Many people create a last will and testament and believe they have taken care of their estate planning. However, there are many reasons why wills aren’t a sufficient estate plan. Creating a will is not going to give you the control that you need if heirs are not responsible spenders or if you want to leave money to a child but want more control over when and how the child accesses his or her inheritance. Wills also won’t protect assets during your lifetime, help you to avoid estate tax, allow you to transfer assets outside of the probate process, or accomplish other important estate planning goals.
Creating a revocable living trust as part of your estate plan is a smart option for many people who are planning ahead to protect their assets and to provide for their families. There are many reasons to create a revocable living trust, although this kind of trust is not necessarily the right option for everyone. You may want to create a revocable living trust so you can specify a backup trustee to manage the trust assets so those assets are protected in case something happens to you and you become incapacitated.
You may also want to create a revocable living trust to facilitate the transfer of assets outside of the probate process. This will allow heirs or beneficiaries to inherit assets much more quickly, which is important if your loved ones will be depending upon their inheritance or if your assets need to be carefully managed by their new owner instead of being managed by the executor of an estate for months while a probate process drags on.
A testamentary trust is a type of trust that you create which will go into effect after you pass away. It is distinct from living trusts, which you can create and have go into effect during your lifetime. You can create a testamentary trust within your will, which is why a will trust is another name for a testamentary trust. Testamentary trusts can be relatively easy to create and can provide you with more control over an inheritance that you provide to someone, such as a minor child who you want to give an inheritance to.
Many tax reform proposals that are currently being considered would repeal the federal estate tax. The federal estate tax is currently assessed once the value of an estate exceeds $5.49 million. If estate tax is repealed, no one will need to worry about making an estate plan aimed at avoiding federal estate taxes. However, those with estates that are subject to estate tax on the state level will still need to take tax planning issues into account when creating an estate plan.
Single parents will face different issues than married parents or people without children as they create their estate plan. This is true both when children are little and when kids grow up. When single parents create an estate plan, they will need to determine who should get custody of their children if something happens to them and the other parent is not involved in the child’s life.
They will also need to consider providing financially for their children in case something happens to them. Once children grow, single parents need to determine how to avoid estate tax when transferring a larger estate to them, and parents need to decide if they want their children to make medical choices and manage assets in case of the parent’s incapacity or if they would prefer to make alternative incapacity plans.
Estate planning attorneys will provide comprehensive assistance to individuals and families after a diagnosis of a serious illness. We can assist the person who is sick with creating advanced directives for medical care to express preferences about care in case incapacity makes it impossible to make independent choices about health services in the future. We can also help after a diagnosis to make plans for long term care services or hospice care, and can provide guidance on getting a last will and testament and other estate planning tools prepared.
To find out more about how Nirenstein, Horowitz & Associates can help you to plan for serious illness or to plan for any other issues that could arise during the course of your lifetime or after your death, join us for a free seminar http://www.preserveyourestate.net/seminars/. You can also give us a call at 860-548-1000 or contact us online to get personalized help with the estate planning process and to make sure you use the right legal tools in your estate plan that will provide you and your loved ones with the protections that you expect.