Have you started thinking about building your estate plan? If so, you might feel a bit overwhelmed. Preparing an effective estate plan involves a comprehensive analysis of your family and financial situation. You will also be introduced to a host of legal terms you might not be familiar with, such as “trust,” “power of attorney,” “last will and testament,” and “living will,” among others.
The good news is, an estate planning attorney like The KC Estate Planner, LLC, can help simplify these terms for you and help you understand the benefits and disadvantages of including certain documents in your estate plan.
You might also be thinking that you don’t have enough “stuff” to justify establishing an estate plan. Although estate planning has historically focused on helping people avoid the payment of estate taxes and other death taxes, estate planning today is more focused on planning for your family while you are still alive. Trusts are one of the greatest tools in an estate planner’s arsenal because it allows you to plan for various contingencies during your lifetime and after your death. Here are just a few of the benefits of including a trust in your estate plan:
Avoid Probate
Probate is the often costly and lengthy court process by which your property is transferred to certain beneficiaries after your death. In addition to the time and expense of probate, the proceedings are open to the public, and all information provided to the probate court becomes public record. As long as you have made sure to transfer all of your property to your trust, a trust will allow you to avoid the probate process completely.
Tax Reduction
For those with estates that will likely exceed the estate tax exemption, complex trust planning can remove property from your taxable estate and reduce the likelihood of having to pay estate taxes. And for those whose estates will be below the estate tax exemption and not subject to federal estate tax, trust planning can help you understand the income tax implications to your beneficiaries of certain transfers of property.
Control
They say you can’t take it with you. But with a trust, you sorta can. When you have a Will, the assets are typically distributed outright to your beneficiaries. Trusts, on the other hand, allow the grantor (the person who establishes a trust) to control the method and timing of trust distributions to beneficiaries even after the grantor has passed away.
For example, if you have an adult child that struggles with financial responsibility, you can include what is known as a spendthrift provision in your trust that will prevent your child from assigning his or her interest in the trust to the child’s creditors. You can also make distributions to your beneficiaries subject to certain conditions so that distributions are not made until the condition is met, like graduating college or trade school.
And in certain circumstances, you can protect your own assets from your creditors. However, this typically requires the use of an irrevocable trust that cannot be modified or revoked once it is created. Also, irrevocable trusts generally cannot provide any financial benefit to the grantor.
Finding the Right Estate Planning Attorney
Working with an estate planning attorney who is well versed in the myriad complexities of estate planning is crucial to creating an effective estate plan. Do not rely on online forms and services or attorneys who do not devote their practice to estate planning. The KC Estate Planner, LLC, focuses exclusively on estate planning and can help you with all of your estate planning needs no matter how simple or complex.