On the surface it could seem to the uninitiated as though the exercise of estate planning is something that may sound harder than it is. You have assets, and when you die you want ownership of them to be transferred to the people of your choosing. What is so complicated about that? The answer is that there are forces that stand in the middle of the exchange that can erode the value of your assets. One of them is the estate tax, and in 2011 the rate of this federal levy is 55%. Another one is the process of probate.
When you retain personal ownership of your property at the time of your death and intend to use a will to communicate your final wishes, your estate must pass through probate. This is the legal process of administering your estate, and it is supervised by the probate or surrogate court that is local to you. Because the disposition of the estate is done under the watchful eye of the court there are protections that come along with probate, so it is not all bad. But depending on your estate and the dynamic of your family this transparency may not be necessary.
The down side of probate is that it is time consuming and it can take months for your heirs to receive their inheritances. It is also expensive because there are fees involved, including court costs, legal fees, and others depending on the specifics of your estate. To avoid probate and save time and money you may want to use a revocable living trust as your vehicle of transfer.
You place your assets in the trust and name yourself as the trustee and the beneficiary while you are alive so you still have complete control of the property. You also name your successor beneficiary who will receive distributions from the trust after your death as well as a successor trustee. When you pass away these assets are not subject to the probate process. They will be distributed to your beneficiary or beneficiaries by the trustee in according with the terms you elucidated in the trust agreement quickly, easily, efficiently, and cost effectively.
- IRS Announces Gift and Estate Tax Increases for 2024 - November 23, 2023
- Schedule an Estate Plan Review with the New Year Approaching - November 7, 2023
- Estate Administration: Navigating the Critical First Steps - October 19, 2023