Estate Planning Basics

HAVE YOU CREATED AN ESTATE PLAN FOR YOUR FAMILY?

James G. Keys, Jr. Esq.

The following article addresses the questions that I typically receive in my client meetings and seminar presentations. This information may be helpful for you in understanding the benefits of using living trusts to help your family avoid the time, expense and aggravation of having to go through the probate court process in the event of the death of a loved one.

I have found that most families are not even aware, until it’s too late, that they could have avoided probate court entirely after the death of a loved one.  They could have maintained control of the family assets. They could have protected their family’s personal and financial privacy from public court records.  They could have protected their assets from creditors and predators, and settled their loved one’s estate privately without ever having to deal with probate court.

Unfortunately, most of us do not like to contemplate the fact of mortality, either our own, or of a loved one. We often put off consulting an estate planning professional until it’s too late.  Most people contact me about estate planning only after they have been specifically advised to do so by their financial planner as part of their wealth management plan.  In a few instances, some people may call because a trusted friend or someone they know has recently gone through the probate court experience, and has urged them to get an estate plan in place to avoid having their family go through that horrific experience.   Financial planners are in almost unanimous agreement that it is better for their clients to use living trusts to settle the estate of a loved one, rather than to have to go through probate court.

Most people think that they don’t have enough assets to worry about living trusts. This is only true for the 1% with larger estates who are concerned about avoiding estate taxes. However, for the 99% with estates under the estate tax threshhold, the primary concern for their family should be avoiding probate by using living trusts, which makes more sense than having the government settle their loved one’s estate through probate.  When the family has to go through probate, they lose control of their assets and their privacy to the probate court for 6 – 12 months, and then have to pay out 8-10% of the estate in fees and costs. Ten (10%) percent in fees for even a “small” estate can add up to a large expense for a family. (For example, 10% of a $300,000 estate equals $30,000 in fees and costs!)  Just having a Last Will and leaving it up to the court to settle your loved one’s estate is not the best alternative for your family, when they can do it themselves privately without any involvement by the probate court.  Of course, the probate professionals do not want you to know that!

Once folks learn about the benefits of using living trusts to avoid probate, such as the significant cost savings, the protection of their family’s privacy from public court records, and the protection of their assets from creditors & predators, they usually put aside their aversion to planning for death.  If you do not have a plan in place, you should immediately call an estate planning attorney for an appointment to set up your living trusts for your family.  The peace of mind that follows for the entire family is priceless.

For more information, contact Attorney Jim Keys at (513) 349-1678, or jkeys@keyslaw.com, or visit www.keyslaw.com.

Attorney Keys offers estate planning services to families throughout Southwest Ohio.  His distinguished 37-year career includes experience in civil law, family law, probate, and business law.  Jim offers free in-home consultations, as well as free seminar presentations to families, financial advisors, church and civic organizations. Jim has also served on the boards of the Atrium Medical Center Hospital, and the AMC Foundation. (The use of trusts involves a complex web of tax rules and regulations. You should always consider the advice and counsel of an experienced estate planning attorney to assist you in setting up and implementing your estate plan.)

Estate Planning FAQ’s

  1. What is Estate Planning?
  1. In simple terms, estate planning is financial planning for death or incapacity.
  1. In other words, it is the process of planning for how your estate will be “settled” upon your death or disability;
  1. How debts will be paid;  How the remaining assets will be transferred to surviving beneficiaries;

       2.  There are two basic ways to settle an estate after death

  1. Allow the government do it for your family through probate court; or
  1. Have your own estate settlement plan in place that allows your family to do it themselves privately, without the involvement of probate court.
  1. The Government’s Public Plan – Probate Court
  1. Involves using a Last Will & Testament;
  1. Can take six to 12 months or longer;
  1. Deprives family of access and control over the estate assets while in probate;
  1. Results in loss of family’s personal & financial privacy (public court records);
  1. Costs & fees can consume 8 to 10 percent of the estate assets before family receives anything!  (That’s $30,000 for an estate valued at $300,000!)
  1. When finally settled, assets are turned over to beneficiaries in lump sum with no protection from creditors and predators.
  1. Having Your Own Private Family Estate Settlement Plan – Avoid Probate Court
  1. You can set up a Living Trust to hold your assets for you;
  1. Your estate avoids probate court completely, since you don’t own anything in your own name;
  1. You name yourself as the managing trustee over your assets;
  1. You also name who will succeed you as managing trustee upon your death or disability;
  1. Your living trust spells out in detail how your estate will be settled, and how the assets are to be transferred to the beneficiaries;
  1. Probate Avoidance is the primary goal of estate planning, since it applies to everyone regardless of the size of their estate.

 

     5.  BENEFITS OF A LIVING TRUST

  1. Your family has ongoing, uninterrupted access and control over the assets; (no probate court involvement);
  1. Allows the financial planner to continue managing the family’s investment portfolio, and avoid any downturn losses that could occur during the 6 to 12 months the estate would have been tied up in probate;
  1. Family’s personal and financial privacy remains intact (no public record);
  1. The only cost is the original, one-time, set-up fee (usually $1,250 for a single; or $1,550 for a couple);  (plus the cost to prepare & file a new deed, usually about $150), rather than the costs of probate, e.g. 10% of the value of a $500,000 estate, or $50,000);
  1. This cost also includes other important planning documents, e.g. financial powers of attorney, healthcare powers of attorney, designation of guardian in the event of mental or physical incapacity, and also advanced medical directives, e.g. living wills; i.e. a “comprehensive” Estate Plan for the client;
  1. Living Trust allows the client to pass property to the individual(s) of the client’s choice without any court challenge;  eliminates so-called “will contests”;
  1. The living trust becomes “creditor and predator” proof upon the client’s death, protecting the estate assets for the beneficiaries;
  1. If the client’s spouse re-marries, the assets in the trust are protected from becoming “blended” with the new marital assets, and are therefore preserved for the children of the client’s marriage;
  1. Blended families can provide for the children of different marriages as they see fit, without any probate court involvement or hard feelings;
  1. If there is a child, or an adult, with “special needs”, the client can provide for supplemental care that will not jeopardize their eligibility for any special programs or public assistance;
  1. Domestic partners can assure that their property will pass to their life partner without any court challenge;
  1. Allows the client to arrange for efficient business succession;
  1. Allows the client to arrange for delayed or “sprinkled” distributions to minor children, or younger adults, or individuals who are not good with money;
  1. Allows the client to protect the share of a beneficiary who may be in an “unstable” marital situation;
  1. Allows the client to arrange for charitable contributions, or legacy gifts to their church or preferred charity;
  1. Allows the client to reduce or eliminate the federal estate tax (presently levied on estates in excess of $5 million);
  1. Affords the client, and the family, complete peace of mind.

 

Estate Planning Worksheet  

A.        Personal and Family Information 

1.         Husband’s Full Name:   _______________________________ DOB: __________

2.            Wife’s Full Name:        _______________________________ DOB:___________

3.         Address:                                                     _______________________________________________________________

4.         Phone: (Hm)____________________(M)_______________________(M)________________

5.         Email:  (Husband)___________________________(Wife)_____________________________

 

  1. Beneficiaries’ Full Names; DOB; Address; Phone; Email:

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

_________________________________________________________________________

 

  • Plan of Asset Distribution for heirs; (e.g. to spouse for life, then to beneficiaries; or otherwise for special circumstances, e.g. if step-children, or children from first marriage, or second marriage, or special needs children, require different treatment etc.);

_________________________________________________________________________

  •  Names in order for back-up trustee(s) who would be in charge of executing the terms of     your estate plan if something happened to both spouses; (e.g. adult children, other      trusted relatives or friends);

_________________________________________________________________________

  • Names of persons who would serve as guardians of minor children, if any;

_________________________________________________________________________

  • Any other specific instructions, e.g. specific bequests to certain individuals, church, charity, etc. 

________________________________________________________________ 

 

ENCLOSED IS A CHECK / CREDIT CARD IN THE AMOUNT OF____________FOR THE PREPARATION OF MY/OUR LIVING TRUST(s), POUR OVER WILL(s), FINANCIAL POA(s), MEDICAL POA(s), AND LIVING WILL(s).  PLEASE PROCEED WITH THE PREPARATION OF MY/OUR ESTATE PLAN DOCUMENTS.  THANK YOU. 

______________________________     ________________________________

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