Estate Planning

Estate Planning is the area of law dealing with the distribution of an individual's property at his or her death, using wills, trusts, insurance, property transfers and other methods so as to gain maximum benefit of all laws, preserve assets, reduce taxes and, at the same time, carry out the person's wishes.

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Probate & Estate Administration

Probate is the court proceeding through which a will is proven to be valid and the estate of a decedent is administered. It is the legal process by which a person's debts are paid and assets are distributed upon her or his death. The process, generally, includes collecting a decedent's assets, liquidating liabilities, paying any necessary taxes, and distribution of property to heirs. The entity that owns the deceased's assets until those assets are distributed is the estate. Estate Administration includes the probate process as well as non-probate transfers of the deceased's assets. Individual state laws direct the probate court how to distribute the deceased's estate. State laws and procedures vary greatly, so, it is important to consult a firm with expertise in this area of the law to ensure
that the deceased's assets are distributed correctly.

Asset Protection

My firm also assists individuals and businesses that may be in a line of work that burdens them with exposure to potential lawsuits, adverse judgments, liens, claims, etc. Using traditional wills and trusts, and other strategies such limited liability companies, corporations, and family limited partnerships, my firm develops a plan for the protection of assets.

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ESTATE PLANNING DEFINITIONS

Will

A will is a legal document that contains your instructions on what you want to happen to your assets when you die. It may also contain provisions for paying your creditors, any taxes owed by you, and the cost of administering your Estate. Of course, it may also state your wishes about your burial or cremation. In addition, your will should make provisions for any minor children you have.

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Executor

In your will you will want to name someone to act as your Executor who is the person responsible for administering your Estate plan. Your Executor will inventory and appraise your assets, pay any inheritance or estate taxes, and distribute the remaining assets according to your wishes as set forth in your will.

Guardian & Trustee

If you have minor children, you will also want to name a guardian and a trustee for any assets that you leave to them in trust. A guardian is someone who will care for your minor children should you die before they reach adulthood. You will want to choose a person who shares your values and is able and willing to take on the responsibility of caring for your children. A trustee is someone named by you to administer any trusts established for your children, charities, or for other reasons. You should choose a person who is financially savvy for this role. The guardian and trustee can be the same person or two different people.

Power of Attorney

A power of attorney is a document that permits a relative or close friend to handle your financial matters for you if you become incapacitated or disabled. The person that you name to act in this role is often referred to as your attorney-in-fact. You may also permit your attorney in fact to handle matters for you if you are simply unavailable, such as, when a husband is out of town on business and his wife signs his name for him at the closing for the couple's new home. Your attorney-in-fact may also be the person you named in your will to act as your Executor, but this is not a must. You should let who ever you name as your attorney-in-fact know and should provide him or her with a copy of the power of attorney and a general overview of your finances and assets, where you bank, bills which may be due, insurance carriers, etc.

Living Will Directive

A living will allows you to appoint a relative or trusted friend to make medical decisions for you if you are unable to do so. The person you name to make these decisions is often referred to as your health care surrogate. A living will defines the medical measures you would want taken in order to prolong your life and gives authorization to someone to tell doctors whether you want to be taken off of life support.

REVOCABLE LIVING TRUSTS

A revocable living trust is a legal entity that has been recognized and used for hundreds of years. While you are still alive you can act as trustee of the assets in the trust on your own. After transferring your assets to the trust it takes legal ownership of the assets, but you can always cancel or change the trust at any time. You also retain complete control of your assets and can still use them for any purpose. A revocable living trust can be used very much like a will in that the trust document can direct how your assets will be distributed at your death. However, a trust has many advantages over a will.

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Avoids Probate of Your Estate

Probate is the legal process through which the Court sees that, after you die, your debts are paid and your assets are distributed to your heirs. By transferring all of your assets to a revocable living trust before you die you have no assets which you own (since the assets are legally owned by the trust) and there is no need for your heirs to have to go through the probate process. There are many disadvantages related to your heirs having to go through the probate process.

1. Probate Is Expensive

The probate process can be very expensive. There are court costs, recording fees, statutory executor's fees, and attorney's fees that all must be paid before your assets can be fully distributed to your heirs. To make matters worse, if you own property in more than one state, your heirs could face the prospect of having to go through the process of multiple probates in accordance with the differing laws of each state.

2. Probate is Lengthy

The probate of an Estate will typically take from 9 months to two years. During this time the assets are frozen so an accurate accounting can be taken and nothing can be sold or distributed to your heirs without Court and/or Executor approval. This could make it very difficult for your family, especially your minor children, if they need money to live on during this period. 

3. Probate Provides No Privacy

Probate is a public process, so any one with an interest in your personal finances will have ready access to see what you owned and who you owed. As a result, this may often allow disgruntled heirs to contest your will and expose your family to unscrupulous solicitors. On the other hand, a revocable living trust keeps your financial affairs private and confidential.

4. Probate Takes Away Your Control

The probate process takes away the control of the distribution of your assets from you and your family. The probate process determines how much it will cost, how long it will take, and what information is made public.

A Revocable Living Trust Provides Protection Upon Your Disability

A revocable living trust can also give you protection if you become physically or mentally incapacitated. You can name a successor trustee (since you will act as the initial trustee yourself) to handle your financial affairs for you while you are unable to do so yourself. This enables you to control who has responsibility for your assets. It also avoids the prospect of having a Court appoint a conservator or guardian of you and your assets of its choosing and not yours. Such a Court ordered appointment can also be very time consuming and costly. And remember - this process does not replace probate at your death, so your family may very well have to go through the court system twice. Although a power of attorney can be used to name someone to handle your financial affairs for you also, many financial institutions will not honor one unless it is on their form. In addition, if it is accepted, it may work too well in that it allows someone to do whatever he or she wants with your assets.

A Revocable Living Trust Reduces Taxes for Married Couples

A revocable living trust can also contain provisions in it that will help to eliminate or drastically reduce the amount of estate taxes paid for married couples. These trust provisions are often referred to as a Marital Trust or a Bypass Trust and allow a married couple to take complete advantage of two very important parts of the federal inheritance and estate tax laws. The first of these crucial laws concerns the unlimited spousal exclusion which means that one spouse can leave an unlimited amount of assets to his or her spouse without having to pay any estate taxes. The second key law at play here is the personal exemption which is the amount of each individual's assets that is exempt from estate taxes.

Other Advantages of a Revocable Living Trust

Some other advantages of a revocable living trust include the following:

Regardless of age, marital status, or wealth, if you own titled assets and want your loved ones to avoid court interference at your death or incapacity, consider a living trust. You may also want to encourage other family members (such as your parents) to have one prepared so that you won't have to deal with the courts at their incapacities or deaths.

Contact your Louisville Estate Planning Lawyers today at the Law Office of John H. Ruby & Associates.