No States Require a Lawyer to Create Your Will

Ultimately, those who live in all 50 states along with the District of Columbia will find that it is not necessary to consult an estate planning attorney in order to create a valid will. However, it’s important to keep in mind that there are a number of cases in which consulting an attorney would be extremely advantageous:

• You have been married more than once and want to be sure that the children from each marriage are treated equally.
• You are thinking about disinheriting your spouse from your will.
• You anticipate that your will may be contested because of your desire to donate to a charitable organization or because of changes that you have made.

In other words, if you anticipate that there will be issues with the way that your family responds to your final choices, working with an estate planning attorney to create your will can ensure that your wishes are carried out.

Similarly, it is beneficial to consult an estate planning attorney to create your will if you are unfamiliar with whether or not your will needs to be notarized in order to go into effect, if you are unfamiliar with the requirements about who must sign your will in order to create a legal document.

Most importantly, however, you will find that if you want to do more estate planning than just the creation of a will – if you wish to assign medical power of attorney or to establish a trust, for example – state laws will again vary. In many cases, you will need to consult with an attorney in order to create a legally binding document.

Administrator

An administrator is the person who is appointed by the court to manage the estate of someone who has died without a will.

Beneficiary

Anyone who is designated to receive some or all of your assets in your will, proceeds of a trust, an insurance policy or your retirement plan.

Charitable Trust

Any trust that is established with a charitable organization as the beneficiary.

Estate Tax

Taxes that must be paid out of the estate’s assets.

Executor

The person who is appointed to carry out the provisions of a will.

Gift Tax

Taxes that are paid by the person making the gift rather than the recipient.

Guardian

An individual who is appointed in a will to provide care for children or for any other person who is unable to take care of his or her own affairs.

Heir

Someone entitled to inherit a portion of the estate of a person who died intestate.

Intestate

To die without a will.

Life Insurance Trust

A trust designed with the proceeds of a life insurance policy as the principal.

Living Trust

A trust that goes into effect while the creator is still living.

Power of Attorney

A document that authorizes someone to act as your agent.

Probate

Proving the validity of a will.

Trust

A legal arrangement in which property is transferred to and managed by a person or institution to benefit another person.

Will

A legal document that explains how property and other assets will be distributed after a person’s death.

Basic Estate Planning

At its most basic, estate planning is a matter of recognizing the need to care for your family and ensure that your assets are distributed as you wish them to be. In order to do this, you will find that basic estate planning is a matter of writing a will, assigning power of attorney, crafting a living will and assigning a healthcare proxy and, in some cases, establishing a trust.

Depending on where you live, you may be able to take some of these steps on your own, however it is important to remember that federal and state laws that govern estates will come into play and you need to be aware of what these laws are. For this reason, even in states that do not require having a lawyer assist you with estate planning, working with an attorney is often the best idea.

Irrevocable Life Insurance Trust

One of the benefits of working with an attorney as you focus on estate planning is that you will be able to learn more about various trusts that will enable you to plan further for your family. One of these trusts that offers a number of benefits is the irrevocable life insurance trust.

An irrevocable life insurance trust:

• Removes your life insurance from your taxable assets.
• Can be used to pay estate costs.
• Can provide cash to your heirs.

On many levels, this is beneficial because it gives your heirs access to tax-free income, however, in order to take advantage of it, you must surrender ownership rights to your life insurance policy.

Family Partnerships

Establishing a family limited partnership is considered to be one of the more savvy estate planning strategies – something that will protect assets, avert liabilities and provide a number of short term benefits as well:

• Annual income tax savings
• Savings on future estate taxes
• Protection of assets

In addition to working with an estate planning attorney throughout the process of setting up a family limited partnership, you will want to be sure that there is an accountant familiar with the process on board to ensure that everything is in order.

Reducing Your Estate

In order to reduce your estate in an effort to limit the estate taxes that will need to be paid later, it’s important to consider the maximum amount of assets that can be transferred tax free, gift limits, and marital transfers.

Additionally, working with an estate planning attorney can help you to learn more about the following and how they can effectively reduce your estate:

• Credit shelter trusts
• Qualified terminable interest property trust (QTIP)
• Gifting
• Giving to charitable organizations
• Taking advantage of a charitable remainder trust

Reducing Taxes

When you are looking at the opportunities that will help you to ease the effect of estate taxes on your family after you have passed, there are a number of ways in which an estate planning attorney can help you to reduce the taxes that your heirs will be required to pay.

An estate planning attorney can help you to learn more about:

• Taking advantage of the federal and state exemption taxes
• Creating family partnerships
• The benefits of leaving part of your estate to charity

When you assign medical power of attorney, there are a few things to keep in mind:

• Medical power of attorney goes into effect as soon as the document is executed and is effective indefinitely unless otherwise determined. The agent will no longer be the one making decisions if there is a termination date or when you are able to make the decisions for yourself again.
• In order for your agent to exercise medical power of attorney, your attending physician must certify in writing that you are not competent to make decisions for yourself.
• If you object, even if you are not competent, care cannot be administered or withheld. Additionally, your agent can not consent to psychosurgery, abortion, the withholding of comfort measures or commitment to a psychiatric institution.

In addition to assigning medical power of attorney, there are a number of other advanced health care directives that should be considered.

Living Wills

A living will can be as general or as specific as you would like it to be. A living will allows you to forbid treatment such as life support measures and even CPR. For those who are looking into more specific directives, a living will can address whether or not you wish to have antibiotics administered, to receive tube feedings, and your wishes relating to pain relief.

If organ donation is something that you wish to consider, your wishes should also be stated in this documentation.

Durable Power of Attorney and Health Care Proxy

Durable power of attorney and the assignment of health care proxy allow you to assign an agent who will be able to make health care decisions and to request or refuse treatment on your behalf.

One of the primary reasons to turn to an attorney when you look for estate planning help is to gain a better understanding of estate taxes and how they impact your estate – without careful planning, taxes can take a large part of your estate.

While there are estate tax and gift tax exclusions that can be taken advantage of and accounted for, in general there will be taxes on the value of your estate. The value of your estate can be determined by looking at the current value of your estate and then subtracting the following:

• administrative fees
• funeral costs and expenses
• certain debts such as your mortgage
• the value of bequests to your spouse

The value of taxable lifetime gifts that you have made will also need to be added in and accounted for in the value of your estate.

Other Taxes that Affect Your Estate

In addition to the Federal Estate Tax, your estate planning attorney will be able to help you learn more about the following taxes (explained more in the Estate Planning Institute Glossary):

• The Generation-Skipping Transfer Tax
• Capital Gains Tax

Planning Strategies That Can Reduce Taxes Charged

While it may not be possible to avoid estate taxes altogether, working with an estate planning attorney can help you to reduce the taxes charged against your estate in a number of ways.

• Credit Shelter or By Pass Trusts can be used.
• Couples can prepare a Two-Trust Estate Plan.
• A Credit Shelter Trust can be implemented
• A Qualified Terminable Interest Property (QTIP) Trust can be put into place.
• Lifetime Gifts to family and friends will allow you to distribute your assets to your heirs while you are living and can help avoid estate taxes.
• Charitable Gifts can support non-profit organizations and help to reduce the amount of your estate.

When you want to be sure that you will be able to have control of the way that your estate is distributed after your death, it is essential to have a written will. A will benefits your family in a number of ways – preventing legal battles, financial fights and even damages to the relationships between your children and other relatives.

Most importantly, however, a will is the document that allows you to designate an executor, to name guardians for minor children and to identify the way in which your assets will be distributed. For those who are unmarried or who don’t have children, having a will creates the opportunity to identify the friends or charitable organizations that will be your beneficiaries.

Who Needs a Will?

Ultimately, everyone needs a will. Whether you simply want to indicate your wishes or you want to be sure that your children and other dependents are cared for, without a will the distribution of your assets will be determined by the laws of your state.

What Are the Benefits of Having a Will?

Having a will can give you peace of mind, can ensure that your children and spouse will be taken care of and is the only way in which you will be able to identify the way in which you wish your assets to be distributed.

Amending Your Will

In order to make sure that your will – and other parts of your estate plan – are up to date, you will want to review your will periodically to ensure that everything is in order, especially in the following circumstances:

• Tax laws change.
• You get married or divorced or there is another change to your marital status.
• You’ve had another child or a grandchild is born.
• You’ve won the lottery or changed jobs or there has been another event that impacts your net worth.
• You relocate to another state (so that you can verify that your will remains legal).
• Other life circumstances change.

When it comes to estate planning, you’re going to find that there are a number of issues that need to be addresses. While there are some questions that are specific to planning your will or establishing a trust, there are a number of key questions that must be answered that are far more general.

Who Should Handle Your Affairs if You Are Incapacitated?

While this seems to be primarily a question that is associated with assigning power of attorney or with establishing a living will, it is important to consider who you believe will best be able to look after your needs. A similar question that you will need to address and answer during the estate planning process involves identifying the individual who you trust to make medical decisions for you – and who will honor your wishes.

Who Will Inherit Your Assets?

This question is, perhaps, best answered with a series of additional questions:

• Will your heirs receive an equal share of your assets?
• At what age should your children receive their inheritance?
• If you have dependents who are mentally or physically disabled and require special care, how will you provide for that care?

In other words, you will find that it is essential to look at all of the finer points of your life situation so that you will be sure that you have taken everything into consideration along the way.

Estate planning is the process by which you are able to look at your assets and how you want to distribute those assets after your death – to your family, to other people in your life and/or to charitable organizations that you are passionate about. More than that, however, what you are going to find is that estate planning is a process that lets you look at your own health and well being and to take action that will ensure that your needs are met if you are unable to take care of yourself.

What Questions Will You Address When You Plan Your Estate?

There are a few key points to consider when you are ready to start the estate planning process:

• What is a will?
• How do you assign power of attorney and what are the different circumstances in which you need to do so?
• What is a living will?
• What is a trust?

Wills

A will is a document that names those who will receive your assets after your death – whether as a gift that the recipients will be able to use as they see fit or in a trust that will be administered in the way that you arrange. It allows you to name an executor who will manage your estate and guardians who will care for your children in the event that they are still minors at the time of your death. Writing a will allows you to take steps to have your wishes carried out after your death.

Power of Attorney

Power of attorney is a process by which individuals are able to authorize another person to act on their behalf under certain circumstances.

Living Wills

A living will – also known as an advance directive – includes instructions for the care that you want to receive under certain conditions. By creating a living will, you will be able to know that your wishes are carried out if you are incapacitated and unable to make decisions for yourself.

Trusts

A trust creates a bridge that allows you to pass on your assets while you are living and after your death so that you can be sure that your assets are used in a way that you are comfortable with.

A will is one of the most common tools for those who are starting the estate planning process. Essentially, a will is just a legal document that indicates how your property and assets will be transferred after you die. While there is nothing that says that you must work with an attorney while you are writing your will, you are likely to find that there are benefits to working with one.

Probate is a legal period during which your will needs to be proven: in other words, it’s possible that your will could be challenged to determine whether or not it is an honest statement of how you want things to be divided. When you work with an estate planning attorney to create your will, you’ll be able to simplify the probate process and know that your will meets your state’s legal requirements.

You’ll also find that working with an attorney can help you if:

• You are concerned about the amount of an estate tax will be owed.
• You anticipate that there are family members who might disagree with the choices that you make.
• You want to ensure that children that you had during a previous marriage will be cared for.
• You own property in more than one state.
• Your state does not recognize a will that has not been prepared by an attorney.

What Should Be Included in Your Will

Wills include:

• Your name and address.
• A description of your assets.
• Names of your beneficiaries – your spouse, your children, charities that you wish to support, friends and others, as well as alternates in the event that the beneficiary were to die before you.
• Any specific distribution of your assets that you want made. Whether you want to be sure that a family heirloom is passed to your oldest daughter or you want your youngest son to have the car, if there are specific gifts you should name them in your will.
• Information about the establishment of trusts (if they have been made).
• Name of an executor for your estate as well as the names of guardians for your minor children.
• Your signature and that of the witness or your attorney.

The more specific that you are while writing your will, the less likelihood that there will be confusion later on.

Taking stock of Your Assets

For many people, this is among the most difficult parts of the estate planning process. While you don’t necessarily need to take stock of every single item of value that you have, you are going to want to make sure that you have a fairly thorough inventory and that you are able to assign a value to those assets.

In most cases, your assets will be broken down into the following categories:

• Your primary residence. In many cases, you home will be the most valuable asset that you have. You will want to be sure that you have made note of the home’s current value (and to recognize that this is a value that is subject to change over time). If you own additional real estate – a vacation home or a plot of land for example – you will also want to document it.
• Your savings. When you assess your savings, you will want to look at your savings accounts, money market accounts and certificates of deposit.
• Your investments. You will need to identify the stocks, bonds and mutual funds that you have shares of.
• Your retirement savings. You are going to look at your IRAs, your Roth IRAs, your 401k or 403b plan and, if you have one, your pension.
• Life insurance policies and annuities.
• Vehicles that you own. Cars, boats, an RV, planes should all be documented.
• Jewelry, antiques, collectibles. In other words, once you have identified the big items, you are going to want to make note of the smaller items. If you are unsure of the value of these items, you will want to be sure that you have an appraiser determine the value for you.