There are many different plans which can pass your property to your heirs. Some of the basic methods of transfer and their advantages are outlined below. Remember your estate planning attorney should always discuss the pros and cons of each method. An estate planning attorney can completely explain each type of document available and how it can carry out the estate planning goals you outlined in the decision making process. An attorney can also alert you to potential methods, instruments and documents which can reduce taxes and save time and money for your heirs. The basic estate planning instruments include:
The will is the simplest and most common estate planning device. A will is a document which tells the probate court how an individual wishes to have his or her property distributed at death. A will should designate an individual who shall serve as executor for the estate. Typically wills are created which give property from husband to wife and vice versa. These wills usually designate the children as beneficiaries after the surviving spouse has passed away. Assets which pass through a will always go through probate.
Tip: when you create a will it is usually a good idea to insert a clause which allows your executor to serve without a bond. This can reduce the probate fees for your spouse and children.
Trusts are very potent and important estate planning devices. A trust is created by a written agreement. Trusts can be particularly useful to hold and distribute property to your heirs after your death. Testamentary trusts arise after death and are used in probate. Revocable living trusts are created during an individual’s lifetime and can be used to avoid the probate process.
Trusts are usually employed for three reasons. First, trusts can be used to reduce the amount of estate taxes owed in larger estates by your children/heirs upon the death of the last parent. Sometimes this can greatly increase the inheritance received by the beneficiaries. Second, trusts can be used to ensure that the inherited money is used in a certain manner. Common examples include, trusts for the education and welfare of grandchildren. Finally, trusts can be used as a way for a family to avoid the time, delay and expense associated with probate.
Revocable Living Trust
A revocable living trust is merely a trust in which assets are placed during your lifetime. The popularity of these trusts has risen enormously over the last 30 years due to their many advantages. In the first place, a revocable living trust allows you to avoid probate for your heirs. This provides a significant savings in time and money for the beneficiaries of your estate. These type of trusts also allow you to retain full control of your assets while you are alive.
As the demand for planning and tax avoidance has increased, the number of plans and instruments available have multiplied. Individuals who have a family business or very large estates can achieve significant savings when passing these assets to their heirs. In some cases, these plans incorporate the use of a family partnership or irrevocable trusts. All of them can be extremely effective tools for the individual willing to use them. When doing advanced planning it is always best to consult an estate planning attorney first. Remember to tell the attorney what you are trying to accomplish and then let the attorney advise you on how to reach your goals.
Thousands of people every year will embark on the estate planning process only to procrastinate when it comes time to implement the plan. This delay can be disastrous. Don’t wait until it is too late.
This article is part of the eFuneral Resource Center and was written by Timothy J. Forrestal, an accomplished Cleveland, Ohio-based attorney with an impressive track record in the fields of elder law and estate planning. He is a member of the National Academy of Elder Law Attorneys, the Estate Planning, Trust and Probate Section of the Ohio State Bar Association, the AARP Legal Services Network and the Better Business Bureau. For more information, please visit www.forrestallaw.com. The Forrestal Law Office Medicaid Planning Team offers help in the following areas: Division of Assets, Medicaid Planning, Living Trusts, Powers of Attorney, Estate Planning, Living Wills, Nursing Home Planning, Guardianships. Those thinking about end-of-life should visit eFuneral.com for help researching, planning, and arranging a wide variety of funeral-related services.
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