Estate Planning Options
The options for Estate Planning
Are there options in estate planning?
“Ask an Attorney.”
–Joe Pippen
Option 1: Do Nothing
The most popular option is to put it off long enough hoping the need to plan will go away. This is clearly the worst option, although 60 to 70 percent of Americans choose this option.
If a person fails to plan their estate, the state they reside in plans it for them. Every state has a written Will for people who fail to create their own. This is called a statutory Will. The statutory Will that your state creates for you decides how your estate will be distributed and who will be your personal representative. The state also decides who the guardian of minor children will be and makes many decisions that individuals should make for themselves.
Isn’t it strange that people spend a lifetime accumulating assets, but fail to spend a few minutes planning what should happen to those assets upon their death?
Option 2: A Will
The second option in estate planning is to have a Will. This can be done easily and inexpensively. The positive aspects of a Will are that you name the personal representative you want to handle your estate and you decide how the estate will
be distributed. These are very positive things that everyone should take advantage of.
However, there are some negatives about having a Will that you should know:
Option 3: Revocable Living Trust
Living Trusts have been recommended in every major consumer publication of the past several years because of the advantages.
The advantages of a Trust are that you avoid Probate (because the assets are in the Living Trust, not in the name of the deceased person), assets can be distributed quickly to your beneficiaries, you have a guardianship plan, and it is a private document.
The biggest misconception about a Trust is that you lose control of your assets if you place them into a Trust. You are the Grantor (the person who manages the Trust) and the Trust is all for your benefit with no loss of control. Trusts also do not require a special tax number or separate tax returns because you use your own social security number.
Another myth is that real estate cannot be transferred to the Trust and if your homestead were transferred to the Trust, the homestead exemption would be lost. The truth is any real estate can be transferred into your Trust and the homestead exemption will not be lost.