Contrary to what many people may believe, all of us have an estate. A person’s estate is comprised of everything that he or she owns, including his or her personal property, real estate, bank accounts, retirement accounts, and other assets. When a person passes away, these assets will be dispersed amongst various beneficiaries according to the wishes of the deceased or state laws of intestate succession. Each state has “intestacy” default rules, which governs the passing of a person’s property when there is probate property and when the deceased person does not have a Will. In many instances, the default rules or laws regarding the disposition of a person’s assets do not reflect the deceased’s wishes, so it is important for everyone to discuss their situation with an experienced estate planning1 attorney as soon as possible.
Probate avoidance
Probate is the process through which an estate is wrapped up after a person’s death. Probate generally involves establishing the validity of any will that may exist, ensuring that assets are transferred to their rightful heir or beneficiary, the payment of debts, and settling tax liability. The process can be lengthy and legally complicated, and proper estate planning can keep a person’s estate from being administered through the probate process at all. There are several ways to avoid probate, including the creation of a trust, designating accounts as payable-on-death, or utilizing different types of joint ownership.
Minimizing tax liability
Planning for purposes of avoiding estate taxes has declined because the lifetime exemption for taxes is now in excess of $5 million for each person’s estate (greater than $10 million for a married couple.) However, that does not mean that tax planning is not necessary. More and more, individuals have larger pre-tax dollars invested in retirement plans, such as IRAs and 401(k)s. The purpose of these accounts is to help pay costs in the retirement years, but in many cases, those accounts are not used during the life of the person who earned the money. The rules on passing this property to a spouse or next generation can be complicated, and often clients need to consider the best manner in titling those accounts on their death to ensure they (and their beneficiaries) receive the best possible treatment. Consulting with an experienced estate planning attorney can ensure that your tax treatment is as favorable as possible during your lifetime and also make sure that your heirs and beneficiaries receive your assets with as little tax liability as possible.
Ensuring that your loved ones are cared for
Many people are justifiably concerned with ensuring that their family members and other loved ones are protected once they are gone. While everyone hopes that none of their children will ever have problems with their own creditors, divorce, disability and be entirely independent, the reality is that your estate could inadvertently end up in the hands of people other than your beneficiaries without proper estate planning. In other cases, clients unfortunately are faced with limited family or other trusted people close to them to help wrap up their affairs. An experienced estate planning attorneycan help you draft a will or establish a trust2 that is legally enforceable, clearly outlines your wishes, and protects your beneficiaries no matter the surrounding circumstances at the time of your death.
Protecting your Spouse
If you or your spouse may face the cost of long-term care in your life, a properly drafted estate plan can help to protect your spouse on your death through a special needs trust. Other types of specialized trusts can help to protect you, or a spouse, during both or either of your lifetimes to help with the cost of long-term care so that all of your resources are not paid to a skilled nursing facility.
Powers of attorney
A comprehensive estate plan should always include powers of attorney for both healthcare and financial decision-making. These documents allow you to appoint someone to make decisions on your behalf if you cannot make them on your own, direct your agents on your end-of-life decisions, and save you the time and cost of additional court and legal fees that would be incurred through a guardianship or conservatorship if you failed to sign a power of attorney.
Contact a St. Louis estate planning attorney today to schedule a consultation
Estate planning is an important part of ensuring that your hard-earned assets are protected and that your loved ones are cared for once you are gone. Consequently, all of us should discuss our circumstances and wishes with an experienced St. Louis estate planning attorney. Missouri and Illinois licensed attorney, Melissa Leavy, is a skilled estate planning and elder law attorney who has dedicated her career to helping people plan for the future. To schedule a consultation with Ms. Leavy, please call our office today at 314-932-5573.
References:
1 https://www.law.cornell.edu/wex/estate_planning
2 https://www.law.cornell.edu/wex/trust