Does everyone need an estate plan?
You have spent a lifetime accumulating your wealth. If you fail to plan your estate, your hard work may be for nothing as a properly executed estate plan will put a protective covering around your assets. A well thought out estate plan based on your needs, goals and objectives will ensure that your hard-earned wealth will pass intact to your loved ones (those you intend to be your beneficiaries), rather than being depleted in unnecessary court expenses, legal fees, and inheritance taxes and federal estate taxes.
What happens if I die without a will or a trust?
You will still have an estate plan; however, it will be one not drafted by you — it will be drafted by the courts; this is called dying intestate. Dying intestate guarantees government interference in the disposition of your estate. A petition must be filed with the court who will then decide how your bills and debts will be paid, how your inheritance taxes will be paid and what family members will receive what percentage of your estate. Although your assets will go to your family members, they just may go to family members you would not want to have the assets. If you fail to plan your estate, you lose the opportunity to protect your family from an impersonal, complex governmental process that is a burden at best and can be a nightmare. Bottom line, if you fail to plan, then you should plan on failing.
What's the difference between having a last will and testament and a living trust?
A will is a legal document that describes how you want your assets distributed at death. The actual distribution; however, is controlled by a legal process called probate . Upon your death, the will is recorded with the register of wills office in the county in which you resided at the time of your death and it becomes a public document available for inspection by any third party. And, once your will enters the probate process, it's no longer controlled by your family, but by the court and probate attorneys.
Probate can be cumbersome, time-consuming, expensive and an emotional trauma in a family's time of grief and vulnerability. Third parties have been known to check the obituaries and then look up the deceased party's will at the courthouse. Many insurance agents, real estate agents, car salesmen, etc., look at the inventory of the estate, gather the names and addresses of the beneficiaries and then contact them with the premise of "assisting them in their time of grief." The sales people are not truly assisting the beneficiary with the purchase of a new house or the investment of their inheritance, rather they have one motive in mind — how to make a big commission.
A living trust avoids probate because your property is owned by the trust, so technically there's nothing for the probate courts to administer. Whomever you name as your "successor trustee" gains control of your assets and distributes them exactly according to your instructions. Since a living trust does not have to be filed and recorded in Pennsylvania, there is no inventory and the names and addresses of the beneficiaries are not made public, thus keeping predators away.
What would happen if I become incapacitated and had no estate plan or just a will?
Unfortunately, you would be subject to "living probate," also known as a conservatorship or guardianship proceeding. If you become mentally disabled before you die, the probate court will appoint someone to take control of your assets and personal affairs. These "court-appointed agents" must file a strict accounting of your finances with the court. The process is often expensive, time-consuming and humiliating. This may be avoided by having a general durable power of attorney .
If I set up a living trust, can I be my own trustee?
YES. In fact, most living trusts have the people who created them acting as their own trustees. If you are married, you and your spouse can act as co-trustees. And you will have absolute and complete control over all of the assets in your trust. In the event of a mentally disabling condition, your hand-picked successor trustee assumes control over your affairs, not the court's appointee.
Will a living trust avoid income taxes?
NO. The purpose of creating a living trust is to avoid living probate, death probate, and reduce or even eliminate federal estate taxes. It's not a vehicle for reducing income taxes. In fact, if you're the trustee of your living trust, you will file your income tax returns exactly as you filed them before the trust existed. There are no new returns to file and no new liabilities are created.
Can I transfer real estate into a living trust?
YES. In fact, all real estate should be transferred into your living trust. Otherwise, upon your death, depending upon how you hold title, the real estate will be subject to the probate process. In fact, you will have to file probate in every state in which you hold real property. When your real property is owned by your living trust, there is no probate anywhere.
Is there a chance the government will do away with living trusts?
More than likely not. The living trust has been authorized by the law for centuries. The government really has no interest in making you or your family go through a probate that will only further clog up the legal system. A living trust avoids probate so that your estate is settled exactly according to your wishes.
Is a living trust only for the rich?
NO. A living trust can help anyone protect his or her family from unnecessary probate fees, attorney's fees, court costs and federal estate taxes. Most likely, if you own a house and have even a small amount of savings, you'll find a living trust offers substantial benefits for you and your family.
What makes up my estate?
Your estate consists of all assets that you possess at the time of your death. These assets include:
Interest in a business
Retirement plans and IRAs
Life insurance death benefits — dependent on who the beneficiary is
What makes up a well-designed estate plan?
A well-designed plan:
Preserves the value of your assets
Avoids the unnecessary costs, time and publicity of probate
Reduces unnecessary taxes and expenses
Ensures that your heirs receive what you intended them to receive
Manages your assets for you and your heirs in the event of disability or incapacitation
To learn more about the benefits of estate planning and how you can take advantage of the various estate planning tools available to you, contact D'Onofrio Law Office, P.C., online or call today at 412-928-2068 and schedule a free initial consultation.