What is Estate Planning?
Estate planning is not only for the rich or the elite. If you have assets and own property, you have an estate and therefore you need to have a plan! Your estate is what you leave after you pass away. You want to control how it is done, who gets your property, and when. People who do estate planning want to make sure that their assets are passed on to their loved ones without problems, without high legal fees, and without time delays. Sometimes, people do estate planning to make sure that a particular person, such as a spouse or a child, is protected. Often, someone does planning to make sure that they have enough assets to live on for the rest of their life. An estate planning attorney, at a firm like ours, is your best resource to make this all happen.
What Planning Documents Should be a Part of my Estate Plan?
At a minimum, everyone over the age of 18 should have what we call “the four must have legal documents” in place. These include, a durable power-of-attorney, healthcare proxy, living will and last will and testament.
What is a Living Will?
A Living Will is a legal document that allows a person to express their wishes in terms of end-of-life medical treatment. For example, whether or not you want to remain on life support.
What is a Durable Power-of-Attorney?
This document allows you to appoint an agent to handle your financial affairs if you are unable to handle those affairs yourself (either physically or mentally).
Do I have to be declared incompetent for my agent to use my Durable Power-of-Attorney?
No, a durable power-of-attorney is effective on the date you and your agent sign it.
Do I have to name my children as agents?
No, you can name anyone that you can trust to handle your financial matters.
If I name my children, must they be named in age order?
No, you can name them in whatever order you feel would be best for handling your financial matters.
Can I name more than one agent in my Durable Power of Attorney?
Yes, you can name more than one agent and/or successor agent(s).
Must multiple agents act together?
No, you can state that the agents can act separately.
Is the agent entitled to compensation if the agent acts on my behalf?
Only if you feel that you want to compensate the agent. You would have to initial a section of the document for them to receive that compensation.
Can I change my Durable Power-of-Attorney to name someone else to act as the agent?
Yes, you can change the document at any time as long as you have the requisite
Is my agent allowed to use the Power-of-Attorney to give himself/herself my money?
No, unless you have specifically stated so in the document.
What happens if my agent misuses my Durable Power-of-Attorney for his or her own financial gain?
The agent may be subject to criminal charges and civil action.
What does a Health Care Proxy allow you to do?
A Health Care Proxy allows you to appoint someone, over the age of 18 that you trust to make health care decisions for you, should you lose the ability to make them yourself.
What is a Last Will and Testament?
A Last Will and Testament is a legal document that allows a person to express their wishes in terms of who is to receive their property/assets when they pass away.
What happens if I die without a Last Will and Testament?
State law will determine who shall inherit your assets.
Who may make a Last Will and Testament?
Any person, eighteen years age or older, of sound mind and memory.
Can I give my assets to an organization or charity under my Last Will and Testament?
What is an Executor?
An Executor is a person you appoint in your Last Will and Testament who will carry out the terms of the Last Will and Testament.
What if I don’t have an Executor or Trustee?
In special circumstances, partners of Russo Law Group, P.C. are able to act as an Executor or Trustee.
Can a Testator/Testatrix change a Last Will and Testament after it has been signed?
Yes, a Testator/Testatrix may change his/her Last Will and Testament. Your Last Will and Testament should always accurately reflect your current wishes.
What is “Probate”?
Probate is the court proceeding to approve your Last Will and Testament.
Will all of my assets/property pass under my Last Will and Testament and go to Probate?
No. Certain assets/property pass ‘by operation of law’, and therefore avoid probate. These include, but are not limited to, assets with joint owners, beneficiary designations and Trusts.
How much money do I need to justify writing a Last Will and Testament?
There is no minimum requirement. A Last Will and Testament is about distributing any and all of your assets as you wish, not about the value of your estate.
What is a Living Trust?
A Living Trust is an agreement made during your lifetime between you (the Settlor or Grantor) and an individual or entity (The Trustee). The Trust agreement determines how Trust assets will be managed and distributed. Trusts can be Revocable or Irrevocable.
What are the Benefits of a Living Trust?
A Living Trust can provide various benefits to meet your goals.
The trust provides for management of your assets during your lifetime. Your co-trustee or successor trustee can manage the trust assets if you become disabled. This can often eliminate the need to go to court for the appointment of a guardian.
You can establish a trust to meet your special needs in the event of a catastrophic illness.
You can avoid probate upon your death and save expenses and fees because the trust contains instructions for the distribution of your assets after your death without court proceedings.
Trusts can be used to minimize estate taxes upon your demise.
What is a Revocable Trust?
Revocable Trusts allow you to maintain control over the trust assets by acting as a Trustee or by exercising your right to amend or revoke the Trust. A Revocable Trust, sometimes referred to as a “Lifetime Trust”, avoids probate and provides on-going management in the event you are unable to manage your financial affairs.
What is an Irrevocable Trust?
Irrevocable Trusts cannot be changed, altered or revoked by you. An Irrevocable Trust can save estate taxes or protect assets in the event of a catastrophic illness, depending upon the terms of the Trust agreement.
What is an Assets Protection Trust?
An Asset Protection Trust is a type of Irrevocable Trust that allows you to protect your trust assets in the event you apply for Medicaid to pay for long term care services. The funding of the trust is subject to the Medicaid lookback and transfer penalty rules.
What are Minors Trusts?
Minors Trusts allow you to set aside funds for a minor for his or her benefit while growing up. The funds can be used for educational purposes. There can also be income and estate tax advantages to you.
What is a Special Needs Trust?
A Special Needs Trust can be used to provide for the needs of another individual, without affecting the individual’s eligibility for various government benefit programs, such as Medicaid.
What are Irrevocable Life Insurance Trusts?
Irrevocable Life Insurance Trusts can be created to provide substantial estate tax savings. Insurance proceeds can escape estate taxation, and at the same time, be used to indirectly pay for estate taxes or provide liquidity for family needs.
What are Grantor Retained Trusts?
A Grantor Retained Annuity Trust (GRAT), Qualified Personal Residence Trust (QPRT) or Charitable Remainder Trust (CRT) can be used to save estate taxes by gifting assets to a trust at a discount. These trusts also allow you to receive benefits from the trust for a period of time.