|

 |
Wills,
trusts, and other estate planning documents can be very important
in preserving assets and in ensuring distribution of assets to chosen
beneficiaries. Without a will or trust, upon a person's death, that
person's assets are disposed of according to state law. State law,
called the law of intestacy, mayor may not match what the decedent's
desires were as to whom should get the property or how the property
should be handled.
|
 |
Even
if current law does match a person's wishes for distribution of
his/her estate, intestacy law at the time of that person's death may
have changed. Unless a person wants to constantly keep up with
changes in the law, it is wise to have a will or trust.
|
 |
Will
and trust provisions are usually accepted as written, and are
generally not affected by changes in the law. However, there are
some restrictions on what will and trust provisions will be
accepted. For example, a spouse cannot be totally disinherited
unless specific steps are taken, such as agreements entered into
during lifetime where the spouse agrees to total disinheritance.
|
 |
Without
a will or trust, a person has no opportunity to personally select
guardians for minor children, to name the person who should manage
the beneficiaries' assets until they are distributed at a particular
age, or to select the person who should handle the details of
distributing the estate. Without estate planning, these important
decisions are left to be made by a judge who can only apply statute
and attempt to determine what would be reasonable under the
circumstances. Most people would prefer to set their own standards
and plan for distribution and management of assets. If no special
provisions are made, beneficiaries receive their share of the estate
immediately upon reaching the age of majority. Through trust
provisions, parents can give directions and restrictions on how and
when assets should be distributed.
|
 |
Clearly
written wills and trusts can minimize the cost of administering an
estate. If a will is used and probate is required, the will tells
the probate court what the decedent's wishes were so the court can
more quickly and inexpensively approve procedures to carry out those
wishes. A trust can be used to totally avoid the probate process,
allowing for transfer of assets to beneficiaries with no court
intervention. (See chapters on probate avoidance and the living
trust.)
|
 |
Tax
planning as part of the estate plan can save significant amounts of
money, regardless of the size of the estate. Whether capital gains
tax will be recognized on appreciated assets can depend on how those
assets are titled or the content of estate planning documents. The
Tax Relief Act of 2001 does contain tax relief, but planning is
essential to be certain that tax relief applies to you in every way
possible.
|
 |
Provisions
can be added to your estate planning documents to prevent
unnecessary bureaucracy. For example, the document can provide that
if a beneficiary does not survive by at least 60 days, that
beneficiary will be deemed not to have survived. This provision
could save the cost and delay of probating assets through the estate
of the deceased beneficiary to get them to the actual recipient.
|
 |
A
survivorship clause also prevents an unintended distribution of
property. Suppose George and Gladys are a married couple with no
children, and have no will or trust. Under the law of intestacy, the
distribution of property is determined according to the order of
death. If an accident occurs and only one spouse survives, the
surviving spouse inherits all property. If the surviving spouse
lives for only a week due to injuries incurred in the accident, all
assets are inherited by the relatives of the second spouse to die,
since the predeceased spouse's relatives are not considered heirs of
the spouse who survived one week. Since the spouse who survived
legally owned all assets, only that spouse's heirs receive an
inheritance.
|
 |
Many
states have statutory survivorship requirements, stating that if a
beneficiary does not survive for a specified time period, for
purposes of distribution, the beneficiary will be treated as if he
or she had not survived. However, statutory survivorship
requirements are generally only a few days, and the laws are always
subject to change. A survivorship clause in a will or trust allows
you to establish the amount of time a beneficiary must survive in
order to inherit.
|
 |
It
is very important that wills and trusts are drafted according to
statutory requirements, are clearly written, and cover all details
of the estate plan since, if ambiguities arise after a death, the
person whose document is being discussed is not available to answer
questions. Professional help is highly recommended.
|
 |
Thinking
about death, accident, or illness is never pleasant. However, if
something does happen, that is not the time for family members to be
forced into making important decisions, or to be burdened with
excessive administrative details. Planning ahead is much more
efficient, inexpensive, and thoughtful than burdening a family
during a period of grief. We all work too hard to accumulate
property to allow it to be wasted on unnecessary bureaucracy or to
allow it to go to someone other than the people or cause of our
choice. |
|