Estate Planning
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Q. Why do I need Estate Planning?
- The basic Will;
- Will with Contingent Trust;
- Pour-over Will;
- Tax-Saving Will;
- Living Trust without Tax Planning;
- Living Credit Shelter Trust;
- Living Credit Shelter/QTIP Trust;
- Qualified Domestic Trust.
A. When you die, there are certain typical problems, which, if not planned for, create a burden on those you leave behind. The financial burdens may consist of Estate settlement costs are that are too high. These costs consist mainly of probate fees and death taxes. Probate Fees are those fees generally paid to the executor of the estate and the attorney who assists with the probate. As Benjamin Franklin stated, "the only certainties of life are death and taxes". When Estates which exceed certain amounts may be subject to both state and federal death taxes. Estate assets may be improperly arranged if there are not enough liquid assets to pay estate settlement costs. Also, there may not be sufficient income to care for surviving spouses, and minors. Assets of the Estate may be subject to probate delays and expense. Those assets transferred to minors may be in cumbersome guardianship accounts until they attain the age of 18, in New York, and are then distributed outright to the children.
Q. I own everything with my spouse. Why is a Last Will and Testament necessary?
A. A will is used to distribute property according to your wishes. If you and your spouse should die simultaneously, then no one will be able to carry out your wishes. Also, without a will, you run the risk that your children will be placed into foster homes.A will affords you the opportunity to appoint a guardian for your minor children. In addition, a will can be used to use the marital tax deduction to its best advantage and to provide special procedures in case you and your spouse die simultaneously. A will can be used to avoid distribution of your estate under the law of Intestacy. Intestacy will pass property to certain relatives whom you might not want to have a portion (or all) of your estate. Most people like to choose who will receive their estate when they die. A will allows you to identify who you would like to take care of your minor children if you should die. Unless a person is identified to take care of your children, the court will appoint a guardian for your children.
Without a Will, the court will require a bond (similar to an insurance policy) to be posted by the executor (administrator-if there is no Will) of the estate to guarantee the replacement of any funds wrongfully taken. This additional cost must be borne by the estate and you should not choose an executor you cannot trust. A will will allow you to waive the bond requirement in your Will.
Without a Will, no one will know how or to whom you wanted your possessions to go to. Without a Will, written or oral instructions may not be followed. With a Will, you may leave specific items of jewelry, furniture, or make cash bequests, and be certain that they will pass to the proper persons, charities, or organizations.
A Will can contain Trust provisions for minors, and as a result, you might be able to defer distributions to minors. When a person dies leaving minor children, each child's share of the estate must be held in a guardianship account until he or she turns 18, at which time the entire remaining share is distributed outright. Trust provisions can be placed in the will to defer these distributions until a more mature age, or if the child becomes emancipated.
Q. Are there different types of Wills?
A. Yes, there are differing Wills. Common types of Wills are:
Q. How long does the probate process of a will take?
A. A typical probate lasts about one year, with six months generally being a minimum time if everything proceeds according to schedule.
Q. Are there ways to avoid probate?
A. Yes there are.
Many people try to avoid the lengthy probate process by resorting to various techniques. Property held Jointly with another individual automatically passes to the surviving individual. There are also disadvantages to joint tenancy. The proceeds of life insurance policies are rarely subject to probate administration. However, an exception to the rule is if the insured's estate is the beneficiary of the policy, or if all of the named beneficiaries die before the insured.
Some people also use a "Poor Person's Trust" also known as a Totten Trust.
This is a way to pass savings accounts to individuals. The passbook accounts is held "in Trust" for another individual.
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