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Home FAQ
Estate Planning

Frequently asked questions about Estate Planning.

What are your estate planning options?

There are four basic methods you can use to plan your estate:
1.   Do nothing.
2.   Draw up a Will.
3.   Hold title to your assets in Joint Tenancy.
4.   Establish a Revocable Living Trust.

What happens to your estate if you do nothing?

For those who have no plan in place, state law will dictate how their estate is to be distributed at death and the estate goes through Probate.  The government's plan of distribution has no particular concern for the best interests of your family.  Doing nothing can result in probate costs, attorney fees, higher death taxes, distribution of assets in a way you would not have chosen, and appointment of guardians or executors you would not have chosen.

Is drawing up a Will a good idea?

A Will is a legal document that tells how you want your assets distributed at death.  Upon your death, your Will becomes a public document when it is filed with the Probate Court and is available to anyone who wants to read it.

Once your Will enters the probate process, your estate is no longer controlled by your family.  It is in the hands of the court, the personal representative and their attorney.

The probate process takes a minimum of five months, but an average time for a probate estate is 1-1/2 years.  During this period, your personal representative has many forms with different deadlines to file with the Probate Court.  There is a lot of paterwork!  Also, asset distribution can be held up indefinitely.

What is Joint Tenancy?

Joint Tenancy with Right of Survivorship occurs when two or more people hold title to an asset together.  Unlike other forms or joint ownership, upon the death of one of the owners, the entire interest passes automatically to the surviving joint tenants.  The right of survivorship means  that whomever dies last owns the whole property.  Because a joint tenant's interest passes to the surviving tenants immediately at death, it is not controlled by the owner's Will.

Many people do not realize that this could be a problem if they do not want the person on the asset to own the property outright  and may rather that it go to multiple beneficiaries.  Also, putting a third party's name (e.g. a child) jointly on a deed can have adverse  income tax consequences.  In addition, jointly owned property is subject to the joint owner's creditors and spouses.

What is a Living Trust and why is it beneficial?

Living Trusts are an efficient and effective way to transfer property at your death to the relatives, friends or charities you have chosen.  Essentially, a Living Trust performs the same functions as a Will, with the the important difference that property in a funded Living Trust does not go through the probate process.
Property in a Living Trust can go promptly and directly to your beneficiaries.  It can be administered in a matter of weeks, depending on the assets in the trust.  Plus, there are no probate court fees, which is a savings to your estate.

While you live, you effectively keep ownership of all property that you have transferred to your Living Trust.  You can do whatever you want with the Trust property, including selling it , spending it, saving it or giving it away.

Basically, a Revocable Living Trust is merely a document that becomes operational at your death.  At that point, it allows your Trust property to be transferred, privately and outside of probate, to the people or organizations you have named as beneficiaries of the Trust.

In addition, a Living Trust, specifically an "A/B Trust", can save thousands of dollars of federal estate taxes, which would leave more money for your beneficiaries to make their lives a little easier.  The federal Government issues the Federal Estate Tax (37%-45%) on a gross estate (including life insurance) of over one million dollars in 2011 unless the law is changed prior to then.  However, an "A/B Trust" can eliminate or minimize this tax.
Most people choose to establish a Living Trust for the simple reason of making their death easier on their surviving family members!

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