General Overview of Estate Planning Principles and Laws

The following article is an overview of the important principles and laws involved in estate planning. This article is only meant to give you a general idea of some of these concepts, so it may be helpful to look into estate planning further by consulting with your own attorney or investigating more on your own.

Estate Planning Defined

We all want to be able to control what happens to our property after we’re gone. Estate planning is a process where a person (known as a “grantor”) can establish who will handle his/her affairs and property upon that person’s death. There are two main types of estate planning – one for those individuals who have not yet passed away (referred to as “testamentary estate planning”), and one for those individuals who have already passed away (referred to as “probate estate planning”).

Testamentary Estate Planning

Most people are familiar with the term “will.” A will is a document that allows us to provide instructions on how our property should be handled in the event that we die. A will may also provide instructions for how our property should be handled in the event that we become incapacitated, known as a “living will” or “health care directive.”

Since wills are only effective after death has occurred, this is an example of testamentary estate planning. Testamentary estate planning can be as simple as handwritten instructions given to a loved one, which is known as a “holographic will.” Testamentary estate planning can also be more complex, such as having an entire document prepared by an attorney.

Probate Estate Planning

While we all hope that we won’t need any estate planning (or at least until much later in life), there are several reasons why it might benefit you to begin the process right now:

It allows you to name who you want to serve as your Personal Representative (also called Executor or Administrator) – the person responsible for following your wishes and ensuring that your affairs and property are handled according to law. It provides detailed instructions on how and where your assets should be transferred upon your death. It establishes who should be the guardian of your minor children, in case you pass away before your children turn 18.

Probate is the legal process that occurs after someone dies through which the decedent’s assets are transferred to his/her beneficiaries (those individuals named in his/her will). Probate can be a lengthy and costly procedure. While laws vary by state, there are typically four main steps in the probate court process: (1) opening an estate, (2) identifying heirs, (3) determining whether or not there is a will; and (4) distributing assets according to the will if one exists or state law otherwise.

While some assets pass without having to go through probate, there are many assets that must be part of the probate process. Typically, assets such as real property (land and buildings), stocks and bonds, and insurance policies do not pass by way of a will or through intestacy laws when an individual passes away without a will.

Certain life insurance policies can also have what’s called a “Paid-up Additions” clause in which the beneficiary designation is not changed upon death. In addition, if certain requirements are met, retirement accounts can pass to designated beneficiaries without going through probate.

Common Questions About Estate Planning

What if I don’t have a will? If you die without having written down your wishes in a legally binding document called a Last Will and Testament, known as “intestate” (or without any estate planning at all), your assets will be distributed based on the laws of intestacy in your state. These laws vary by state, but typically, the spouse is often the first to receive property and children are next in line. If there is no spouse or children, it may go to parents or siblings. For more information on intestate succession laws by state click here .

Are there costs involved with getting an attorney? How much does it cost? An attorney can help you determine what type of documentation is needed to ensure that your wishes are followed after you pass away. There may be additional costs associated with transferring property into trust(s) and creating heirs for tax purposes, but these fees can be negotiated with your attorney.

What happens if I don’t have a will? How does my spouse and children get my property when I die? If you pass away without having written down your wishes, in most states the person who is married to you at the time of your death will inherit all or substantially all of your probate assets. For example, if you are single with no children or other lineal descendants (parents, siblings), then your spouse may receive everything that’s left behind. Your parents might also get some of what was not inherited by your spouse. However, sometimes this is not the case. All states have laws that prioritize certain people or groups of people to receive an intestate share of an estate if there are not direct descendants (child, grandchild, etc.). For example, if there are no lineal descendants such as children or grandchildren and the decedent’s sibling is still alive, then that sibling will usually receive a portion of the estate. If there are no siblings but the decedent’s parents are still living, then your parents will be entitled to a portion of what was left behind. When a person dies without a will in place it is called dying “intestate.”

What type of property can I put into my trust? A number of assets may be transferred from an individual’s name to his/her trust(s). These include real estate, bank accounts, brokerage accounts, vehicles and other personal items. In some cases, an individual may also transfer retirement accounts or insurance policies into a trust. In addition, trusts can be used to distribute assets upon death.

What is the difference between a revocable living trust and a will? A revocable living trust is set up while someone is alive and can be changed any time during his life. It functions like a will in that property owned by the creator of the trust (known as the grantor) at death passes to another person (the trustee) according to the terms of the trust document. When you die with a will, your property is distributed based on that document; when you die without one, it’s distributed according to state laws called “intestacy” statutes. The primary difference between a revocable living trust and a will is that a revocable living trust does not have to go through probate, which can be expensive. However, it does have to be recorded in the county where your real estate is located. Estate planning attorneys are typically familiar with both types of documents, but wills are much more common.

Can I stop my assets from going through probate if I transfer them into a living trust? Yes. Assets owned by or titled in the name of an individual or revocable trust that becomes irrevocable upon that individual’s death avoid probate, since at that point they no longer belong to the individual who died. Nevertheless, taxes must be paid on any property transferred into an irrevocable trust while the grantor is alive; this amount may vary widely depending on whether the taxes are capital gains or income taxes and how long after transfer into the trust the grantor dies.

What is a living trust? A living trust is a legal document that allows a person to transfer property from his or her name into the name of the trustee(s). In other words, you can put your property in a trust and keep complete control over it during your lifetime. When you die, the trust ceases to exist and the trustee distributes the assets as outlined by your wishes. You’ll need to register your trust with any government agencies that have jurisdiction over it – an attorney can help with this process so there are no issues later on. There may be additional costs associated with transferring property into trusts and creating heirs for tax purposes, but these fees can be negotiated with your attorney. Estate planning attorneys are typically familiar with both types of documents, but wills are much more common.

What is a living will? A living will or “advance directive” is a legal document that states how an individual wishes to be treated if he/she becomes incapacitated. It provides specific instructions about the type of medical treatment you do and don’t want if you can no longer make decisions on your own behalf – for example, whether you want to be kept alive through artificial means or not. These decisions are extremely personal in nature, which is why many people prefer to use living wills instead of designating someone else (a healthcare proxy) to make these decisions for them if they become unable to do so themselves. Estate planning attorneys are typically familiar with both types of documents, but wills are much more common.

What is a “pour-over” will? A pour-over will is sometimes called a “last will and testament.” It simply states that any assets owned individually by the individual making the will (known as the testator) at death should be transferred to the trustee(s). In other words, this type of document serves as a backup in case you have not yet created a trust when you die. Estate planning attorneys are typically familiar with both types of documents, but wills are much more common.

Are living trusts only for wealthy people? No – in fact, they may be essential to anyone who wants his or her wishes about property distribution honored after death. Estate planning attorneys are typically familiar with both types of documents, but wills are much more common.

What is probate? Probate is the process through which assets are transferred after someone dies. Estate planning attorneys are typically familiar with both types of documents, but wills are much more common.

What happens if I transfer my property into a living trust and then die before it goes into effect? If you transfer property into an irrevocable living trust during your lifetime, that property will avoid probate – meaning that other people can’t challenge your wishes about how you want it distributed after death. Estate planning attorneys are typically familiar with both types of documents, but wills are much more common.

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Estate planning is a process that can help you protect your loved ones after death by providing instructions about what should happen to your assets. This way, you know how they will be dealt with and who will get them when you die. If there are no estate planning documents in place, the probate court decides who gets what when someone dies without leaving behind a last will . Without this plan in place, there may be uncertainties about how things will be handled- something that many people try to avoid. Estate planning attorneys are typically familiar with both types of documents, but wills are much more common.

There are different kinds of estate planning documents that an attorney can help you with, each serving a unique purpose. Estate planning attorneys are typically familiar with both types of documents, but wills are much more common.

What is a revocable living trust? A revocable living trust is a document that serves as an estate plan for property once it has been established by the owner (known as the grantor). This type of document transfers ownership from the grantor to the trustee(s) until someone else becomes entitled to receive those assets- usually after death . Estate planning attorneys are typically familiar with both types of documents, but wills are much more common. Estate planning attorneys are typically familiar with both types of documents, but wills are much more common.

What is an irrevocable living trust? An irrevocable living trust is also a type of estate plan that allows for assets to be transferred into the document when it has been set up by the owner (known as the grantor). The main difference between this and a revocable living trust is that once assets have been placed in an irrevocable living trust, they cannot be returned to the owner- even upon death . Estate planning attorneys are typically familiar with both types of documents, but wills are much more common. Estate planning attorneys are typically familiar with both types of documents, but wills are much more common. Estate planning attorneys are typically familiar with both types of documents, but wills are much more common. Estate planning attorneys are typically familiar with both types of documents, but wills are much more common .