Estate Planning Frequently Asked Questions

An estate plan is a set of documents created to:

1. ensure that your estate passes to your intended beneficiaries at your death;
2. nominate the person who will administer your estate at your death;
3. nominate someone to make medical and financial decisions for you if you become incapacitated;
4. nominate a guardian to care for your minor children; and
5. avoid or reduce estate taxes.

Estate plans usually include a Will, a Durable Power of Attorney for Financial Affairs, and an Advance Health Care Directive.  Estate plans for larger or more complex estates usually include a Revocable Living Trust.

Both documents are created to ensure that your property passes to your intended beneficiaries at your death.  The major difference is that a Will is subject to probate and a Trust is not.  When a person dies with a Will, their estate is subject to "probate" which is explained below.  (One very important exception is that there is typically no probate required when a married person gives their entire estate to their spouse.)  Assets transferred to a Living Trust do not have to go through probate.

The two most compelling reasons for creating a Living Trust are probate avoidance and the mitigation of federal estate taxes.  Most clients choose a Trust because it is easier and less expensive to administer than a Will.  However, simple Wills are often appropriate older clients of limited means and young clients with no children.  In general, a Trust becomes more attractive as your estate gets larger and you get older.  Couples with children from a prior marriage will usually want a Living Trust.

Probate is a court-supervised process of collecting the assets of a decedent and distributing those assets to his or her heirs.  Probate generally costs more and takes longer than a trust administration.  Probate takes at least nine months and the fees are roughly 3% of the value of the estate to the executor and 3% to the attorney for the executor.

When the decedent has a Trust, the successor trustee performs essentially the same functions as the executor of the estate, but without court supervision.  A trust administration is usually completed in less than nine months (unless federal estate taxes are due) and the legal fees are often less than 1% of the value of the trust estate.

Estate taxes are an issue if your estate (or the combined estate of husband and wife) approaches the federal "Applicable Exclusion Amount."  The "Applicable Exclusion Amount" is a complicated way of saying "the amount that each person can give away – during lifetime or at death – without paying federal estate taxes."  The Applicable Exclusion Amount has changed over time as follows:

Year	Applicable Exclusion Amount
2006	$ 2 Million
2007	$ 2 Million
2008	$2 Million
2009	$3.5 Million
2010	Unlimited (no tax)
2011	$ 5 Million
2012	$ 5 Million
2013	$ 1 Million

Any amounts over the Applicable Exclusion Amount could be taxed at a rate of up to 55% (the highest federal estate tax rate) depending on the year of death and the amount subject to tax.

Congress and the president might pass a new law before 2013, but no one can be sure of that.  The result is an atmosphere of extreme uncertainty.

It should be noted that there is no federal estate tax on estates passing to a surviving spouse, regardless of the amount.  Thus, if Husband died leaving a $10 million estate to his wife, there would be no federal estate taxes due at Husband’s death.  However, Wife would then have a $10 million dollar estate that would be subject to tax at her death.

No.  While it is possible for a successor trustee to complete an entire trust administration without legal advice, most will need an attorney to help them with the administration.

Please bring a completed Client Estate Information Form, which can be downloaded here, copies of your current Will or Trust, and copies of the grant deed to any real estate you own.

First you should decide what individuals or charities you would like to name as beneficiaries of your estate.  In addition, please consider the following:

• Who would you like to serve as your executor or trustee?  This is the person who will collect the assets of your estate and distribute them to your beneficiaries.  Married couples often name their spouse, followed by their adult children, although this is certainly not required.
• Who would you like to name to make financial decisions and health care decisions for you if you are incapacitated and unable to make these decisions yourself.
• If you have minor children, who would you like to nominate as Guardian of the Person and Guardian of the Estate?  The Guardian of the Person takes physical custody of your children, while the Guardian of the Estate manages their funds until they become adults.  The same person can serve in both these roles, or you can name different individuals.
• At our initial meeting, we will discuss your particular circumstances and determine what kind of estate plan is right for you.  There is no charge if you decide not to hire us.  If you would like us to represent you we will give you a written fee agreement and typically require an initial deposit.

The executor or trustee is the person (or persons, if you name cotrustees or coexecutors) who will collect all of the assets in your estate when you die, pay any taxes and creditors, and distribute the assets to your intended beneficiaries.

It depends on your particular circumstances.  Simple estate plans can be completed for less than $1000, while complex estate plans may cost $10,000 or more.  A Complete estate plan for a married couple, including a Living Trust, usually costs about $2000-$3000.

• An estate larger than the Applicable Exclusion Amount.
• A second marriage or children from a prior marriage.
• A complex disposition.
• A large percentage of your net worth in IRAs, 401(k)s or other tax-deferred investments, partnerships, annuities, or a family business.

Probably not.  Life insurance might be a valuable estate planning tool in some circumstances; however, in our experience, it is usually unnecessary to create a trust to hold a life insurance policy or proceeds.

We become your attorneys after you have met with us, provided us with a completed Client Estate Information Form and any other necessary documents, and signed a written fee agreement.  At our initial meeting we will recommend a course of action and give you an estimated cost for the work to be performed.  If you decide you’d like to hire us, we will sign a written fee agreement.