There are plenty of questions shared among most clients, and although estate planning is unique to each individual engaging in such, there is a tremendous amount of information and principles that need to be understood before one can roll up their sleeves in look at their own circumstances. For now, I have compiled a list of the most common basic estate planning, trusts, and asset protection questions I get every day. In the future, I may categorize and index them, but in the mean time, feel free to browse the questions, and contact us for more information.
What is the Difference Between a Will and a Trust?
A Will is a declaration of a deceased individual regarding (among other things), where they would like their assets to be distributed, and who will be managing that transfer. In order for a Will to be administered, a Probate Court needs to get involved, which is commonly referred to as "Probate." A Living Trust, however serves a very similar purpose, but the way it is structured allows all assets to pass to the appointed beneficiaries privately--outside the Probate process. Furthermore, a trust allows distributions to be structured over time and based on certain qualifications. Lastly, a Trust is also in effect upon incapacity, and trust agents (trustees) are able to manage trust assets during this time (whereas a Will cannot). A Trust is the preferred estate planning document for 90% of clients.
What is the Difference Between a "Revocable" Trust and an "Irrevocable" Trust, and is the Term "Living Trust" mean anything?
A Revocable rust is a Trust that can be fully revoked, amended, changed, etc. Every estate plan will start off with a Revocable Trust, and add onto it an Irrevocable Trust for a limited and specific use. An Irrevocable Trust is a trust where the creator voluntarily restricts their ownership and control over one or more assets. The reason one would do this would be to effectuate some sort of tax or asset protection benefit. Irrevocable Trusts are part of an overall comprehensive tax or asset protection plan, and should not be executed without competent legal representation. The term, "living" just means that you created the trust while you were alive (as opposed to the archaic, "Testamentary Trust.")
What Documents Do I Need for an Estate Plan?
There are number of documents that are part of a Comprehensive Estate Planning Package. At the very core, is going to be the Revocable Living Trust (or in a very limited number of situations, a Will), a Power of Attorney, which appoints agents to act on your behalf, and a Health Care Directive, which appoints agents to act on your behalf for medical decisions. There are a number of other documents in a comprehensive plan, and a description and background can be found here. Note that the best way to put together an estate plan is to get a package which consists of all of the documents you need. Here at Trust Legal Group, we refer to it as our "Comprehensive Estate Planning Package."
What Information Do I Need to Prepare to Meet With an Attorney to Prepare an Estate Plan?
Most attorneys will require some sort of intake form is filled out prior to an initial consultation. However, at Trust Legal Group, any prospective client is able to "come as they are," and we are able to work through some of that basic information gathering together. Our website has a wealth of information for a prospective client. First, on our "Client Resources" page, one can find information on preparing for an initial consultation meeting. This page goes over the information we will be discussing, how an estate plan is structured, the process, etc. On the "Educational Resources" page, there is a section associated with basic estate planning which addresses everything one needs to know about basic Estate Planning as it relates to what we discuss during our initial meeting.
What Can I Expect to Pay for an Estate Plan?
Initial consultations are always free–regardless of whether you decide to retain our services. Most clients are looking to get a Comprehensive Plan which includes all of the necessary estate planning documents. A firm, flat fee will be determined at the consultation and will include all phone calls, meetings, questions, etc. There are no hourly or other additional fees other than the agree-upon flat fee. The fee for a Comprehensive plan usually ranges from $2,000 to $3,500 depending on marital status, net worth, and complexity of the estate and other factors. More information can be found here.
Can I Hold Property Jointly With Another Individual as a Viable Estate Planning Alternative?
Joint Tenancy and Joint Ownership would allow one to avoid probate on the death of the first spouse, but the joint tenancy becomes extinguished and all assets will later be subject to probate upon the death of the second spouse. The use of joint tenancy has some significant tax disadvantages that almost always make it a non-preferable alternative. Furthermore, the original owner is doubling his/her legal liability exposure by adding on another individual, whose circumstances could result in a lien placed on jointly-owned property (e.g. by way of a divorce, judgment, bankruptcy, etc.).
What is "Trust Funding," and Do I Need to Transfer my Assets Into The Trust?
A revocable living trust is a vessel which is of very little utility unless something is placed inside. The living trust is a set of instructions and stipulations that generally refer to the ominous “Trust Estate” which essentially includes the client’s entire estate—so long as it is “placed into” the trust. The process of placing property into the name of the trust is referred to as “funding” the trust. Property not included or properly funded into the trust will not be subject to any of the terms, and will, in most situations, be subject to probate.