Estate Planning Secrets, Beyond Wills and Trusts - Six Secrets.

Why do you need an Estate Plan?   

An Estate Plan protects property from bill collectors, creditors, lawsuits; and ensures assets are gifted or inherited by intended family and friends. Nobody likes to think about end of life estate planning, but assurances that hard earned assets are conferred to those recipients of choosing is the basis of private property ownership.

Determining estate planning wishes in the care of those who require extra consideration include guardianship of minor children, special needs family members, beloved pets, and charitable causes.

Isn’t Estate Planning exclusively for the wealthy with extensive property?

Secret #1: No. Every person who accumulates property during their lifetime should seek the advice of a credentialed estate planner. Even younger couples should seek professional estate planning services to ensure proper administration is carried out on behalf of beneficiary minor children, including the prudent distribution of assets. 

Isn’t estate planning complicated and expensive?          

Secret #2: No. Through estate planning services provided by a credentialed professional, it is ensured that property and personal affairs are managed to express instructions, with a possible reduction of estate taxes. 

History and Basis of Property Ownership.

Property ownership has long been considered a “natural right” that has been preserved over the centuries as pre-historic nomadic tribal personal possessions evolved into modern concepts of real estate and personal property.  Medieval proof of land “real property” ownership was established via royal family tax rolls and deeds, with ownership typically demonstrated by the land owner through a fireplace mantle receptacle showcasing the actual dirt soil from the deeded land.

The United States Declaration of Independence outlines the unalienable rights of “life, liberty, and the pursuit of happiness.”  Since its inception, “happiness” was construed as meaning wealth, property, and prosperity.  Modernly, an estate is the net value of the personal assets and real property held by an individual at the time of their death. Property ownership does not necessarily cease at the time of death and may carry over to one’s surviving estate. 

Wills.

A will, also referred to as a testamentary will, is a legal document that ensures final wishes are carried out upon the death of the named testator. 

Intestacy occurs when someone dies without a will for carrying out their final wishes. When someone passes without a written will, state intestacy succession laws will be applied for the distribution of assets by an impersonal court of law. Avoidable expenses associated with lengthy probate processing includes legal fees, courts and filing costs, and the potential for irreparable family harm through bitter disputes over claimed possessions and inheritances.  

Secret #3: Avoid probate court – Through the use of a properly executed will, costly and lengthy probate court will be avoided with a reduction of family members fighting over inheritance assets.

A will that creates a trust upon the death of the testator property owner is also known as a pour-over will.  The use of a will without a trust may not afford the same privacy protections as with the use of a trust agreement. Using wills and trusts, the property owner may avoid or minimize estate and property taxes, with the potential for tax savings far exceeding the costs associated with estate planning services. 

Secret #4: Tax savings - Estate tax savings is usually greater than costs associated with initial estate planning.

Trusts.

A trust is an enforceable agreement between the property owner grantor and fiduciary trustee, on behalf of outlined beneficiaries named in that trust agreement.  Trusts may hold and control numerous types of assets including, cash, real and personal property, and investments such as stocks, bonds, options, and commodities.

A trust may provide legal protections to the Grantor’s listed assets and possessions, in accordance with the trust document terms.  In addition to asset protection and ensuring one’s desires are fulfilled, a trust may also offer privacy advantages for the property owner.

A Living Trust is created and is in effect during the lifetime of the property owner grantor in comparison to a Testamentary Trust that will typically handle the estate affairs after the property owner passes. Additionally, there are Revocable and Irrevocable Trusts tailored to the asset protection and distribution needs outlined in those trusts. Irrevocable trusts typically provide stronger asset protections but include the irrevocable permanent nature of those trust agreements. Seeking the advice of an estate attorney is highly recommended prior to choosing these types of estate planning tools.

Secret #5: Privacy - Trust agreements may provide privacy protections, in addition to asset protection from creditors.

Insurance and Annuities.

Insurance policies and Annuities may be incorporated into an estate plan, for the purpose of avoiding lengthy and expensive probate proceedings, income and estate tax minimization, and strong asset protections from lawsuits and creditors. Many states have enacted laws that prevent creditors from garnishing proceeds from insurance products, including life policies and annuities. 

Secret #6: Asset Protection – In certain states, insurance policies and annuities provide protection from creditors.

Other Estate Planning Documents.

Financial Power of Attorney: This is a legal document that permits someone to choose for managing finance and legal matters in the case of incapacity.

Living Will: This is a legal document that directs a physician regarding patient preferences for medical and end of life decisions.

Lastly, it is important to have an active estate plan in place that includes a trust agreement, valid will, and insurance policies prior to the need for asset protection, inheritance transfer, and estate administration. 

After a critical life event, it is often too late to implement an estate plan. The best time for estate planning is today. Contact a local estate planning attorney, financial planner, and/or tax planning professional for long term asset protection.  

For Educational Purposes Only – Not to be relied upon for legal advice, no attorney-client relationship, express or implied. Seek legal advice from a licensed local attorney familiar with your state and federal laws.