Frequently Asked Questions
What is estate planning?
Estate planning refers to making arrangements before your death to ensure that your assets are transferred properly and other desired wishes are carried out. The “term” estate typically refers to property, but estates can refer to any type of assets including cash, jewelry, cars, etc.
Estate planning involves more than just transferring assets. Your last will and testament can provide instructions for other areas, including what actions you would like to be taken if you become disabled and ensure your values are maintained when your will is followed.
What is the difference between a will and trusts for estate planning?
A Will provides the instructions for how you would like your assets distributed after your death. However, before your assets are distributed, whoever is receiving those assets must go through the State’s Probate process. During this court process, your last will and testament is legally approved and executed.
Estate planning Trusts are handled privately and avoid the Probate process. Trusts are financial vehicles created by a “trustor” to legally hold assets for a beneficiary known as a “trustee”. Trusts also provide legal and tax protections and ensure assets are distributed properly.
Is estate planning only for the wealthy?
No, people at all income levels should consider estate planning to ensure the financial security of their loved ones after they pass. Many people associate the term “estate tax” with the wealthy, but in reality your loved ones may face taxes or court fees for assets of any size.
How do I write my last will and testament?
Although many people may seek legal advice or hire a lawyer to write their will and testament, your will can be an informal document or there are also many online will services. Make sure to sign your will and you are allowed to have witnesses sign your will as well.Your last will and testament should include the following:
- Estate executor - a family member or other person who is in charge of making sure your wishes and financial distributions are properly followed.
- Assets and property - anything which holds value that will be passed along to loved ones as part of your will’s instructions.
- Debt obligations - your will can define how your existing debts and other planned costs, such as funeral expenses, are paid for.
- Beneficiaries - these are the individual loved ones who will receive your assets and anything else involved in the instructions of your will.
- Guardianship for children - if relevant, your will can define who should be the legal guardian of your children under 18.
- Other instructions - feel free to add any other instructions or wishes to how you would like your will to be executed.
What is a Durable Power of Attorney?
The term “Power of Attorney” (POA) refers to someone you have assigned to make medical, legal, or financial decisions on your behalf in the event that you are not capable of making, or would not like to make, those decisions.
The term “Durable” in Durable Power of Attorney refers to a POA who is allowed to make decisions on your behalf if you become mentally or physically incapable, usually as the result of a healthcare incident. Typically a regular Power of Attorney loses their ability to make decisions on your behalf once you become mentally incapable.
As part of estate planning, you should consider assigning a Durable Power of Attorney. Many people seek the advice of an attorney when assigning their Durable Power of Attorney, but there are also many online forms and services to assign one on your own.
What is the difference between a Probate Lawyer and an Estate Lawyer?
Probate lawyers provide legal advice on Probate, which is a court process whereby your last will and testament is legally approved and executed after you die. During this process your assets are legally transferred to the beneficiaries in your will. On the other hand, Estate lawyers provide a wider range of services and advise on all aspects of estate planning such as preparing wills and trusts.
Estate lawyers typically deal with the living estate holder, while Probate lawyers help with executing the will after the estate holder has passed away. It is possible that an Estate lawyer can also be designated as the Probate lawyer.
How much does an estate planning attorney cost?
The costs for an estate attorney can vary depending on what type of estate planning services you require. A simple Will may cost as low as $200, but estate lawyers typically charge by the hour at an average rate of $275 per hour. The total cost for a more complex estate plan could cost over $5,000.
What should be on my estate planning checklist?Each person’s estate planning will be different, but some common checklist items and questions to ask are:
- What are my assets or any other property which hold value and I would like to pass on to my loved ones?
- Will I have any debt or liabilities at the time of my death? Should I purchase any insurance to protect the finances of my loved ones, such as long term care insurance or final expense insurance?
- Think of any other items or instructions you would like to include in your will. These can include non-financial considerations such as legal guardianship or how your pets will be cared for. Create your will with the advice of an estate lawyer and do not hesitate to update your will as time passes.
- Consider designating a limited power of attorney and durable power of attorney to make any decisions on your behalf, especially in case you become medically incapable of making decisions.
- Understand your State’s estate tax laws and seek the advice of an estate planning attorney to determine if forming estate trusts will help with your estate planning.