Hopefully, you are aware of the need to have a well thought out and properly drafted estate plan in place. Not only can your estate plan ensure that your estate assets are distributed according to your wishes when you are gone, but it can help protect and grow those assets while you are here. Given everything an estate plan can do, it may be surprising to learn that over half of all Americans do not have a plan in place. One of the most common reasons people give for not starting on their estate plan is the simple fact that estate planning can be very intimidating. Working with an experienced Missouri estate planning attorney will help you feel less intimidated, as will learning more about estate planning ahead of time. For example, consider the following five will and trusts questions you should know the answers to before you create your estate plan:
- Will My Estate Have to Go Through Probate? The answer to this question is crucial when creating your estate plan because probate has a direct impact on the decisions you make in your estate plan. Probate is the legal process required following a death. Probate ensures that assets owned by the decedent are accounted for and valued, creditors are given the chance to file claims, and taxes are paid before assets are transferred to the new owners. Most estates are required to go through the formal probate process; however, there are exceptions. In addition, even estates that are required to go through formal probate may include non-probate assets. Non-probate assets are not part of the probate process, meaning they pass to beneficiaries outside of the probate process.
- What Does an Executor Do? One of the most common mistakes people make when creating a Last Will and Testament is not giving much thought to who they appoint as the Executor of their estate. The Executor, however, can significantly contribute to the success, or failure, of the probate process. The Executor has numerous responsibilities, including:
- Identifying, locating, and valuing estate assets
- Opening probate with the court
- Notifying creditors that probate is underway and reviewing/paying claims
- Defending the estate during litigation
- Managing estate assets
- Calculating and paying estate taxes
- Transferring estate assets to intended beneficiaries
- How Does a Trust Work? After a Last Will and Testament, trusts are the common addition to a comprehensive estate plan. A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor, who transfers property to a Trustee. The Trustee holds that property for the trust’s beneficiaries. Trusts are broadly divided into testamentary and living trusts with a testamentary trust not taking effect until the death of the Settlor and a living trust taking effect during the lifetime of the Settlor. Living trusts are further divided into revocable and irrevocable living trusts.
- What are the Duties and Responsibilities of a Trustee? Choosing the right Trustee for your trust is crucial given the fact that the Trustee will manage the trust assets and administer the trust terms. Do not simply appoint a spouse/parent/adult child without considering what a Trustee actually does. Among the duties and responsibilities of a Trustee are:
- Understanding and abiding by the terms of the trust
- Investing trust assets using the “prudent investor” standard
- Keeping precise accounting records of trust business
- Communicating with beneficiaries and resolving conflicts
- Distributing trust assets according to the trust terms
- Preparing and paying trust taxes
- Will My Estate Incur Federal Gift and Estate Tax? The federal gift and estate tax is potentially imposed on the value of estate assets owned at the time of your death combined with the value of gifts made during your lifetime. At a rate of 40 percent, estate taxes can significantly diminish the value of your estate. Fortunately, every taxpayer is entitled to exempt up to the lifetime exemption amount, set at $5 million and adjusted annually for inflation. For 2016, the lifetime exemption amount is $5.45 million. If your estate is likely to incur federal gift and estate taxes you need to include tax avoidance strategies in your estate plan.
Contact Us
If you have additional questions or concerns about wills and trusts, or creating your estate plan, contact the experienced Missouri estate planning attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.
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