Do I Need Estate Planning?
Estate planning is about protecting yourself, your family, and your loved ones against potential problems that could arise after you die. Estate planning includes creating a will, establishing trusts, making medical directives, and choosing guardianship over minors. Having a valid will is essential if you don’t do anything else.
You might think you’re too young to worry about estate planning, but you probably are not. A recent study found that nearly half of Americans haven’t done anything to protect themselves financially. And while most people understand the importance of saving money for retirement, fewer than one in four have a savings account.
If you want to ensure that your family gets what you want and deserve after you die, you owe it to yourself to take action.
Is My Estate Plan Good Enough?
Whether you want to protect your home, your family, or both, there are many ways to accomplish this goal. Estate planning is one of those things that people do without really thinking about it. But the reality is that having an effective estate plan helps ensure that you can pass your wealth to your loved ones while protecting yourself against probate court proceedings. In addition to ensuring that your wishes are carried out upon your death, estate planning allows you to take advantage of tax benefits and reduce the amount of money you pay in taxes during your lifetime.
The most important thing to remember about estate planning is that it doesn’t have to be complicated. There are three basic steps involved in creating an estate plan:
1. Determine Your Goals
2. Create Your Plan
3. Implement Your Plan
I Have A Living Trust, Do I Need A Will?
A living trust is one way to avoid probate while transferring assets to beneficiaries upon death. If you have a living trust, you may still need a will. But what happens if you don’t have a will? What if you die without having established a trust?
You may still need a will because assets that are not in your living trust that do not include beneficiary designations or are owned solely by you may still be subject to estate taxes. And if you fail to transfer those assets into your trust correctly, they could become part of your estate and be subject to probate and administration fees.
In addition, if you have a will, it may provide guidance about how you want your assets distributed among your heirs. Without a will, however, there is no specific distribution plan. Sometimes, a court may distribute assets according to state intestacy laws. These laws vary widely across states.
What Is Probate?
What is probate? Probate is the legal procedure used to resolve issues surrounding the distribution of the deceased estate. In simple terms, it involves the formal transfer of property owned by someone who died without a will into the hands of their beneficiaries. This occurs after the court determines what happens to the deceased person’s assets upon death.
The probate process includes validation of wills, payment to creditors, distribution of assets to heirs according to the terms of the will, and a third-party mediator to settle disputes. In some cases, there are no heirs; in others, there are multiple heirs, and the court must determine how the assets should be distributed among them.
With A Small Estate, Should I Still Consider Probate?
Probate is the legal process for distributing assets upon someone’s death. This includes real property, personal property, bank accounts, and life insurance policies. However, it does not apply to certain types of trusts, such as charitable remainder trusts, irrevocable life insurance trusts, and revocable living trusts. Probate is required even if no beneficiaries are named in the deceased person’s will. If you die intestate without a valid will, your state’s laws determine what happens to your assets.
In general, probate proceedings take longer and cost more money than administering a simple estate. For example, the average cost per hour for lawyers performing probate work is $250, compared to $150 for estate administration. Also, the process involves many steps, including filing paperwork, obtaining court approval, having witnesses sign affidavits, paying fees and taxes, and waiting for the courts to make decisions.
The good news is that most people don’t need a lawyer to handle probate. Many states offer simplified probate procedures that allow individuals to administer their estates. Some states require only one form to file for estate administration and probate. Others provide online options, allowing anyone to complete and submit forms electronically. These streamlined processes typically save families thousands of dollars over traditional probate.
However, probate still applies to all wills regardless of whether the estate is large or small. And, probate is always required if someone dies without a valid will.
Types of Trusts
A trust is a legal arrangement where one person manages another person’s property. You can set up a trust for yourself, others, or both. There are three types of trusts: revocable, irrevocable, and testamentary. Each type has different requirements and benefits. Revocable trusts allow you to change the terms of the trust whenever you want. Irrevocable trusts cannot be changed once established. Testamentary trusts give you control over what happens to your property after you pass away.
Charitable Remainder Trusts
A charitable remainder trust allows donors to give away money today without paying taxes on it now. In exchange, the donor receives an annual payment during their lifetime, plus the chance to designate how much goes to charity upon their death.
The trust is similar to a living trust, except that it offers donors a way to receive an income tax deduction, freedom from capital gains taxation, and the possibility of avoiding estate taxes. When the donor dies, the trustee distributes to designated charities according to instructions left in the trust document.
How the McGuire Law Firm Can Help
The McGuire Law Firm provides a full range of personalized trust services, including trusts, wills, powers of attorney, tax advice, insurance, and retirement plans. We are here to ensure you and your family are financially protected, whether during life or after death.
We offer a variety of services to meet your individual needs. Our experienced Denver Tax Attorneys are ready to assist you with estate planning, asset protection, and long-term care planning.
Don’t hesitate to contact The McGuire Law Firm today to learn more about our trusted solutions. Call us at 720-883-7705.