Estate Planning Articles

We have included several articles and links here that generally discuss and relate to Estate Planning. Click on the topic area or link of your choice below.

PLEASE NOTE: Please take a moment to read our Disclaimer of Liability. The information in this document is not intended to serve as legal advice. We strongly advise that you consult qualified legal counsel in your jurisdiction before acting on any information provided here.

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• Nolo's Legal Encyclopedia of Wills and Estate Planning
  • Estate Planning: An Introduction
  • Wills, Probate and Executors
  • Living Trusts
  • Estate and Gift Taxes
  • Funeral Planning and Other Final Arrangements
  • When You Can't Manage Your Own Affairs

  Estate Planning

  What Happens If You Die Without a Will?

  How to Select a Lawyer

  "Legalese:" Terminology Used in Estate Planning

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ESTATE PLANNING

by Don Bierman

ESTATE PLANNING is the process of preparing for the distribution of your assets at your death. Some of the goals with Estate Planning are to make your wishes known to those who will manage your estate, manage or avoid the probate process, manage estate taxes, maintain control and privacy. The process includes several tools, such as:

• Probate
• Wills
• Living Trusts
• Powers of Attorney for Health Care or Property

WHAT IS PROBATE?

Probate means "prove the will" and results in a legal process through which the court makes sure that, after you die, your debts are paid and your property is distributed according to your wishes. Someone, usually your executor or a family member, must request that probate proceedings begin and must keep the court informed while your estate is managed and distributed.

The probate court could also become involved during your life, if you become disabled or not competent to manage your own affairs. Probate may also become involved if there are minor children and both parents die or become disabled.

PROBATE TAKES A LONG TIME.

Whether you die with or without a will, the probate process requires that all of your heirs be notified of the proceeding. If you have many relatives, it may take months to locate and notify all of them that your probate hearing has or will be scheduled. If any of them choose to contest the validity of your will, it may take more time and money to defend that action.

PROBATE IS EXPENSIVE

Both the executor and the attorney are entitled to a fee, which is set by the State's Probate Code. The fees can easily reach 5 - 10% of an estate's gross value. With more planning these assets could have gone to your loved ones.

PROBATE IS A PUBLIC PROCEEDING.

Anyone can review the court file and see what you owned, who you owed and your beneficiaries.

WAYS TO AVOID PROBATE!

JOINT TENANCY.

When one owner dies, ownership of the asset will automatically transfer to the other owner. When the second owner dies the asset must be probated at that time if other planning has not taken place. Also, if both owners die at the same time, the asset will have to be probated. Joint Tenancy will not protect you if you become disabled or incompetent. If two or more people own a property jointly, all owners must sign to transact business. If one can't sign, the court may take over and set up a conservatorship and delegate someone to manage your affairs for you. Even if that person is your spouse, they will have to keep the court informed and sometimes obtain the courts permission to transact your business.

POWER OF ATTORNEY.

A Power of Attorney is usually revoked at disability or death. Even a durable Power of Attorney is revoked at death, absent other planning the estate must be probated.

GIVING ASSETS TO YOUR CHILDREN.

This will ensure that the assets are not in your estate at your death. However, you may not want to give up control over all of your assets. Also, your children may have substantial income taxes to pay when they sell the assets. When you give them the asset they retain your basis/cost. If they take the assets as an inheritance they will receive a stepped up basis and the property is valued as of the date of your death.

ABOUT LIVING TRUSTS

WHAT IS A LIVING TRUST?

A living trust is a legal document that resembles a will and does what a will does. It also does a lot more. There is no probate with a living trust. This means no costly court proceedings, fewer delays, your privacy is preserved and the stress on your family is minimized. Additionally, with proper planning your estate taxes may be reduced.

HOW DOES A LIVING TRUST AVOID PROBATE?

With a living trust, you transfer all of your property from your name to the name of your trust, which you control completely. Technically you no longer own any of the property that was transferred to the trust, so there is nothing to probate when you die or become disabled.

WHO CONTROLS THE PROPERTY?

When you put your assets into a living trust, you retain control of the property because you name yourself the trustee. As trustee you can do everything that you did before. Only the titles change, not your ability to buy and sell your assets.

WHO CONTROLS THE PROPERTY AFTER YOU?

You will name a co-trustee and a backup trustee in your living trust. When you die or become disabled the co-trustee (usually your spouse) will handle your business. A backup trustee would take over when your co-trustee dies. The backup may be your beneficiary or possibly a corporate trustee (such as a bank) if your assets are sufficient to require more experienced assistance. These trustees will then distribute your assets as you directed.

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WHAT HAPPENS IF YOU DIE WITHOUT A WILL?

by Mary Randolph
Copyright © 1995 Nolo Press

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• Your Property
• Your Young Children
• Your Personal Representative (Executor or Administrator)
• Making a Will is Easier Than You Think

Abraham Lincoln did it. Pablo Picasso did it. So did Howard Hughes.

All these famous folks died without a valid will, leaving relatives and lawyers to wrestle over their estates. Well, they were busy. What's your excuse?

Most people without wills simply haven't gotten around to the task; it's not something that many of us happily put on the top of our "to do" lists. But underlying our procrastination is the belief that if we were to die unexpectedly, without a valid will, things would somehow work out -- our things would go to the people we would want to have them, and the right people would look after our kids.

The truth, unfortunately, is that what happens under state law is very unlikely to match up with your wishes.

Your Property

All states have precise rules about who inherits the property of someone who dies without a valid will. (These rules are found in state "intestate succession" statutes.)

Before you read further, ask yourself a question: Do you know who would inherit your property if you died without a will?

Most married people assume that everything would go to the surviving spouse -- and they are probably wrong.

If you're married but don't have kids, your parents are likely to be entitled to inherit some of your property.

And if you have children, a surviving spouse usually gets only part of the pie; the children, even if they're still in diapers, are entitled to the rest. For example, in New Jersey, your spouse gets the first $50,000 of your estate and one-half of the rest; your children get everything else. In California, the spouse inherits all the deceased spouse's community property and shares the separate property with the children.

Of course, toddlers or teenagers aren't just mailed a check; a court must appoint someone to manage the property for them until they turn 18. And the court must supervise that person -- even if it's the child's mother or father -- until the child turns 18. More intrusion, more expense.

If you're not married, your assets are parceled out to your "next of kin," in an order determined by state law. Usually, children, parents and siblings are the first in line. No friends, charities or lovers get anything.

Your Young Children

A major motivator for writing a will is the birth of a child. And making a will in this situation is a good idea, because it gives you the chance to state your preference about a very important matter: who will raise your child if you can't.

If you should die unexpectedly before your child is 18, the child's other parent will almost certainly take over. But if both spouses die, or a judge concludes that the surviving parent is unfit, the court will need to appoint someone to raise the child. This person is called a "personal guardian."

If you don't have a will, the court will have no guidance from you about who you want to take on this crucial job. Family fights -- even court battles -- can erupt if relatives can't agree about who should raise the child.

Your Personal Representative (Executor or Administrator)

Unless you make a will, you can't choose an executor -- someone to look after the collection and distribution of your property after your death. So if you die without a will, the probate court judge must appoint someone to do this job.

The judge may choose the person you would have chosen -- your spouse, for example -- but there's no guarantee. In the worst case scenario, the person entrusted with your worldly goods could have no qualification other than friendship with the judge.

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Making a Will: It's Easier Than You Think

For many folks, the idea of writing a will is bound up with the idea of sitting across a big desk from a lawyer, paying big bucks to discuss some of the most personal aspects of your life: how you feel about your family members, what you own, and how you think about mortality. It's an understandingly intimidating prospect.

Fortunately, it doesn't have to be that way. Writing a legally valid will is a task that almost anyone can handle without a lawyer -- IF you get solid legal information to help you. Wills haven't changed all that much in hundreds of years; once you strip away the legal jargon that clogs most of them, they are fairly straightforward documents. After all, you're just making some statements about who should get your property, who should look after your kids, and who you want to make sure your wishes are carried out. Your sentiments may be complicated, but the document doesn't have to be.