Estate Planning FAQs
Q. What is Estate Planning?
A. Many people think that Estate Planning is as simple as deciding where you want your assets to pass at the time of your death and drafting a will to reflect these desires. However, estate planning actually encompasses much more than just writing a will. A good estate plan will provide instructions for handling your personal and financial affairs should you become ill or incapacitated, avoid the need for a future guardianship, as well as plan for how you want to dispose of your assets at the time of your death. A proper estate plan will identify the person who you want to manage your estate for you, and should be constructed in a manner to minimize both future estate taxes, probate fees and professional fees.
Q. What documents should be included in an estate plan?
A. Your estate plan should include:
1. Health Care Power of Attorney - directions to carry out your wishes regarding health care matters, so that if you ever are unable to give the directions yourself, someone you select would do that for you, and know when you would want them to authorize heroic measures and when you would want life support continued or removed.
2. Living Will – gives directions to physicians to remove life support under certain circumstances.
3. Financial Durable Power of Attorney - names someone to make financial decisions on your behalf should you become incapacitated and unable to manage your own financial affairs.
4. Last Will and Testament – directs the distribution of your property to your loved ones at the time of your death and names who you want to handle the affairs of your estate.
5. Revocable Living Trust – for those people concerned with avoiding the costs and delays of probate, or who, due to the age or lack of responsibility of their loved ones, desire continued supervision of funds being left for the benefit of their children or grandchildren, a properly funded revocable living trust will direct how and when you want your property distributed to your family members at the time of your death.
6. Funding Documents and advice on beneficiary designations and other information on how to make your estate plan effective.
Q. When should I consider using a Trust as part of my estate plan?
A. Trusts offer a number of important benefits:
1. Probate avoidance – the probate process can take a year or more and can cost the family lots of time and money. A properly funded trust can be administered without probate court supervision and will allow the funds to be distributed to the family members much sooner.
2. Retention of privacy of family assets and finances – the probate process involves filing information on personal assets and estate beneficiaries with the court. These documents are public and anyone can view them. By funding your trust and avoiding probate, your assets are not disclosed to the Probate Court, and the privacy of your beneficiaries is protected.
3. A properly funded trust could help avoid the need for a guardianship or a conservatorship in the event of a disability or incapacity.
4. A trust could also be drafted to provide creditor protection for your beneficiaries.
5. Through the use of a trust, you can control the distribution and management of assets during life and after your death.
6. Death tax avoidance or reduction.
Q. When Should An Estate Plan Be Reviewed?
A. Estate plans should be reviewed at least every two to three years. Additionally, any important change in your life or the life situation of your loved ones demands immediate review. These changes might include:
* Birth, death, marriage, divorce or disability of you or a beneficiary;
* Large increase or decrease in the net worth of you or a beneficiary;
* Substantial change in the type of your assets;
* Purchase or sale of a business;
* Change of residence to another state;
* Change in tax laws
* Change in Medicaid rules.
At Lotter & Associates- our main goal is to assist, counsel and represent our clients in the best way possible. Contact the professionals at Lotter & Associatestoday.
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