Questions & Answers
DO I HAVE AN ESTATE?
Most likely, yes. Often, people believe that “estate planning” is only for someone who owns multiple homes around the country and intends to leave multi-millions of dollars for their children. This is a gross misconception.
Ask yourself, do you own a home, a car, how about something that fits in a box? If you answered “yes” to any of these, then you likely have an “estate.” The word “estate” is really just a fancy word referring to your property. Such property includes: your home, cars, jewelry, money in your bank accounts, stamp collection, stocks shares, a patent or copyright you filed, as well as a partnership interest you may own.
So, an “estate” plan can be drafted to carry out your wishes if you become incapacitated, and when you die. This way, you can make sure that your property is “gifted” exactly to the person to whom you want it to go.
THE WILL: Do I need a Will?
A will is what we call the “basic” estate plan. We’re probably all familiar with those television programs where the lawyer reads the rich uncle’s last will and testament to the uncle’s heirs---all of them waiting anxiously to learn if they were left any property. So, the most recognized purpose of a will is to carry out a person’s wishes that his/her property is gifted to whom he/she intends.
But, a will can be so much more. Although a tough topic to discuss for many people, a will can be drafted to provide for someone’s children when a person dies before his/her children reach 18 years old. As such, a person can use a will to appoint a guardian to take care of his/her children, as well as appoint a person to take care of the money/property left for the children, which could include directing payments for the child’s college.
So, although a “basic” estate plan, a will could be a great place to start for many people, especially where dying without a will (or any estate plan) can lead to a person’s property going to people to whom they really didn’t want it to go.
PREPARING FOR INCAPACITY: Can the Living Trust Estate Plan Help me Prepare for Incapacity?
A living trust estate plan can be drafted so that if a person becomes incapacitated for any period of time, a trustee (someone that he/she trusts), can take care of a person’s property and finances during that period of time. In addition to the trust document, this type of estate plan often includes accompanying documents, such as a power of attorney and a health care directive. These extra documents help carry out a person’s wishes during a time of incapacity, both financial and health-related decisions.
LIVING TRUST: What’s All this talk about a Living Trust and Avoiding Probate?
A living trust is a more “advanced” type of estate plan. But don’t be fooled by the word “advanced.” This doesn’t mean it’s designed solely for people with complex estates. Rather, the general bare bones purpose is to avoid the costs of probate, no matter how “complex” your estate may be. When a person dies without a will, and even with only a will, under many circumstances the probate court must step in to oversee, among other things, how the person’s property is given away to others. However, a living trust can be designed to sidestep this court procedure which can, in turn, avoid, or at least minimize, the cost of probate.
PROVIDING FOR YOUR CHILDREN: Can my Trust Provide for my Children as Minors and as Adults?
A living trust can be designed to provide for your minor children if, under the very unfortunate circumstances, you pass before your children reach 18 years old. In fact, you can use the trust to appoint a guardian for your children. And, you can also use the trust to guide a trustee (a person you appoint whom you can trust) to use the money and property you left behind to provide financial support for your children---which can include making payments towards their college.
As for your adult children, like many parents, you may not want to turn over your entire estate (all of your property and money) to your adult children before they are mature enough to handle the responsibility. So, a trust can be designed to release portions of your estate to your adult children at different moments in time: such as one-quarter when an adult child turns 22 yrs. old; one quarter at 25 yrs. old, and the remaining portion at 28 yrs. old. Such flexible is a hallmark of a living trust estate plan.