By now, you should have known what estate planning really is. Well, if for some reasons you don’t, or you have probably forgotten, here is a reminder. Estate planning are plans made regarding the management and distribution of the estate of a deceased upon death or incapacitation.
An estate plan is to be made when you are alive, and its purpose will be served after your demise or incapacitation, depending on how it is planned. After your death, your assets and properties cannot be distributed until they undergo probate. Probate is simply done to determine the authenticity of your will.
Your will, on the other hand, is an important aspect of an estate plan. This legal document contains important information regarding the distribution of your estate. It contains the name of your estate executor, your assets, the name of beneficiaries and the portion of your asset each person inherits, etc.
If you contact a competent estate planning attorney, he or she will always advice that you plan an estate that avoid probate to save your family and loved ones the pain and stress of having to spend a lot and wait so much for the probate process to be over before becoming new owners of your assets.
If you wish to avoid probate, the best way to do it is by creating a trust. A trust is can be regarded as a legal vehicle that helps in the transfer of properties from one party to another. The trustor creates a trust that gives the other party (trustee) the right to hold assets for the benefit of a third party which is usually the beneficiaries of an estate.
Trust are made in such a way that they facilitate the easy transfer of asset according to the wish of the trustor, with less difficulty, time-frame, paperwork, etc. In some scenarios, creating a trust is the best way to ensure that your family and loved ones pay little or nothing as inheritance taxes.
Trust are usually created by an estate owner with the assistance of his or her attorney. It is then the duty of the trustor to decide if he or she will transfer the whole asset or part of it to the trustees. It is the job of the trustee to hold the asset on behalf of the estate beneficiaries. Trust have rules, and these rules all depends on how the trust was created. Sometimes, some beneficiaries are chosen as trustees; of course, it is very possible in some regions.
A trust is not only created for estate beneficiaries, you can create a trust that states how your assets should be managed while you are alive; or if you want, after your death. If you wish to safeguard your assets from creditors, one of the way to do it is to create a trust. Just like probate, a trust will keep your assets away from the reach of your creditors.
As you know, everything that has an advantage must surely have a disadvantage. The downside of a trust is that, it is usually not easy to create. Creating a trust can take a long period of time. Trusts are also expensive to create; well, they ought to be, due to their significance.
Just like an estate, a trust can be taxed. A trust comprises of a principal (the asset transferred to the trust by the grantor) and the income accumulated by the trust (from investments). If peradventure the trust hold income more than the end of a year, then it is a must that taxes be paid on it. If, on the other hand, the cash was shared to the beneficiaries, its taxability will depend on what was distributed (the principal or income).
Estate Planning Attorney
Because estate planning is an important process, you will need the help of professionals when planning your estate. An estate planning attorney can also assist during probate. A good estate planning attorney boast of the experience, knowledge and expertise to help you not juts plan an estate that mirrors what you want, but an estate that conforms to the estate law of your state. An estate planning attorney will also offer you advice on how to plan your estate so it correctly speaks for you after your death. Contact us if you need an estate planning attorney.