According to an op-ed article posted at CNBC.com, the pandemic has inspired a rise in estate planning. In a survey conducted for LegalZoom.com, 32% of young people ages 18 to 34 said they created a will because of Covid -19. The LegalZoom survey found that 62% of Americans don’t have a will, and those who do, 12% created them in the past 12 months. The reasons for why many Americans have not followed through with estate planning are many and varied: for some, they may mistakenly believe they don’t have enough assets to justify estate planning, or for others they may erroneously think that they are too young to worry about. However, one of the most common reasons for delaying estate planning is a general feeling of helplessness by being overwhelmed with what to do and how to get started. Source: https://www.cnbc.com/2020/10/05/op-ed-more-people-are-creating-wills-amid-the-pandemic.html
Get Started on Estate Planning with David Knecht Law Consultation
At David Knecht Law, we have extensive experience in estate planning. We can meet with you, understand your objectives, analyze your assets and liabilities, and help you establish a plan that is tailored to you and your family.
We also publish articles to help you understand estate planning, and today we will discuss part two, with a sequel to our first article about Living Trust Basics. (Source: https://www.scscourt.org/self_help/probate/medical/living_trust.shtml
- What is a Living Trust?
A Living Trust is a legal tool for financial planning that allows a person (Trustee) to hold another person’s (Settlor’s) property for the benefit of someone else (Beneficiary). Unlike a testamentary trust, a Living Trust goes into effect during the settlor’s lifetime.
- Does a Living Trust have tax benefits?
Yes, a Living Trust may have tax benefits, depending on your specific situation and the type of Living Trust you use. Several kinds of Living Tursts let you avoid, reduce or postpone federal estate taxes.
- How much of my property is exempt from estate tax?
The federal estate tax is based on the gross value of the property you own or control at the time of your death, over a certain amount. Taxable property includes property in a trust that is revocable by you or over which you have excessive rights to use the property in it for your benefit, property in your name, funds from IRA’s, retirement benefits or life insurance and property held in joint tenancy. The tax rate depends on the year of your death.
- What happens if I die or become incompetent?
With most Living Trusts, someone else, like a trusted friend, relative, or a professional trustee, will take over as trustee when you die or become incompetent. At that point, the trustee has certain legal duties, which can include managing or investing your property, spending trust assets on your behalf (if you are still alive), and paying all your debts and distributing or managing all trust assets according to your instructions when you die.
- Are all the assets distributed immediately?
Not necessarily. Sometimes the terms of the trust will direct the trustee not to distribute the assets right away. The beneficiaries may be children or considered too young to handle their inheritance. The successor trustee does not need to ask the court to get involved and will typically need only the trust document and death certificate.
- With a Living Trust, do I still need a Will?
Yes, it’s typically a good idea to have a Will in conjunction with a Living Trust for any new property that is acquired after the trust is created and for a guardian if you have young children. You should sign a “Pourover Will” along with your Living Trust. The Pourover Will is a back-up for any property that might not have been properly transferred to the Living Trust during the settlor’s lifetime. Without a Pourover Will, any property acquired after you set up your Living Trust that inadvertently is listed in your name rather than in the name of your trust would normally pass to your heirs as determined under State law, who may or may not be the same people that you name in your trust to receive your assets at your death. The Pourover Will will ensure that any such assets will be added to your trust so that they will be ultimately distributed to the beneficiaries you name in your trust. If you have minor children, you can use your Will to establish a guardian for your children if both you and the other parent die.
If you are interested in more information about how a Living Trust may be a useful tool for your estate planning, please contact the Law Office of David Knecht, at 707-451-4502.
