INTRODUCTION
Estate planning can be an intimidating process for anyone. Sometimes it feels like the attorneys are speaking a foreign language full of confusing terms and concepts. Seck & Associates is going to present a series of estate planning blogs to break down and provide a brief overview of several common terms, concepts, and types of trusts to help our clients work with us to achieve their goals. Although in this series of blogs we will attempt to provide a general overview of this process, it is important to remember that very estate plan is unique, and structuring depends on 1) the types of assets currently held by the client, 2) the client’s retirement plans, 3) the client’s anticipated need for long-term care, 4) the client’s wishes for distributing property and wealth to both the client and others throughout the client’s life and following the client’s passing, and 5) tax considerations. After you gain the following general estate planning knowledge, we are happy to sit down with you and address the specific needs of you and your family.
Last week we explained what Wills and Trusts are and the general terms that surround the making of each. Part II of this week we will address what part each instrument plays in the estate planning process.
Part II – The Role of Wills and Trusts
As a refresher from last week’s blog, a Will is a legal document that coordinates the distribution of assets after death, and it can appoint guardians for minor children. Trusts are used to make the property transfer process following death of the creator of the Trust (and the Will) easier and to take advantage of certain tax rules.
When Trusts are used as part of an estate plan, it is still important to have a basic Will for a few reasons. First, whenever a person dies, state laws require (with certain very limited exceptions) that the estate of the deceased person be submitted to the state courts for what is called Administration. The state courts in charge of Administration are called Probate courts, and the job of the Probate courts is to 1) utilize the assets of the deceased person to satisfy any outstanding debts of the deceased and 2) after the debts of the deceased are satisfied, to recognize and document the transfer of property to the deceased’s heirs and any other individuals named by the deceased in the deceased’s estate documents.
When someone passes away without a Will, the Probate court is forced to follow procedures called Intestate Administration. Without a Will to guide the Probate court, the Intestate Administration procedures require the Court to decide which assets of the deceased are liquidated to satisfy any debts of the deceased. Also, any assets that aren’t included in the Trust(s) created by the deceased will have to be distributed by the Probate court using default rules under state statute that may not reflect the wishes of the deceased.
We hope Part II of our series has provided some comfort and clarity in what to expect during your first meeting with your estate planning attorney. For your own personal consultation please reach out to us at sseck@seckassociates.com. We are happy to sit down with you and address the specific needs of you and your family.