Contrary to popular belief, estate planning for the future is not merely an antidote for the wealthy looking to escape taxes. Probate, property transfer, life insurance, annuities and inheritance can represent chaos without proper planning. Throw in family members, the Internal Revenue Service, state laws and legal officials and you have a bubbling cauldron of confusion. Estate planning gives you the power to manage your resources without interference.
By definition, estate planning is a process designed to help you manage and preserve your assets while alive, and to conserve and control their distribution after your death.
Your age, health, heritage, lifestyle, life stage, goals and other factors determine the special needs of estate planning. For example, you can have a small estate and may require specific people to receive particular items. Probably a simple will is all you need. Or you can have many responsibilities that require complex planning with sophisticated strategies to protect family members.
But keep in mind, a disability can affect anyone at any time and this is more than enough reason to consult a lawyer about drafting a will or estate planning.
Plans that Fit Every Family
The most basic plan that benefits every family is a living trust. Trusts and wills are the primary tools of estate planning as both allow you to decide who inherits your assets when you die, and who will administer, manage and distribute your estate when you’re gone.
The most common type of living trust, also referred to as family trust, is one that is revocable, which means that the customer has the power to amend or revoke the trust. The power of revocation or amendment is important to the customer, because we live in a changing world where financial and family circumstances often face modifications.
Advantages of a Living Trust
By funding a trust with your assets, you transfer those assets out of your name into the trust. Any new assets you purchase, you simply transfer those into the trust. You will become the trustee and the assets will be under your control. If you decide to move assets you do so as the sole trustee.
Upon your death, your successor trustee will take control, according to your written directions, without any involvement of the probate court.
The main advantage of a living trust is that the family avoids the need for costly and inconvenient court administration (Probate).
• Families can save thousands of dollars in the long run.
• Living trusts act as an organized administration that provides the privilege to carry out estate planning in private.
• Living trusts are private matters; probate cases are public record and open to inspection by any person.
Nuts and Bolts of a Revocable and Irrevocable Living Trust
Revocable trust, also referred to as a Living Trust is flexible and you can modify the provisions at any time. In other words, if you need to make changes down the road or have second thoughts like a change of beneficiary or switch trustees, you can easily modify the terms. The pitfall of a revocable trust is that with so much flexibility, funded assets could be considered your personal assets, which leave you vulnerable to creditors.
An irrevocable trust cannot be cancelled nor any assets removed once the documents are signed unless all beneficiaries and the court agree to dissolve the trust. It’s often impossible to accomplish this without good reason. However, in certain situations, an attorney may be able to request an amendment if there are changes to the beneficiaries.
Advantages of an Irrevocable Trust
Irrevocable trust offer several distinct advantages, especially for long-term health care planning; however, to really benefit without neglecting unforeseen elements, it’s wise to communicate with a Florida attorney. Consider the benefits of an irrevocable trust;
• Asset protection
• Shield assets from eligibility criteria when applying for government benefits like Medicaid and Social Security Supplemental Income (SSI)
• Possibility of avoidance of federal gift tax
The centerpiece of living trusts is often the special considerations, managed according to your pre-specified rules. These trusts can incorporate special features to handle various family dynamics.
These special approaches may include special needs trusts for the care of children or disabled family members, trusts for pets, custom arrangements for a “blended family,” often due to a remarriage. These trusts can specify guidelines that include children from previous marriages, adopted children, stepchildren, etc.., and provisions that protect the “waste” that of a child’s inheritance from creditors, and other fraudulent individuals.
Living trusts accomplishes the essential purpose of a will. Assets transfer to your beneficiaries smoothly, without the burden of probate. By avoiding probate with a living trust, it is almost impossible to contest your pre-specified directions.
Deciding Who Gets What and When
Many parents impose restrictions when estate planning for the future. Some provisions are not overly restrictive, but many protect the child’s inheritance, however big or small, until they reach a certain age.
• Limiting access to funds until child reaches anywhere from 18 to 25
• Giving beneficiaries a portion of their inherited principal at varied intervals
• Declaring who will share real property, and enforcing strict guidelines to protect from outside influences
Why You Still Need a Will
Seven out of ten individuals die without a will and most people don’t understand if you die intestate (without a will) your state will distribute your property according to state law. In addition, without a will family members will probably pay more than necessary in federal and state taxes.
Even if you have a living trust, a will is desirable to provide for the guardian of children, in the event there are no surviving parents or grandparents.
Many individuals go to great lengths to discuss their requirements after death and yet they neglect to enforce their plans legally, often causing their family to weather the burden of probate. Consulting with a Florida lawyer will ensure you haven’t neglected any essential decisions. Estate planning for the future is simply taking control to protect your assets and detail your wishes before someone else makes the decisions for you.