Estate planning involves the execution of legally binding documents. There is really no one document that is inherently more important than every other. We have all heard people refer to the “right tool for the right job.” This enters into the field of estate planning.
A document that is very important for one person may not be relevant to the next. This is why personalized attention is the key to a well constructed estate plan. When you discuss your unique situation with a licensed attorney, you can become apprised of your options and take the appropriate steps.
A last will can be used to facilitate the transfer of your financial assets to your loved ones. Many people assume that they should use a last will without knowing all of the facts.
When a will is utilized to transfer your personally held property, the will must be admitted to probate. This is a legal process that is time-consuming, and it can be expensive. The heirs to the estate do not receive their inheritances until this process has run its course.
It is possible to use other documents to arrange for future asset transfers outside of probate.
Revocable Living Trusts
If you were to create a revocable living trust, you could act as the trustee and the beneficiary initially. When you are creating the trust agreement, you name a successor trustee and successor beneficiaries. After you die, the trustee would follow your instructions and distribute assets to the beneficiaries outside of probate. Because probate would not be a factor, the transfers would take place in a more timely and efficient manner.
Advanced Estate Planning Strategies
There are people who are exposed to the federal estate tax. If you want to transfer more than $5.34 million, the estate tax looms large, because it carries a 40 percent top rate.
You could use certain estate planning strategies to mitigate your estate tax exposure. Various types of irrevocable trusts are used for tax efficiency purposes. These would include grantor retained annuity trusts, generation-skipping trusts, charitable lead trusts, charitable remainder trusts, and qualified personal residence trusts.
Documents such as these could be very important to high net worth individuals, but they may not be appropriate for those who are not exposed to the estate tax.
Aside from the matter of estate tax exposure, there are other situations that would call for more advanced estate planning techniques, such as concern about long-term care expenses, particularly nursing home expenses.
Incapacity Planning Documents
You should account for the possibility of future incapacity when you are planning your estate. Durable powers of attorney are used to name representatives who would be empowered to act on your behalf in the event of your incapacitation.
The living will is also an important incapacity planning document. With this device you record your wishes with regard to the utilization of life-sustaining measures.
Free Estate Planning Report
If you would like to learn more about estate planning from an overview, download our in-depth special report. This report is being offered free of charge, and you can obtain access through this link: Ashland KY Estate Planning.