By: Joel W Locke
With the future seeming to grow more uncertain with each passing day, now is the time to take a fresh look at your current estate plan. For those unfamiliar with the concept, estate planning is the advance preparation for how a person’s assets will be managed and distributed in the event of incapacity or death. An estate plan will often include several key components including a Trust, a Will, Powers of Attorney and Medical Advanced Directives.
When it comes to making sure that a spouse inherits your assets, the process is typically straightforward and joint tenancy can be utilized. Further, there is no tax to a surviving spouse because there is an unlimited marital deduction provision in the United States Estate and Gift Tax Law. The law provides the passage of assets to a surviving spouse with no gift or estate tax liabilities.
Different people have different reasons for creating an estate plan. From ensuring minor children will be cared for in the cases of unexpected incapacity or death, to making sure a family business will remain operational, creating an estate plan is imperative.
Use a Will or Trust
With an estate plan, the two biggest tools to direct the handling of your assets will be a trust and a will. While both deal with the management of assets after death, they have several key differences.
A will is a legal document that states how your assets will be distributed after death. It also may include instructions, such as funeral arrangements or guardianship of minor dependents. These instructions are then carried out by your designated personal representative. A validly executed will is legally enforceable but has one major limitation: it must be submitted and probated in the District Court. Probate is the process for proving-up and distributing assets under a Last Will and Testament and is costly, time consuming and public. This process can be quite tedious and cause a financial hardship on both the heirs and the personal representative.
A revocable living trust is another estate planning tool in which individuals, either married or single, can designate how assets will be distributed during one’s life as well as at the time of their deaths. This form of trust is created while the trustor is still alive and will have full control over the trust and its assets until death. The key benefit of this form of estate transfer is that it completely avoids probate court and can remain completely private. A successor trustee who is chosen by the trustor during their lifetime has the authority to distribute the trust assets pursuant to the written directions in the trust. The process for administering a trust is generally less time consuming and much less expensive than probate. Trusts can be modified at any time during the lifetime of the trustor and are a useful tool for ensuring your loved ones are provided for after your death.
No matter what tool or tools you want to use for estate planning, the correct management of your estate after death will require an experienced lawyer. Allison MacKenzie attorneys have experience in estate planning law including all aspects of the accumulation, preservation, and distribution of wealth. Individuals, families and businesses that are facing the challenges of succession planning can rely on our considerable experience in drafting wills, trusts, and offering general estate planning advice. For any questions regarding estate planning, please contact Allison MacKenzie at 775.687.0202.
Fletcher, C. (2020, April 15). 6 Parts Of Your Estate Plan You Should Review Now. https://www.forbes.com/sites/christinefletcher/2020/04/15/6-parts-of-your-estate-plan-you-should-review-now/.
Kagan, J. (2020, January 29). Estate Planning. https://www.investopedia.com/terms/e/estateplanning.asp.
Jarrell, M. (2020, April 14). Will vs. Trust: What’s the Difference? Investopedia. https://www.investopedia.com/articles/personal-finance/051315/will-vs-trust-difference-between-two.asp