Most of the clients we have the good fortune to work with know what estate planning is. Essentially, it involves putting your affairs in order to maximize the benefits your assets can provide to you during your lifetime and to others after you are gone. As we like to say, it is all about protecting everyone you love and everything you own.
But that does not mean our clients are crystal clear on all the finer details of crafting a plan that works for them. As estate planning attorneys, we field plenty of questions throughout the planning process. Below are just a few.
FAQs about estate planning that everyone should know
Q: Can I create my own estate plan?
A: Estate planning is more than just creating documents. It also involves understanding the big picture and how legal documents will work with your assets when they are needed.
Q: Do I need an estate plan if I hold all my assets jointly with another person?
A: This is one of the worst ways to plan your estate. If assets are held jointly, and one of the owners dies, the assets will go to the surviving owner(s). The assets do not go to the deceased owners’ children. Here are a few more issues:
- It does not avoid probate. It simply delays it until the last owner’s death.
- It may cause the application of estate, gift, and capital gains taxes.
- It is subject to the creditors of all owners.
- It will result in the transfer of the property to the joint owner when one owner dies, even if that was not intended.
- Also, it is worth noting that if any of the owners apply for Medicaid, the entire account will also be considered his or hers and may put them over the asset limit.
Q: Can I put my adult child on my bank accounts? Would that avoid probate and inheritance taxes?
A: Unfortunately, probate and inheritance taxes may not be the most important things to avoid. If your child were to have an accident resulting in a judgment against them, your bank account could be used to settle the claim. That could also happen if unexpected changes in employment resulted in credit problems. And if the child on your account is involved in a divorce, their spouse could claim a right to your assets. Those are just a few of the bigger problems that can arise.
Q: Do I need a will if I have a small estate?
A: Everyone should have a will and/or trust. Many people believe that if there is no will, all the decedent’s assets will simply be distributed to the surviving spouse. This is not always the case. If you do not create a valid will, state law dictates where your assets go and who will administer your estate.
Q: Does a will cover all my assets?
A: Wills do not cover assets held as joint tenants with right of survivorship, retirement plans, annuities, life insurance, financial accounts payable on death, or transfer on death designations.
Q: Does my out-of-state will work here?
A: Out-of-state wills should be reviewed by an in-state attorney. One of the things they check is if the will provides for an independent administration (the simpler and easier probate) or a dependent administration (complicated and expensive).
Q: How can I avoid probate?
A: A will is not effective until it is legally proven in court through the probate process. A properly funded trust can avoid probate and save the family from going through the hassle of probate.
Q: Why is funding a trust so important?
A: The only way a trust works as intended is if the assets are in the name of the trust when something goes wrong. The assets must be in the name of the trust to avoid court involvement.
These are just a few FAQs we see a lot during the estate planning process. But there are so many more, and it is our job to answer those and ensure you and your family are covered from A to Z.
Call Leigh Hilton PLLC today!!
Call Leigh Hilton PLLC in Denton, TX, and we will help walk you through all of your estate planning needs. We have ample experience and will take into consideration your particular situation. Proper planning of an estate, whether through a will, trust, or both, helps ensure your wishes are carried out.
Leigh Hilton PLLC wants to be your first call every time for any estate planning need. We look forward to serving you.