Estate Planning is the very important process everyone should go through in order to be prepared for one’s inevitable, and sometimes unexpected death. Most of us are fortunate enough to have families that we would like to take care of upon our passing. What you own and your familial obligations will help determine what kind of estate plan you should have. An estate plan is a gift to your family. Between probate and taxes, your family may spend lots of time and money that could have been saved by effective estate plan. Your survivors will have a much easier time both emotionally and financially if there is an estate plan in place.
While a will-based plan can accomplish many of the same goals that a trust-based plan can accomplish, a will-based plan is hindered by the fact that the provisions of a will do not take effect until you die. Thus, a will-based plan cannot avoid a guardianship, nor can it avoid probate. These can only be accomplished by a trust-based plan.
In addition, and for many this is a very important issue, a will is a public document filed with the court and accessible by anyone. Thus, upon your death, anybody who wants can learn who your heirs are and how much money they will be receiving. This creates an opportunity for predators to take advantage of your loved ones. A trust-based plan avoids this publicity since your trust is not a public document.
Accordingly, we recommend living trusts as the foundation for most estate plans. A living trust offers complete control to you during your lifetime, provides for you and your loved ones in the event of your incapacity, and on your death allows you to pass your assets to your loved ones without the costs, delays, and publicity associated with probate. A living trust can give you peace of mind to know that you have a comprehensive, personalized, and thoughtful plan in place for your own protection in case you become incapacitated and also for the benefit of your loved ones after you are gone.
While a living trust is typically more expensive than a Will, an effective living trust provides value far in excess of the cost to set up and maintain it. Consider the costs of:
1. Forcing your family to go to court should you become incapacitated. This alone could run into the tens of thousands of dollars.
2. Paying for probate (possibly in multiple states), again can easily run into the tens of thousands of dollars.
3. Paying estate taxes. For those estates where estate taxes are an issue, a proper estate plan can easily produce tax savings.
1. Maintain control over who receives your assets when you die.
If you have not done any formal planning prior to your death, the State of Florida will plan for you. It will tell your heirs who gets what, how much they will get and when they will get it. This can result in gifts that you rather not have given, or the avoidance of gifts that you would like to have made, or kids receiving an inheritance before they are mature enough.
2. Estate Tax Reduction or Elimination.
At this time, the Federal Estate Tax Exemption is such that the vast majority of estates will not be subject to taxation. However, in those cases where estate taxes are a concern, proper planning can increase the likelihood of minimizing or eliminating your estate’s tax liability.
3. Probate Avoidance.
Probate is expensive, long, and public. There are fees that are paid to the Executor of the estate, to the attorney handling the probate, and court costs. It is common for a probate case to last a year or longer before assets are distributed.
4. Guardianship Avoidance.
If you become incapacitated and cannot manage your affairs, a properly crafted estate plan can avoid a guardianship. A properly drafted living trust includes detailed instructions on how your property is to be managed for your benefit during your incapacity. Without this, your family would need to petition the court to appoint a guardian for you to manage your affairs. This can be a costly process.
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