A significant percentage of people who do not have estate plans in place simply don’t know where to begin according to surveys. This is understandable because entering into the unknown is always disconcerting.
With this in mind, let’s take an estate planning 101 approach to explore the basics.
Informal Outline
To get started, you can sit back and ask yourself how you want your assets to be distributed after your passing. Make a note of concerns you may have about individual people on your list.
For example, you be leaving an inheritance to a family member with a disability who relies on need-based government benefits. In addition to the recipient, you should get a general idea of the assets that you expect to be able to pass along.
Aside from the obvious things like real property, cash, and investments, family heirlooms are part of this equation. You can also think about potential representatives to act for you in the event of your incapacity.
Understand Probate Drawbacks
After you have a basic idea of how you want to proceed, you should consider asset transfer options. A will is one of the possibilities, but the administration process is more complicated than you may think.
If you use a will, you name an executor to administer the estate. They would admit the will to probate, and the court will provide supervision. This is a time-consuming process that will take nine months or more in most instances.
Since no inheritances are distributed while the estate is being probated, this time lag negatively impacts the heirs. Probate is public, so there is a loss of privacy. Thirdly, probate expenses consume a portion of the estate before it is distributed to the beneficiaries.
Consider a Trust
The revocable living trust is a very commonly used alternative to a simple will. You would maintain complete control of the assets during your life because you would be the trustee.
As the name would indicate, you can revoke the trust if you change your mind. Along the way, you can alter the terms, add property to the trust, or remove property from the trust as you see fit.
After your death, the successor trustee that you name will administer the trust. The probate court would not be involved. This is one of the benefits a living trust will provide, but there are others.
In addition to the revocable living trust, you could potentially benefit from a different type of trust. As a case in point, we mentioned the challenge of providing for a beneficiary with a disability. A supplemental needs trust can be used under these circumstances.
The trustee would be able to use the assets in the trust to enhance the beneficiary’s life in many ways. Since the beneficiary does not directly own the assets, the trust would not impact eligibility for need-based benefits.
Incapacity Planning Component
To be on the safe side, you should prepare for incapacity when you plan your estate. This will prevent a court-ordered guardianship if you become unable to handle your own affairs late in your life.
A living will is part of this equation. You use a living will to assert your life-support preferences. To account for decisions that are not related to life-support, you can name a representative in a durable power of attorney for healthcare.
If you have a living trust, you can name a disability trustee to manage the trust. To account for property that is not held by a trust, you can name an agent in a durable power of attorney for property.
Schedule a Consultation Today!
When you work with our firm, we will answer all your questions, and you will fully understand your options. Ultimately, you will go forward with a tailor-made plan that is perfect for you and your family.
To get started, call our Westport or Glastonbury, CT estate planning offices at 860-548-1000 or send us a message through our contact page.
