Insight Law - Estate Planning And Probate Services
Protect Your Assets and Family
A will has 2 primary purposes:
1. it states how you wish your property to be distributed, and
2. it states who you wish to settle your estate.
In addition, a will can contain trust language to protect your children’s inheritance, name a guardian for your minor children, and create trusts to reduce estate tax liability.
Most people need a will because the default rules (intestacy laws) do not match their wishes. Married couples should each have a will, rather than one joint will. In addition to wills, you should each have durable powers of attorney, which will name persons you wish to make health care and financial decisions for you if you are incapacitated. Finally, you may wish to have a health care directive and a disposition of remains authorization.
A good estate attorney will not just create these documents for you based on your goals and wishes, but will also coordinate them with your financial and insurance portfolio, discuss end-of-life decisions, and make sure your beneficiary designations on your retirement accounts and insurance policies match your estate plan.
Trusts and Tax Planning
Revocable living trusts. A revocable living trust is a tool to avoid probate—a process that occurs at your death where the court helps settle your estate. A revocable living trust does not in itself have any tax benefits, although these can be built in. If you do not have a tax problem, and you do not have out-of-state property, but you probably do not need a revocable living trust. Washington has a very efficient probate process making the administrative hassles and cost of a revocable living trust often outweigh those of probate.
Tax planning. For most persons with estates under $2 million (in 2012), you do not need to worry about estate taxes. (FYI— Your “estate” approximately equals your net worth plus the death benefit on any life insurance policies you own.)
Washington State does not assess estate taxes on estates under $2 million, and the federal government does not assess taxes on estates under $5.12 million (2012). Although the federal estate tax exemption is set to decrease from $5.12 million to $1 million in 2013, don't panic because Congress hopefully will step in to avoid this. So, if your estate is between $1 million and $2 million, I recommend waiting until 2013 before doing any complex estate planning. If Congress does increase the exemption amount, you will have paid legal fees and created complexity for no good reason.
Other types of trusts. In addition to revocable living trusts, estate attorneys can create a variety of additional types of trusts to help you with estate planning and tax planning goals. For example, if you have permanent life insurance and an estate tax problem, an irrevocable life insurance trust (ILIT) may be an efficient way of avoiding estate tax on your insurance proceeds. (FYI—Insurance proceeds are generally not subject to income tax, but they may be subject to estate tax.) Most people do not need any types of trusts, but if you do have an estate subject to estate tax, talk to an estate attorney about your options.
Page 3: Probate, Personal Representatives, and Trustees Probate and personal representatives. If you are the personal representative or executor, you are in unenviable position. You may be in morning for the person who is passed away and yet have the thankless job of settling the estate at the same time. You may also be dealing with squabbling beneficiaries and living away from home.
To help you at this time, pick an attorney with reasonable fees, with whom you get along well, and who has experience in the probate process.
Trustees. It's not easy to be a trustee of a trust, whether the trust is revocable or irrevocable. The Fiduciary’s Handbook (http://www.epcseattle.org/EPC-fiduciary-handbook-3pdf.pdf) is a good reference, but sometimes it can be difficult to understand what it is exactly you are supposed to do and how you should do it.
Speak to an attorney who can explain your role and responsibilities clearly and in plain English. Attorney fees generally can be paid by the trust. Ultimately, the trust saves money and you save time if you make sure you do are doing everything right from the beginning.
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