Estate Planning FAQs
How Often Should I Update My Estate Plan?
As life changes and circumstances change – whether it’s the birth of a child, grandchild, a death in the family, or family relationships have grown sour. Updating your estate plan is critical as time passes to ensure your plan works the way in which you intent. Additionally, you will need to ensure each of your non-qualified (post-tax) assets are titled in the name of your trust.
In general, it’s a good idea to revisit your estate plan every 2-5 years. A good rule of thumb is to look at your plan when a major life event occurs such as those listed above.
Does My Will Avoid Probate?
Many believe that once they have created a will, whether drafted by an attorney or using a DIY solution or online format – they have designed a plan that avoids the probate courts. Unfortunately, that is not the case.
A will allows you to specify your wishes for after your death, but it still must be submitted to the probate court in order for your will to be followed and your assets distributed to your chosen beneficiaries. Probate is a very public, time-intensive, and expensive process that can be avoided by utilizinga trust.
What Are the Benefits of a Trust?
A trust avoids the probate process completely because your assets are either titled in the name of the trust (including bank or investment accounts, business interests, or vehicles) or designate the trust as the beneficiary (life insurance, annuities, or retirement accounts).
Also, the trust is private, keeps your assets out of the court system, simplifies the process for your loved ones, and allows you to set up controlled trust distributions for beneficiaries that are minors, have special needs, or require protection from a divorcing spouse, creditors, or immature spending habits.
Isn't a Trust Only for the Wealthy?
No. Estate planning is not about the amount of money that you have.
Proper planning not only allows you to make the choice as to who receives your money, business, and property, it addresses what happens if you become incapacitated and someone has to make decisions on your behalf, financially or medically.
Won't My Spouse Automatically Receive Everything at My Death?
Unfortunately, this is not always true. Who will inherit your estate even if you’re married depends on many different factors, including how your property is titled, who you have named on your beneficiary designations, if you have a blended family, and the laws of the state where you live and any other state where you own property.
What Happens if I Can’t Make My Own Medical or Financial Decisions?
A comprehensive Estate Plan will also address what happens when you are alive but unable to make your own decisions.
A Durable Power of Attorney, whether permanent or temporary, will cover the bases by naming specific people to take on roles to ensure your financial responsibilities are handled appropriately. A Health Care Power of Attorney provides the authority for someone you trust to work with medical professionals to make critical decisions on your behalf.
What Should I Do if My Chosen Successor Trustee Dies Before Me?
If the successor trustee of your revocable living trust (RLT) dies before you, nothing will happen immediately with respect to how your trust is managed. If you named a backup to your successor trustee in your trust document, it is important that you speak to that person and reconfirm that your chosen backup is willing to serve as your trustee when the time comes.
If you choose to revise your trust document, it is advisable that you name not only a successor trustee but also a backup to your successor trustee to ensure that there is always someone available to step in no matter what happens. As always, it is vital to discuss this selection with the person you have chosen before you finalize your documents to make sure that this person will act when the time comes.
How Do I Avoid Probate?
Accounts and property that are titled solely in your name, payable to your estate, or do not have a beneficiary, pay-on-death, or transfer-on-death designation, will go through the probate process.
There are many different strategies to avoid probate. Many people transfer their accounts and property to a revocable living trust to avoid probate. In addition, some items such as life insurance, retirement accounts, and annuities can be given to a chosen beneficiary by using a beneficiary designation.
Can My Partner Inherit From Me if We Are Not Married?
If you are not married, your partner can inherit from you, but only if you proactively create an estate plan. If you do not do any estate planning, your state’s intestacy statute will determine who will receive your money and property, as well as the amount each legal heir will receive.
If the state law governs your estate plan, your partner will receive nothing because the state law does not include unmarried partners in their plan.