You will often hear estate planning attorneys saying that people of all ages need to have an estate plan in place. Young people may feel as though estate planning is not relevant to them because they are unlikely to pass away due to natural causes. And even if they did they have very limited assets to pass along so they feel as though the matter would just take care of itself. This is arguable, but it can be conceded that a young adult who is in college may not need to have a consultation with an estate planning lawyer occupying a prominent place on his or her to-do list.

However, once you get out of college, get married, and start a family an estate plan is a must. When someone is relying on your income you must have an income replacement vehicle in place, and this would typically be a life insurance policy. Young couples who have children have an added layer or responsibility in this regard. Accidents happen every day, and if both parents were to pass away in a traffic accident or some other type of tragedy the needs of the dependent children must be met. Minors cannot assume ownership of the insurance policy proceeds, so you need to account for this possible scenario in your estate plan. This is often done through the creation of a testamentary trust.

The word “testamentary” is derived from the word “testament” as in “last will and testament.” Actually both of these terms are interchangeable at this point, so the testamentary trust is part of a testament or will. The trust is created upon the death of the settlor, and it can contain assets that were already a part of the settlor’s estate as well as funds that were acquired as a result of the settlor’s death, like insurance policy benefits. When you are drawing up the will you name a trustee to administer the funds in behalf of the minor children beneficiaries. The trust will remain active until the children reach adulthood under terms specified in the will of the deceased parents.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

If you have not spent much time delving into the topic of estate planning you may just feel as though preparing the distribution of your assets after your death involves simply drawing up a will unless you are a person of extraordinary means. This is one way that it can be done, but it may not be the best way. Most people want to do whatever they can to make sure that their assets stay intact as the are being passed on to the next generation, and due to some of the powers that be you may need to take some steps to avoid asset erosion.

One of these powers is the probate court. The process of probate can consume as much as 5-7% of the value of your estate, and many people would prefer that their loved ones receive that money instead. With this in mind you may choose to pass along most of your assets through a revocable living trust rather than a will.

When you create the trust you appoint a trustee and name beneficiaries who will succeed you after your death, but while you are alive you can assume both of these roles. So you retain complete control of your assets, and since the trust is revocable you can change it or even dissolve any time if you so choose. Upon your death the successor trustee assumes the responsibility of administering the trust and your beneficiary receives distributions in accordance with your wishes as set forth in the trust agreement. This arrangement is not subject to the probate process.

Aside from the avoidance of probate a revocable living trust can protect in other ways. You can appoint a bank or trust company as the trustee and stipulate that your beneficiary is to receive only the income earned by the trust and none of the principal unless an emergency was to arise. In this way you install some safeguards to ensure the long-term viability of the trust with the best interests of your beneficiary in mind.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

There are a plethora of sometimes confusing terms tossed around when you are engaged in the process of estate planning, but the one thing that everyone is familiar with is the will. This is the basic document that is often used as a vehicle of transfer stating the manner in which you would like your assets to be distributed after your death.

In addition to this standard will there is another type of will that is currently recommended called the living will. By executing this document you state your medical preferences so that your family and your health care providers will know what type of procedures you would be willing to accept in the event of your incapacitation, and those that you would deny. The issue of whether or not you would want to be kept alive through the use of artificial means if you were in a terminal condition is usually central to a living will.

There is a third type of will that we would like to highlight here and it is not a legal instrument, but it can be a vital component to your estate plan. It is called the ethical will, and it is a personal document with which you record your moral and spiritual values and any other personal observations and/or confessions. The practice of leaving behind an ethical will dates back thousands of years and actually originated as an oral tradition.

An ethical will can be framed by your faith, and in fact ethical wills are a centuries-old part of the rabbinic tradition that has been embraced by Jewish laypeople as well. But one can use the framework to communicate personal values from any perspective. Drafting such a document can be personally cathartic to the author simultaneous to being instructive to the reader as you sincerely evaluate your ethical foundation at a time when the end of your life may be drawing near.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

When you are doing your inheritance planning and you recognize the fact that your estate will significantly change the lives of your heirs, you have a lot of soul searching to do. With some of your family members who are older, stable, and established you may feel confident directly passing along whatever it is that you have earmarked for them. But when you are considering the impact that a large inheritance may have on younger family members or those who have displayed certain questionable decision making traits, the matter is not quite as simple.

One estate planning tool that is commonly used by people who have these types of concerns is the incentive trust. With these trusts you name a beneficiary like you would with any trust, but you include stipulations that your heir must meet in order to receive distributions from the trust.

For example, if you had heirs that had not yet come of age, you could set up incentive trusts that lead them toward higher education. You could stipulate that regular distributions from the trust will be made as long as they stay in school. You could perhaps offer additional distributions upon graduation, and after completion of each graduate degree.

One concern that many people of means have when they are engaged in estate planning is the possibility that their heirs will never develop a work ethic should they receive a large inheritance. A possible solution would be to set up an incentive trust that makes distributions related to monies earned by the beneficiary via his or her own labors.

These are just a couple of examples, but you can create an incentive trust with any stipulations you want to as long as they are legal. If you use your imagination the possibilities are endless, and these trusts are certainly something to keep in mind when you are trying to decide how to provide for your loved ones after your passing.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

When looked at from a comprehensive perspective estate planning involves financial and medical matters, but there is also a philosophical component to consider. Through the execution of these three different types of wills you can efficiently cover the gamut and let the full spectrum of your wishes be known to your loved ones.

Standard Will

When you think about estate planning the first thing that comes to mind is the will, or what was traditionally known as the “last will and testament.” This is the foundational document within which you elucidate your wishes concerning the distribution of your real and personal property after you pass away.

Living Will

You hear a lot about advance health care directives these days, and one of them that is commonly included in modern day estate plans is the living will. People are living longer than ever, and medical science is making advances each and every day. So, the technology exists to keep individuals alive through the use of artificial means when they have no hope of recovery. This is a controversial matter, and how you feel about it is a personal matter. With that in mind, you can state your wishes regarding this and any other health care eventuality that you care to address via the execution of a living will.

Ethical Will

The ethical will is a bit more esoteric than the standard will and the living will, but it is important all the same. When you pass away you are leaving behind assets, but how did you acquire them, what were your business ethics, and how would you like to see your heirs approach the inheritances that you have left to them? You can address all of these matters by drawing up an ethical will, which is a document that has been used for thousands of years to pass along spiritual and ethical values from one generation to the next.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

When you pass away, your estate attorney will send out copies of your Last Will and Testament to all interested parties. when your Will is filed in a court of law during probate, it will become public record, so anyone can see it, but only those your attorney deems necessary will be sent a copy.

Estate Executor

The person you name in your Will as your estate executor or personal representative will most likely be the first person to receive a copy. Your representative will use your Will to pay your final debts, follow any special instructions you leave, and pass property out to your chosen heirs.

Heirs

Anyone you name in your Will to receive an asset is considered a beneficiary. Your attorney will send a copy of your Will to every listed beneficiary. This will help each recipient understand what he or she will receive and possibly why.

Your attorney may also choose to send a copy toany heirs at law that were not included in your Will, or any beneficiaries in previous Wills, who are not included now. Your attorney may do this if a possible challenge to the Will exists. Once those not included in the Will receive a copy, they have only a short amount of time to file a challenge.

Trustee

If you have a Revocable Living Trust, you will name a successor trustee to care for your trust holdings. This trustee, assuming he or she is not the estate executor, will also get a copy of your Will. Your trustee must work with your executor to transfer all unfunded items into your Living Trust.

Accountant

It is best to have an estate accountant to assist with handling estate funds for paying debts, paying taxes and passing out financial assets to heirs. This accountant should receive a copy of the Will in order to better comprehend the financial status of the estate.

IRS and State Tax Authority

If the estate will owe federal or state taxes, then a copy of the Will must be sent to the IRS and to a state tax representative.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

It is important to take steps to preserve your assets as you pass them along because there is a powerful force that will be standing at the ready waiting to pounce when it is time for the distribution to take place. We had a brief respite from it in 2010 because it was temporarily repealed, but the force will be back in 2011 and it is called the federal estate tax. The maximum estate tax rate is going to be 55% unless there is some change enacted, and paying such a draconian levy is clearly something that most people would like to avoid if it is at all possible.

One strategy that can be used to sidestep the harsh bite of the estate tax is the creation of a generation-skipping trust. Consider a scenario where your parents left their estate to you and it was reduced by half due to the estate tax. You have built some wealth on your own, so at the end of your life you still have everything that you inherited from your parents. When you leave those assets to your children, they are going to be cut in half once again by the IRS. And this will go on and on down the line.

With a generation-skipping trust you avoid the above situation. You create the trust with your grandchildren as the beneficiaries, and it is subject to a generation-skipping transfer tax, but there is an exemption of around $1.3 million. Your children can receive distributions from the trust and even control the disposition of the assets within the trust (to other parties) through a special power of appointment. In this manner your assets are transferred, your children can benefit from them, and no estate tax can be levied.

Your children can then set up a generation-skipping trust funded with their own accumulated assets, and the family wealth can be passed on from generation to generation without being steadily eroded by the estate tax.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

The matter of estate planning is unique in a sense because it involves a process that few people ever participate in directly other than probate lawyers. For this reason delving into your DIY passions when it comes to will creation is probably not a good idea. Your will is going to have to pass through the process of probate, which makes it very difficult for the uninitiated to effectively draw up homemade wills because they have no experience dealing with the probate or surrogate court.

Most people recognize the fact that estate planning, when done correctly, involves a number of components in addition to the standard will. When you consult with an elder law attorney he or she will listen as you state your wishes, examine your overall financial situation, and advise you accordingly. You may benefit from the creation of a legal instrument that you hadn’t considered, like a living trust, for instance. So if you were to “risk it” with a homemade will, you would never learn about more comprehensive estate planning strategies that could be very advantageous to you.

Tapping into this broader outlook is one reason to consult with a probate lawyer to assist in the creation of your will. But another reason why it is not advisable to “go it alone” is the simple fact that a will is an important legal document with serious ramifications for you and your family. It is going to be administered though the probate court, and its validity will have to be determined. Interested parties may contest the will, and there could be claims made against the estate during probate. Contingencies must also be addressed during the original drafting.

Are you prepared to create an iron-clad legal document that addresses every possible probate scenario? If the answer is no, as it would be for about 99% of the population, you would do well to consult with an estate planning attorney rather than trying to put together a will on your own.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

When you are only going to be doing something once you are not going to be able to call on the benefit of experience to help you along, so you generally have to engage the services of a specialist. Estate planning falls into this category, and though everyone is aware of the fact that assets are traditionally transferred after death through a will, there are other legal instruments that are worth considering as well. One of these is the revocable living trust, and more and more people are recognizing that a trust can be a very valuable addition to their estate plan.

Most people plan their estates with two primary objectives in mind. First, they want their assets to be passed along to their heirs simply and efficiently with minimal red tape or hassles. Secondly, they want to devise a plan that protects their assets so that they don’t lose value as they are being passed along. When you use a will to define the terms of your estate, it has to go through the legal process of probate. There are protections that probate provides that are useful, however, it does hinder accomplishment of these two overarching objectives. Probate is a bureaucratic and time consuming affair, and it is also costly so it reduces the value of your estate.

Creating a revocable living trust can help you achieve the goals of asset protection and efficient transference. You simply fund the trust and name yourself as the trustee while selecting a person, multiple people, or an entity such as a bank to serve as the successor trustee. You also name beneficiaries. Since it is indeed revocable, you can alter the trust or even dissolve it if circumstances change. In the event of your passing, the successor trustee administers the trust and distributes the assets therein to your heirs according to your stated wishes. Through the use of a revocable living trust the estate can bypass the probate process.

Revocable living trusts are very useful vehicles that make a lot of sense for many people. If you would like to discuss the possibility of creating a living trust, please give us a call at (800) 295-1917 to arrange for a free consultation.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.

People take varying views on taxation, and of course nobody likes to pay taxes, but there are those who view these levies as necessary evils. However, others would contend that estate taxes are really indefensible. Their argument revolves around being taxed more than once on the same income, and it makes a lot of sense.

When you earn a paycheck or derive income from your business it is taxed. You use some of what is left to pay your mortgage. Let’s say your home is finally paid for after thirty years and it is worth $2 million. If you were to bequeath the house to your heirs in 2011 (the inheritance tax has been repealed for 2010) a federal inheritance tax of 55% of that $2 million would be due. Many would say that a tax exceeding half of the value of your property is excessive. But beyond that, the money that you earned to pay for the house in the first place was the net income that you retained after having paid income tax on your total earnings.

Considering the above, qualified personal residence trusts are useful estate planning instruments that can facilitate the transfer of property to your heirs without being subject to estate tax. The homeowner/grantor places the property in the trust and names a beneficiary or beneficiaries. An agreement is included defining a period of time that the grantor may continue to live in the house rent free, though he or she is responsible for maintenance, taxes and other expenses. When the specified period is up, the home becomes the property of the trust and is thus transferred to the beneficiaries.

There is no inheritance tax levied, but there may or may not be a gift tax due. The value of the house is reduced by the retained interest of the grantor, so it will be considerably less than the fair market value of the property. There is a lifetime gift tax exemption of $1 million, so there would be no gift tax due if this had not been used up and the actuarial value of the house was less than this amount.

Qualified personal residence trusts are useful estate planning tools that make it possible for many homeowners to pass along their homes to their heirs with optimal tax efficiency. If you feel as though this strategy may be beneficial to you, simply contact us through this website to arrange for a free consultation.

The Law Offices of Saul Kobrick, P.C. is a member of the American Academy of Estate Planning Attorneys.