Estate plans are unique and need to be individually tailored to each person. Even though many people will benefit from the same type of plan, that plan differs depending on your estate, your beneficiaries, and your goals. For these reasons, it is important to consult with an attorney to determine the correct plan for you in your situation, but here are some helpful general guidelines.
The first question to determine how to tailor your estate plan – What is your estate?
For estate tax purposes, an estate generally includes all property owned or under a person’s control immediately prior to death. This includes assets held in revocable trusts, life insurance proceeds, and innumerable other assets such as real estate, bank accounts, brokerage accounts, marketable securities, retirement accounts, automobiles, boats, household furniture, artwork, valuable collections, jewelry, etc.
An attorney at REP Law will gather all information regarding what is included in your estate. This examination will help determine the best place to start.
If you have few assets then a Will may be sufficient for you needs. If you own real property in multiple locations, a Trust is likely the best option.
The second question to ask is who are your beneficiaries (the people or entities that will receive your estate upon your passing)?
Whom you leave your estate to is a decision completely up to you. An attorney will not direct you on who to leave your estate with, but he or she will ensure those assets are passed on in the most efficient and cost effective way possible.
If you want to leave all your assets to your spouse and after his or her passing to your children, then a Revocable Trust or Will could be a perfect fit.
If your bequest to beneficiaries is more complicated, such as leaving assets to a charity or organization, there are unique Estate Plans, such as a Charitable Trust, that can accomplish these desires while still avoiding taxes at death.
Third, examine your goals.
Do you want your beneficiaries to avoid probate, are you worried about how your medical expenses will be paid if you are incapacitated, do you have substantial assets and want to avoid estate taxes, do you want to ensure someone close to you does not receive a large sum of money all at once? The answers to these questions can help direct you to the correct estate plan.
In general, there are four advantages to a trust:
- Cost Savings: Trusts can avoid probate and save substantial fees and costs.
- Incapacity Management: Named trustees can manage assets for a settlor’s benefit if he or she is incapacitated, avoiding the need for a court-appointed conservator.
- Tax savings: A trust arrangement can reduce estate taxes in certain situations.
- Beneficiary protection: Setting up a continuing trust arrangement can protect beneficiaries who are too young or otherwise unsuitable to receive all of their inheritance outright in a lump sum.
If you have one beneficiary you want to leave with your entire estate and want that person to have control and decision-making authority upon your incapacity or death, then a trust may not be the best option. A Will with a power of attorney can likely accomplish those desires.
These general guidelines are a great starting point, but REP Law attorneys are available for a free consultation to help tailor these guidelines to your specific needs.