Estate Planning FAQs
Here are the top 10 most frequently asked questions regarding estate planning. If you have additional questions, please feel free to call or send us an email.
Why do I need an estate plan?
Why Estate Planning? Everyone needs estate planning. You have a 100% chance of dying. You should plan to make sure your property goes to the people you want, without unnecessary administrative cost or tax, and that you leave a legacy of consideration and organization, equipping your family and those managing your affairs with the tools to ensure that the financial and legal issues associated with your passing are handled as efficiently as possible.
The Top Seven Reasons to Get Estate Planning
- Control Over the Disposition of Your Estate. Without a proper Will, the court will determine who manages your estate, and state law will determine who gets your property. Basic planning avoids this fate. Deciding who should receive your assets is the easy part. Deciding how and when they should inherit is more important and challenging. Often, leaving assets outright to your beneficiaries is not the best way. By holding the assets in trust, you can protect those assets from your beneficiaries’ creditors and future ex-spouses. Also, you can choose a Trustee to distribute the assets over time so that your beneficiaries can use the assets, without the opportunity to squander the assets.
- Coordination of Assets and Legal Documents. Estate Planning is not just about document preparation. Did you know that many of your assets will not pass pursuant to a Will at death? How do life insurance policies, retirement accounts, deeds, and debt relate to the legal documents? Competent planning means getting your financial affairs in sync with your legal documents.
- Avoidance of Probate. Not only is probate expensive, it is also a time-consuming and often frustrating public bureaucratic process. By planning in advance, you can avoid or greatly reduce the costs associated with the administration of your estate, as well as protect your privacy.
- Reducing the Burden of Estate Taxes. For those whose estate is subject to tax, the burden is huge. With proper planning, the tax owed at your death can be substantially reduced or eliminated entirely.
- Providing for Children. Do you have minor children? If so, who would you want to serve as their guardian in the event of your untimely death? Perhaps your children are of age, but still not financially responsible enough for you to feel comfortable with them receiving their entire inheritance outright. Through the establishment of trusts, you can ensure that these children are cared for and also set guidelines for how and when they should receive distributions.
- HealthCare and Incapacity Planning. The occasion for estate planning is also the time to establish legal documents specifying who will make decisions for you regarding your financial, legal, and healthcare matters during any period of your incapacity. A good Estate Planning lawyer has experience not only planning, but also helping families deal with the reality of such difficult times.
- You Get to Work with Walker Lambe! The Estate Planning Group of Walker, Lambe, Rhudy & Costley, P.L.L.C. has helped Triangle area individuals and families with estate planning and administration for more than twenty-five years. It is what we do, and our practice reflects this experience. Working with Walker Lambe means that now and in the future, you and your family will be served by a dedicated team of attorneys and professionals. From drafting of simple wills to sophisticated tax and financial planning and the structuring of complex estate plans incorporating wills, trusts, charitable trusts and gifting plans, Walker Lambe provides the highest quality of legal services, tailored to individual needs and with a sensitivity to cost. We will help you understand the issues, advise you regarding your options, help you define your goals, and counsel you regarding family circumstances or financial matters that present unique challenges.
"The possibility of a disabling injury or illness scares me. What would happen if I were mentally disabled and had no estate plan, or just a will?"
Most of us spend a considerable amount of time and energy in our lives accumulating wealth. With this, there comes a time to preserve wealth both for enjoyment and future generations. A solid, effective estate plan ensures that your hard-earned wealth will remain intact as it passes to your beneficiaries, instead of being siphoned off to government processes and bureaucrats.
"If I don't create an estate plan, won't the government provide one for me?"
YES. But your family may not like it. The government's estate plan is called "Intestate Probate" and guarantees government interference in the disposition of your estate. Documents must be filed and approval must be received from a court to pay your bills, pay your spouse an allowance, and account for your property--and it all takes place in the public's view. If you fail to plan your estate, you lose the opportunity to protect your family from an impersonal, complex governmental process that can become a nightmare.
Then there is the matter of the federal government's death taxes. There is much you can do in planning your estate that will reduce and even eliminate death taxes, but you don't suppose the government's estate plan is designed to save your estate from taxes, do you? While some estate planners favor wills and others prefer a Living Trust as the Estate Plan of Choice, all estate planners that dying without an estate plan should be avoided at all costs.
"What's the difference between having a will and a Living Trust?"
A will is a legal document that describes how your assets should be distributed in the event of death. The actual distribution, however, is controlled by a legal process called probate, which is Latin for "prove the will." Upon your death, the will becomes a public document available for inspection by all comers. And, once your will enters the probate process, it's no longer controlled by your family, but by the court and probate attorneys.
Probate can be cumbersome, time-consuming, expensive, and emotionally traumatic during a family's time of grief and vulnerability. Con artists and others with less-than-pure financial motives have been known to use their knowledge about the contents of a will to prey on survivors.
A Living Trust avoids probate because your property is owned by the trust, so technically there's nothing for the probate courts to administer. Whomever you name as your "successor trustee" gains control of your assets and distributes them exactly according to your instructions.
There is one other crucial difference: A will doesn't take effect until your death, and is therefore no help to you during lifetime planning, an increasingly important consideration since Americans are now living longer. A Living Trust can help you preserve and increase your estate while you're alive, and offers protection should you become mentally disabled.
"The possibility of a disabling injury or illness scares me. What would happen if I were mentally disabled and had no estate plan, or just a will?"
Unfortunately, you would be subject to "living probate," also known as a guardianship proceeding. If you become mentally disabled before you die, the court will appoint someone to take control of your assets and personal affairs. These "court-appointed agents" must file an accounting of your finances with the court. The process is often expensive and time-consuming and exposes the private affairs of the family to the public record.
"If I set up a Living Trust, can I be my own trustee?"
YES. In fact, most people who create Living Trusts act as their own trustees. If you are married, you and your spouse can act as co-trustees. And you will have absolute and complete control over all of the assets in your trust. In the event of a mentally disabling condition, your hand-picked successor trustee assumes control over your affairs, not the court's appointee.
"Will a Living Trust avoid income taxes?"
NO. The purpose of creating a Living Trust is to avoid living probate, death probate, and reduce or even eliminate federal estate taxes. It's not a vehicle for reducing income taxes. In fact, if you're the trustee of your Living Trust, you will file your income tax returns exactly as you filed them before the trust existed. There are no new returns to file and no new liabilities are created.
"Can I transfer real estate into a Living Trust?"
YES. However, it is extremely important that you consult legal counsel in connection with the decision to title North Caroilna real estate in your trust. In many instances, for North Carolina residents, titling your North Carolina real estate in your Living Trust will not be the best decision. In other cases, it can be essentially to saving your family time, money, and frustration in association with the administration of your affairs at death.
"Is the Living Trust some kind of loophole the government will eventually close down?"
NO. The Living Trust has been authorized by the law for centuries. The government really has no interest in making you or your family suffer a probate that will only further clog up the legal system. A Living Trust avoids probate so that your estate is settled exactly according to your wishes.
"Isn't a Living Trust only for the rich?"
NO. A Living Trust can help anyone protect his or her family from unnecessary probate fees, attorney's fees, court costs and federal estate taxes. In certain circumstances even individuals with small estates can derive meaningful benefits.
"Can any attorney create a Living Trust?"
YES, but you would be better off choosing an attorney whose practice is focused on estate planning and administration and therefore allows them to provide your family the level of experience and support it deserves.