Estate planning

Frequently asked questions regarding estate planning.  

What is a will?

A will is a legal document in which you control who is to receive your assets upon your death.  No matter who prepares your will, it must be executed in a manner prescribed by law.  Failure to do this may invalidate the entire will.  You can designate either individuals or institutions to be the beneficiaries.  Your will is administered by someone (or institution) you choose, called an executor.  After your death, the executor manages all your affairs, including the disposition of your possessions according to your wishes.  In your will you may also name the guardian of your minor children, and make specific gifts to individuals or charities.

What is a Living Trust
A revocable inter vivos trust, also known as a "living will" or "family" trust, is a written agreement between yourself, the trustor, and whomever is to manage the trust, the trustee.  In a revocable trust, you give the trustee the right to manage your assets; set forth the provisions for the trustee to follow; and name the beneficiaries of your estate after your death.  It may be amended at any time, even revoked, as long as you remain competent.  Because a revocable trust allows you to set forth how your assets are to be managed, it avoids having to have a conservator appointed by the court.  It also avoids the necessity of a probate action after your death.

What is a Probate? 

When the court supervises the transfer of your property after your death, then your estate is said to be "probated".  An advantage of Probate is the Court supervises resolution of any disputes arising in the distribution of your property and resolution of debts.  The disadvantage is that probate proceedings may be lengthy and are public.  Therefore, in certain cases it may be advantageous to avoid probate by the creation of the revocable inter vivos trust to save fees and to avoid making your wishes public.

Does Estate Planning Include Tax Planning?
The manner in which you plan your estate will have major tax consequences, particularly if your estate is large.  Generally speaking, federal estate and gift taxes are imposed if you give away during your life and upon your death.  With proper planning and the recent changes in the law, substantial tax savings can be achieved.  Therefore, the consequences of a failure to plan can be disastrous and may lead to the unneeded loss of the "family farm".

What if I Become Disabled?
If because of accident or illness, you become unable to provide for your own care, the law allows the courts to set up a conservatorship to manage your affairs.  Use of the court process can be avoided through a properly drafted document.  This is called a durable power of attorney.  In a durable power of attorney, you as the principal, appoint another individual, the attorney-in-fact, to make decisions regarding your property or health care on your behalf. The attorney-in-fact functions similar to a conservator, but without the need for court intervention.  Just as with a will, powers of attorney may save attorneys fees and will allow your personal business to remain private.