What is Estate Planning?
Estate planning is a process that creates a plan that covers the transfer of your property at death as well as a variety of other personal matters and may or may not involve tax planning. The core document most often associated with this process is your will. During the estate planning process, your attorney works for you to meet your goals and address your concerns with respect to your assets and how they are owned, and your family structure. It can involve the services of a variety of professionals, including your lawyer, accountant, financial planner, life insurance advisor, banker and broker and may also involve some of your loved ones if you choose. What is your lawyer’s role? It is tempting to use one of the many do-it-yourself will kits available online and at your local office supply store. These kits will work well for some people, but the complexities of the law and the individual goals and needs of your family are unlikely to be accomplished through a one-size-fits-all approach. A qualified lawyer can serve as your guide and interpret the network of laws that control property rights, taxes, wills, probate, and trusts. On the other hand, you can save time and money by preparing thoroughly for a meeting with your estate planning lawyer. You can organize your information regarding your assets, liabilities, and title arrangements and discuss your feelings about providing for various family members. You should provide copies of important documents such as previous wills or trusts, powers-of-attorney, life insurance policies, employment benefits, and prenuptial/domestic partnership agreements or divorce decrees. The advice and direction of your attorney will be essential to implementing an estate plan that both disposes of your assets according to your wishes and meets your other personal objectives. What can a will do and do I need one? If you die without a will, Minnesota statutes will determine who receives your property. A will allows you to alter the state’s plan to suit your personal preferences. A will provides for the distribution of your property at death in any manner you choose (with a few exceptions). However, a will does not govern the distribution of all types of your property at your death, and you should seek the advice of an attorney to help you plan for distribution of these other assets so that they are distributed according to your wishes. Wills can be of various degrees of complexity and can be utilized to achieve a wide range of family and financial objectives. If a will provides for the outright distribution of assets, it is sometimes characterized as a simple will. If the will establishes one or more trusts, it is often called a testamentary trust will. Alternatively, the will may leave probate assets to a preexisting inter vivos trust (created in your lifetime), in which case it is called a pour-over will. In either case, the purpose of the trust arrangement is to ensure continued property management and creditor protection for the surviving family members, to provide for charities, and to minimize taxes. |
Aside from providing for the intended disposition of your property to a spouse, children etc., consider these other important objectives that may be accomplished in your will:
What is a Revocable Trust? The term “living trust”, “revocable trust” or “inter vivos trust” is generally used to describe a trust which you can create during your lifetime, and which you can revoke or amend whenever you wish to do so. You can also create an “irrevocable” living trust, but that is permanent and is almost exclusively done to produce favorable tax results. A “living trust” is legally in existence during your life, has a trustee who is currently serving, and owns property that (generally) you have transferred to it during your life. While you are living, the trustee (who may be you) is generally responsible for managing the property as you direct for your benefit. Upon your death, the trustee is generally directed to either distribute the trust property to your beneficiaries, or to continue to hold it and manage it for the benefit of your beneficiaries. Like a will, a living trust can provide for the distribution of property upon your death. Unlike a will, it can also provide you with a vehicle for managing your property during your life, and authorize the trustee to manage the property and use it for your benefit (and your family) if you should become incapacitated, thereby avoiding the appointment of a guardian for that purpose. The Estate Plan A good estate plan will provide not only for the distribution of your property after death through a will or trust instrument, but will also help you and your loved ones prepare for decision-making in the event that you or a loved one becomes unable to make financial or personal decisions for yourself. Generally, these goals are accomplished through alternative decision-making documents including a health care directive (as known as a living will) and a power-of-attorney. |