The goals of estate planning can involve honoring the asset holder’s wishes for the distribution of assets after death and preserving divided assets. If not, adequately planned estate assets can be depleted through the probate process or subjected to creditor claims and tax liability.
Further, they must be structured in a way that transfers assets to their intended beneficiaries. Unfortunately, there is not a one size fits all solution. Therefore, it is essential to consider the unique circumstances of the person requesting an estate plan.
Estate planners try to avoid probate to reduce costs and make the distribution of the estate proceed more quickly. These tools and strategies that allow an estate asset to be transferred without the involvement of a probate court.
Of these goals, preserving estate assets is perhaps the most important. Lawyers are involved in this area. Estate planning lawyers must understand how federal and state tax law impacts how assets are transferred to beneficiaries.
For example, a lawyer should have a basic understanding of how the IRS taxes estates upon their transfer. Additionally, how the IRS taxes assets held in trust. In many ways, estate planners must engage in a game avoiding tax traps when establishing an estate plan.
What is Estate Planning?
When an individual dies, they leave an estate. This consists of all real and personal property owned by an individual at the time of their death. Just as the old saying goes, “you can’t take money with you,” an individual’s estate is left behind. The estate must be managed and distributed.
Estate planning refers to the process through which an individual plan for the transfer of assets upon their death. An estate plan’s goal is to preserve the maximum amount of the estate as possible for the intended beneficiaries and heirs after paying creditors. Additionally, to satisfy any tax liability. An estate plan generally employs wills and trusts to preserve and transfer estate assets to beneficiaries and heirs. State law governs the creation, administration, and disposition of wills, trusts, and estates.
Why Consider Estate Planning?
Planners do consider the implications of state and federal tax law when estate planning. This is to minimize the tax liability of the estate and beneficiaries. Preserving wealth so that it can be passed on to heirs and beneficiaries it the goal of estate planning. Although there are several other tools, wills and trusts are the primary tools used in estate planning. Such as life insurance, advance directives, and durable power of attorneys wills and trusts accomplish the bulk of the work. The strategies the lawyer uses depends on the individual preferences and circumstances of the person whose estate is being planned.
Many people do not have a plan regarding what should happen when they die. The reason many do not prepare an estate plan rests on several factors. First, death and what should become of our worldly possessions are an uncomfortable topic. Because of this, most people who are among the living would rather not have the conversation.
A second reason most commonly found among individuals with children or other loved ones involves the sticky question of how to distribute their estate without starting a feud among those left behind.
Lastly, others who do not have an estate plan in place often point out the fact it is only for those with large estates. This misconception could not be further from the truth. Estate planning is valuable for estates of all sizes with many tools tailored explicitly for smaller estates.
What Services Does A Lexington Estate Planning Lawyer Offer?
Estate Planning provides a few simple goals which guide the entire process. The first goal is to preserve wealth so that it can be passed on to heirs and beneficiaries. The second goal makes sure to honor the wishes of the estate planner after his or her death. To accomplish these goals, we rely on several tools that can achieve the purpose of preserving the estate and honoring the estate owner’s wishes.
A will is a legal document that provides instructions as to the division of a person’s property after death. Only a valid and final will can be legally binding. The author of the will is considered to have died intestate if a will is contested and found invalid. When a person dies intestate, state law provides for intestate succession rules. This means the order of distribution in which an estate will distribute among heirs. In this case, the process of allocating the estate is overseen by a probate court.
Trusts provide a person with the option to place their property in the care of a third-party. With the possibility to be later given to a beneficiary. Learn more about trust administration.
In the event of incapacity, the advanced directive includes a living will or a legal document that outlines a person’s wishes concerning medical treatments.
The type of tool used will depend on several circumstances that relate to a client’s preference and financial events. For example, a client who anticipates needing end of life care or long-term care would undoubtedly want to consider advance directives. Whereas individuals who have more complex estates involving multiple types of assets or complex family situations may benefit from a trust or other arrangement that can be modified easily.
Why Avoid Probate?
An important consideration in estate planning involves avoiding probate. Therefore, planners will try to plan an estate so that the probate court will administer none or as few as possible estate assets. Probate property includes all estate assets that pass through a will or intestacy. Non-probate property is anything not subject to a will or intestacy. This means property in joint tenancy, life insurance, payable at death accounts, Inter Vivos trusts, small estates (estates under a set valuation).
Call A Lexington Estate Planning Lawyer Today
Avoiding probate is a vital strategy to reduce the reduction of estate assets and avoid deviation from the planner’s wishes. An experienced lawyer can guide clients to determine if avoiding probate is an appropriate estate planning approach.
If you or your loved ones need estate planning, McCutchen McLean, LLC can offer experienced guidance for your estate. Call our Lexington office at (803) 785-4529.