, most people living in Brigham City do not have a will for a variety of reasons, ranging from procrastination to sheer lack of knowledge of the law. If a decedent dies without a will in Brigham City Utah, the law of intestacy will take into effect, leaving little room for discretion and flexibility and a wide opportunity for discord among the loved ones left behind. It’s much more affordable and practical to have a will, no matter the size of your estate.
Revocable Trusts in Estate Planning
An increasing number of people are utilizing the revocable living trust as the primary document in their estate plans. A revocable living trust is an entity created during lifetime in which an individual (called a trustee) holds legal title to property on behalf of a beneficiary, who is typically the individual establishing the trust (or the grantor). It is a revocable trust because the grantor, at all times and for any reason, retains the absolute power and right to revoke the trust, or to otherwise amend or change the trust terms in any fashion. In addition, the grantor may withdraw the trust assets at anytime by taking the properties back into his or her individual name.
The living trust is beneficial because it permits an individual to transfer title of his or her assets now, but that transfer is not to the individual’s beneficiaries, but rather to the trust entity. In fact, the re-titling of assets during lifetime is generally considered to be the revocable trust’s principal advantage since assets held by the trust will not be subject to court supervision. Furthermore, the grantor typically serves as initial trustee so as to maintain complete control over the management of the assets.
In the event of an incapacity or illness, a successor takes over as trustee to manage the trust and otherwise provide for the grantor, without the necessity of seeking the appointment of a legal guardian to take title to his or her assets. Upon death, the successor trustee would be in charge of the assets without the necessity for probate proceedings. If probate were required, delays in transferring the properties to one’s family and the potential for additional legal, accounting and court costs could result. Without court involvement, the trustee can expeditiously transfer the assets in accordance with the grantor’s wishes, which will remain private, as a trust agreement need not be deposited with the probate court at death.
The trust will often contain significant tax planning provisions as well as terms of ongoing trusts for the grantor’s family. This arrangement could permit the grantor’s assets to be kept together in one piece for the family’s benefit for a period of years. In addition, the trust could also provide for the protection of the properties from creditors or claims against the family.
While the revocable trust will, in effect, take the place of a Last Will and Testament, in that the trust will provide for the disposition of the grantor’s assets at death, a Will is nonetheless a necessary instrument in every estate plan. If a trust is established, but one’s assets are not properly transferred to the trust during lifetime, a Will would be required to direct the disposition of assets at death. In an estate plan that includes a revocable trust, a Will could merely provide that any assets that might be titled in a grantor’s individual name pass to the trust to be held by the successor trustee under the general provisions of the grantor’s estate plan. Moreover, a Will would name a guardian for any minor children. Notwithstanding the advantages of the revocable living trust, it is not appropriate or necessary in every instance. Therefore, any person interested in exploring the applicability of a revocable trust in their estate plan should consult their attorney.
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!
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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