Nine items every estate plan should include:
Estate Planning is:
Making a plan in advance and naming the people you want to receive the things you own after you die.
Good estate planning is also much more than that. Proper Estate Planning also:
Estate planning is for everyone.It is not just for “retired” people, although people do tend to think about it more as they get older. Unfortunately, we can’t successfully predict how long we will live, and illness and accidents happen to people of all ages.
Estate planning is not just for “the wealthy,” either, although people who have built some wealth do often think more about how to preserve it. Good estate planning often means more to families with modest assets, because they can afford to lose the least.
A full estate plan including a living trust should cost $1500-$2500. Pay any less than that and you should question the quality of the estate plan your lawyer will produce for you.
Your will, powers of attorney and health care directives are essential for everybody.
If you have kids, guardianship papers are essential.
If you own assets and property worth more than $100,000 (regardless of what you might owe on it), a living trust will save your heirs many times the cost of creating that trust, in the form of probate fees, plus it will save them months of hassle and waiting (the probate process is long and drawn out) and the public visibility of the process (who gets something from the estate is a matter of public record).
It's never too early to start.
One main difference between a will and a trust is that a will goes into effect only after you die, while a trust takes effect as soon as you create it. A will is a document that directs who will receive your property at your death and it appoints a legal representative to carry out your wishes. By contrast, a trust can be used to begin distributing property before death, at death or afterwards.
A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a "trustee," holds legal title to property for another person, called a "beneficiary." A trust usually has two types of beneficiaries -- one set that receives income from the trust during their lives and another set that receives whatever is left over after the first set of beneficiaries dies.
A will covers any property that is only in your name when you die. It does not cover property held in joint tenancy or in a trust. A trust, on the other hand, covers only property that has been transferred to the trust. In order for property to be included in a trust, it must be put in the name of the trust.
Another difference between a will and a trust is that a will passes through probate. That means a court oversees the administration of the will and ensures the will is valid and the property gets distributed the way the deceased wanted.
A trust passes outside of probate, so a court does not need to oversee the process, which can save time and money. Unlike a will, which becomes part of the public record, a trust can remain private.
Wills and trusts each have their advantages and disadvantages. For example, a will allows you to name a guardian for children and to specify funeral arrangements, while a trust does not.
On the other hand, a trust can be used to plan for disability or to provide savings on taxes.
Please feel free to call me with any estate planning questions you have. I will gladly audit your existing estate plan, at no charge, to be sure you have all of the required documents, and that your documents are in line with current law.
Eric Ridley
Estate Planning Attorney