Making someone inherit your property seems simple and easy, right? All we need is to write down a last will and testament containing who gets what, sign it, an attorney reads it in front of people, and it’s a done deal. But in reality, there is more to it than just the will. It’s just a part of a bigger process called estate planning. But no worries, that’s where an estate planning attorney comes in to help you!
Estate planning and why do I need it?
It’s a process where you layout how you would be transferring your estate assets to a person or several people. Your estate includes all your properties: the deed for your house, land, business, cars, money. Your estate administration relies heavily on legal counsel, like estate planning lawyers and accountants, to guide you in the process.
This process is more beneficial to people with medium to large-sized estates. The process aims to assure that the distribution of inheritance to the heirs is according to how the decedent wants it to be. In other words, it’s a way for you, the owner, to decide what and how much of your property to distribute to your selected beneficiaries.
Estate planning is also a way to financially secure your properties by minimizing the estate tax charged for your estate the moment it’s being transferred to its intended beneficiaries. This also is an avenue for people to decide on crucial decisions such as guardianship for underage children, arrangements in hospitalization in case of incapacity, and funerals if you pass away.
What will I need to set up?
Of course, when undergoing this process, you will need estate planning documents as proof for your decisions. Here are some of the things you’ll need:
- Will – Who from the surviving family and friends inherit how much of what? That question can be answered by you when you create a will. In addition to that, in case an underage child will be left behind, the will should contain who shall be the child’s legal guardian. Contents of the will should be carried out by an executor and has a fiduciary duty to assure that they act accordingly with the interest of the decedent, the estate, and the beneficiaries.
- Trust – Setting up a trust makes you, the trustor, transfer your properties first to a trustee, or someone that will be in charge of your properties on behalf of your intended beneficiaries. There are two ways on how to classify types of trusts: living trust and testamentary trust; and revocable trusts and irrevocable trusts.
- A living trust is created while you are alive. On the other hand, a testamentary trust is created through your will and is irrevocable.
- A revocable trust (sometimes referred to as revocable living trust) is a trust that can be modified or revoked while an irrevocable trust cannot be changed. A revocable trust will turn into an irrevocable trust after the grantor dies since the deceased person is the only authorized person to amend any of the provisions stated in the trust.
- Financial Power of Attorney – this gives authority to someone, be it a loved one, a friend, or a professional to manage your finances when you can’t do it yourself.
- Medical Directives – also called health care directive or living wills, this contains all of your instructions concerning health care in case of a time where you are incapacitated and cannot make decisions on the spot. It also includes a power of attorney that will appoint the surviving spouse, a relative, or a friend as a personal representative to decide on what to do in terms of your health.
Consult a reliable Tacoma estate planning lawyer to help you set up the paperwork necessary to keep track of your estate. You will find that having a legal professional working with you helps ease your burdens and clarifies any confusing detail.
Wills vs Trusts
You still have the option of what to execute between wills and trusts when you undergo estate planning. Wills are contestable and will only take effect after death, meaning it is not viable until the grantor has passed. Meanwhile, trusts can take effect immediately after signing. Unlike wills, however, trusts have an expiry date and will lapse when a certain condition has been met (e.g. when the heir reaches a certain age or gets married) and are commonly used when the beneficiaries are minors or disabled. A trust also doesn’t undergo a process called probate and is rarely contestable.
If you have privacy concerns, you might want to opt for trusts. Wills are made public and are accessible by other people while trusts aren’t.
The probate process is an expensive and complicated process where a specialized court called a probate court will authenticate your will. All concerns raised by your loved ones and friends with regards to the will shall also be settled. Unfortunately, this process might be a reason why beneficiaries may not receive the entirety of their share indicated in the will. Delays in the distribution are also inevitable.
However, trusts are a different story. In the case of a testamentary trust, the court will occasionally check in with the trustee to ensure that the property is being managed properly. On the other hand, living trusts don’t have to go through probate. In case the deceased has left no will, the state will be in charge of distributing the estate following a setlawyer of rules called the laws of intestacy. Most people opt to execute trusts to avoid probate.
As you undergo estate planning, you are most likely avoiding probate. The transfer will be smooth-sailing when you die since you already had control over your properties and have already assigned which and how much of your assets would go to your selected beneficiary.
Still don’t know how to start managing your properties? Ready to plan on how to manage your estate? James A. Jones Attorney At Law can help you with a free consultation! Contact our Tacoma estate planning attorney or use our Self-Scheduler to book an appointment and let us help you in drafting an estate plan that suits you and your needs.