The process of inheritance planning is not a cookie-cutter affair. Each person is in a different situation, and there are myriad different circumstances that can exist. This is why personalized attention is important when the estate planning process is underway.
At the same time, there are certain basics that every estate plan will cover. Exactly how these necessities are addressed will vary, but the framework is widely applicable.
In this post, we will look at the anatomy of an inheritance plan, and we also look at some specific circumstances that can call for specialized inheritance planning.
Will or Trust
The facilitation of postmortem asset transfers is at the core of the inheritance planning process. You have to make sure that assets get into the hands of your loved ones after you pass away, and there are different ways to go about it.
Of course, there is the legal document called a last will or last will and testament. Everyone has heard of this document, and you can state your wishes with regard to the distribution of your personally held property through the execution of a will.
This course of action can sound like the most efficient way to go, but there is the process of probate to take into consideration. If you state your final wishes in a will, the executor that you name in the document would admit the will to probate after your passing.
This is a legal process, and it takes place under the supervision of a court. The court is guided by Connecticut state laws.
Probate is time-consuming, and there are expenses that can accumulate during probate. In fact, things are not as simple as they may seem to be on the surface if you use a last will as the centerpiece of your estate plan.
On the other hand, if you were to use a revocable living trust, the trustee that you name in the document would be empowered to distribute assets to the beneficiaries outside of probate. Plus, you would not have to allow for lump sum distributions. If you want to, you could include spendthrift protections so that the beneficiaries don’t burn through their inheritances recklessly.
A revocable living trust can be a good choice for a wide range of people, but there are other trusts that can accomplish more complicated objectives. For example, high net worth individuals can be exposed to the federal estate tax. This tax is potentially applicable on asset transfers that exceed $5.45 million.
There are various different types of irrevocable trusts that can be used if you are looking for ways to mitigate your estate tax exposure. In addition to the estate tax efficiency objective, there are irrevocable trusts that can be used to protect assets.
Irrevocable special needs trusts can be useful if you want to set aside resources for the benefit of a loved one with a disability. Many people with special needs are enrolled in government benefit programs that are only available to people who can demonstrate a significant level of financial need.
These are a handful of scenarios, but there are other situations that can exist that would call for more advanced estate planning techniques.
Advance Directives for Health Care
End-of-life planning is an important part of the equation. Your estate plan should include documents called advance directives for health care. One of these advance directives is a living will.
A living will is used to record your preferences with regard to the utilization of life-sustaining measures like feeding tubes, artificial hydration, and mechanical respiration.
Another advance directive that is recommended is the durable power of attorney for health care or health care proxy. Every possible medical contingency will not be covered in the living will. To account for this, you can name someone to make medical decisions on your behalf through the execution of a durable power of attorney for health care.
To empower someone to handle your financial affairs in the event of your incapacitation, your estate plan could include a durable financial power of attorney. If you have a living trust, you could empower a disability trustee to administer the trust in the event of your incapacitation.
Inheritance Planning Consultation
There is no need to hesitate if you are concerned about discussing sensitive matters with an attorney. We make our clients feel comfortable every step of the way, and we assure you that you will feel at ease if you work with our firm.
If you would like to begin a relationship with an estate planning law firm that truly cares, call us at 860-548-1000 or send us a message through our contact page to schedule a consultation.