Estate Planning Basics: Part II

Creating Revocable Trusts

Creating a revocable trust eliminates the need for a probate altogether. It transfers ownership of all assets to a trust that spells out exactly what happens were you to become incapacitated or pass away. Because everything is contained in a single document, you avoid probate.

It is important to remember to actually transfer ownership of your assets to a trust. That way nothing is left out and sent to probate. It may seem odd to switch ownership of a bank account from yourself to a trust, but since it uses your Social Security number as the tax ID, it serves as an extension of you.

It is also possible to avoid probate if all your assets are owned jointly by you and your spouse, provided your assets don’t exceed the estate tax exemption. If it does exceed state or federal exemption, set up two trusts – one for you and one for your spouse – to diminish estate taxes owed.

Without a Revocable Trust

If you are married and choose against creating a trust, be sure to retitle your home, so it’s owned “tenants by the entirety.” That means if one spouse dies, the property is automatically transferred to the surviving one.

While states have different rules, it is common that if you leave money outright to you children in a will, they will receive all assets once they turn 21. Setting up a trust allows you to name a responsible trustee who manages and distributes the funds according to your wishes. The trustee can, but does not have to, be the designated guardian.

Reviewing your Estate Plan

It’s important to review your estate plan every three to five years to be sure you’ve designated the most appropriate people. If your trustee, for example, moves across the country or out of it, you are probably better served changing it to someone local.

If your children are grown, reexamine your plan after major life events, including the birth of new grandchildren, the death of a relative, or a divorce. You may have inherited new assets to protect or have new names to add to or remove from your documents.

Other Important Decisions

When choosing an estate attorney, remember you want someone who is a good personality fit. Your spouse or family members will be dealing with them when you aren’t around, so it helps if everyone gets along. Choose someone who specializes in estate planning. Experience will pay off when decreasing estate taxes owed and making sure everything runs smoothly.

Estate Planning with Cohen & Burnett

The trusted legal professionals at Cohen & Burnett have provided estate planning, fiduciary management, tax services and retirement planning assistance in and around Washington, D.C. for over 25 years. To learn more about our services, please visit our homepage today.



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