Expert Shares Estate Planning Tips

A Last Will and Testament (also known as a Will) is one of the most important documents a person should have, yet so many people procrastinate about signing the documents. People believe they do not have enough assets, or they are too young (18 and older) and do not need a document. This is a mistake.

A Will enables a person to pass assets to their desired beneficiary. When someone passes without a Last Will and Testament then this may cause additional issues for their loved ones. If an asset is held in the deceased individual’s name that asset will pass through probate (proving of the Will) and then to the beneficiaries in the estate documents. Any assets held in joint name, in a trust name, or name a beneficiary will bypass the probate process and go straight to the beneficiary with a death certificate.

Every state has different laws. If you move to a new state, you should consult an attorney and update your estate documents. Some states make probate more difficult than others and probate is more expensive in certain states. Georgia is typically a simple probate and not expensive. Therefore, you may not need to avoid probate in Georgia. Without a Last Will and Testament probate becomes a more cumbersome process for your loved ones, adding time and expenses.

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There are many types of trusts. Testamentary trusts are ones that do not exist until a person passes. They are usually found inside a Will. Irrevocable Trusts are set up now and typically cannot be changed. This type of trust is commonly used to remove the value of life insurance in your estate for estate tax purposes. Your estate is valued at assets minus liabilities plus life insurance. If the Irrevocable Trust owns the life insurance the value is removed from your estate. This trust avoids probate for the assets owned by the trust.

You may wish to add a Revocable (also known as a Living) Trust as another document. If you add this document and all of your assets are joint or name a beneficiary or this Trust acts as the owner of the asset, then no probate may be necessary. The Revocable trust turns Irrevocable upon the Trustor’s incompetence or death (whichever is first). The Trustor is the person who makes the trust. A Revocable Trust may use the Trustor’s Social Security number and include these assets on the Trustor’s income tax return. The Trustor also has access and control over the assets. Upon your incompetence or passing, the trust becomes irrevocable and receives a new federal identification number, files its own income tax return and whoever Trustor names as successor Trustee then has the control and access to the assets.

Wherever you own real estate you are subject to probate. To avoid probate in a second state, the Revocable Trust may be named as the owner of the real estate. If you own an LLC with real estate outside of Georgia, then the Revocable Trust may act as the Member of the LLC to avoid probate in another state. There are a lot of types of trusts and reasons to have one or not have one. You should consult an attorney if you have questions. You should update your estate documents when there is a death of anyone you named in your documents or if your circumstances change, including moving to a new state. This is general information, and you should consult an estate-planning attorney regarding your specific situation.

Two very important documents are the Advance Directive for Health Care and a Durable Power of Attorney (aka Financial Power of Attorney). These documents are relevant while you are alive and every person 18 and older should have them in place. Most attorneys will include these in your estate planning package.

A good starting point is to complete a questionnaire and submit it to an attorney. One example is located at: https://www.estateinnovations.biz/new-client-documents. When interviewing attorneys look at their credentials at the state bar. The website, https://www.gabar.org/membership/membersearch.cfm, is also a good tool.

This story was written by Laura K. Schilling, Esq, CPA, CSA founder of Estate Innovations. Laura has been practicing estate planning over 25 years. Laura also is the owner and founder of Financial Innovations a wealth management and financial planning firm, www.financialinnovations.biz. This is general information, and you should consult your attorney prior to making any decisions.