Why You Should Begin Your Estate Plan Now
People are motivated to establish comprehensive estate plans for many reasons, ranging from disinheriting family members to avoiding probate or even simply protecting their assets. The Law Offices of Charles R. Frazier is ready to assist clients with planning for all objectives.
The Law Offices of Charles R. Frazier helps our probate administration clients meet all of the legal requirements of managing a deceased loved one's estate. This is particularly impactful when our client is still grieving the loss of a close friend or family member.
Here's an important question to consider: When was the last time you had an estate planning attorney perform a full review of your long-term plans for your financial affairs, your family, and your legacy?
For that matter, have you ever sought out such a review? Have you taken the necessary steps to keep your estate out of probate when you pass on?
Many individuals believe their estates are protected against probate. But thanks to changes in your finances over time –and perhaps misconceptions you hold about the probate process and what triggers it –that protection can erode or disappear entirely. In fact, many people are blissfully unaware of just how vulnerable their estates are to probate.
This lack of awareness can have serious consequences for the next generation and many charities and causes you support. If you fail to identify these issues, your family may discover them at the worst possible time.
So, what can you do to stay current and complete? The answer is simple: conduct periodic strategic reviews of your estate plan to ensure that it's probate proof and otherwise up to date.
Why probate is generally something to avoid
- Probate can be costly. The total cost of probate can be anywhere from 5 percent to 15 percent of the estate's total value, varying in cost depending on the size of the estate to be administered. These costs are deducted from the estate, which means your beneficiaries will never see that money.
- Probate can be time-consuming. Even for a modest-size estate, probate can last between 6 months to a year, providing no complications. Your heirs won't receive their inheritance until probate is complete. Small Estate administration rules that speed probate up, but it still costs money and is a public process.
- Probate is public. One of the biggest drawbacks to probate is that it makes private matters public. When your estate is probated, your financial information, identities of your heirs, and other personal information all become a matter of public record, accessible to anyone who wants to look it up, possibly even online depending on the court system in the county in which your estate is probated.
Avoiding a Will or Trust Contest
A will or trust contest can derail your final wishes, rapidly deplete your estate, and tear your loved ones apart. But with proper planning, you can prevent that result.
What is a Will or Trust Contest?
A will or trust contest is a type of lawsuit filed to object to the validity of a will or trust.
If a will or trust is successfully contested (i.e., declared invalid), the court “throws out” the will or trust. If there is a previous will or trust, then those terms will control. If there are no other estate planning documents, Tennessee's laws of intestacy will control. This can be a disastrous outcome for your intended beneficiaries.
Who Can Contest a Will or Trust?
Only a person who has legal “standing” can file a lawsuit. Standing means that a party involved in a lawsuit will be personally affected by the case's outcome.
The following people have the standing to question the validity of a will or trust:
- Disinherited or disadvantaged heirs at law--Family members who would inherit or inherit more under applicable state law if the deceased person failed to make a valid will or trust.
- Disinherited or disadvantaged beneficiaries-- Beneficiaries (such as family, friends, and charities) named or given a larger bequest in a prior will or trust.
Providing for Charities at Death
If you want to support a cause or are otherwise charitably inclined, you should be sure that your wishes are well known to your family or a lawyer. A charity can be the beneficiary of a trust that gives you the ability to pass assets to charities without probate, delay, or expense.
If you use a revocable trust, you retain the ability to change or terminate the trust during your lifetime. If you don't want to change or terminate the trust you can give to charity through an irrevocable trust. Other giving strategies using trust designed to benefit one or more charities can provide benefits to charity and provide tax benefits to your family or yourself.
Special Needs Planning
All children are a blessing. From the day they are born, you begin making plans to ensure that your child or grandchild has a bright future. What will their interests be? What job will they have? Who will they marry? While these are common concerns for most families, for those with a special needs child or grandchild, taking steps to ensure they have a safe, happy, and healthy future is even more important than the additional hurdles they may face. To help provide a prosperous future for your special needs child or grandchild, we suggest the following steps:
Have a Special/Supplemental Needs Trust Prepared
One of the first things you can do in your estate planning is establishing a special or supplemental needs trust (SNT) to benefit your child or grandchild. An SNT is a special type of trust designed to set aside money and property for the benefit of a beneficiary who may qualify for public assistance for medical and other care expenses due to his or her disabilities. This type of trust can be added to an existing trust or drafted as a standalone trust.
Write Down Your Instructions
Besides creating an SNT, writing a letter or memorandum of intent can provide excellent instructions to the trustee you choose about what is to happen after you have passed. Although this document is not legally binding, it can give your trustee insight into your true intentions. You can include instructions regarding the types of things you want the money to be used for (so long as they are allowable under the various government rules), milestones you would like to see the beneficiary achieve, and the standard of living like the beneficiary to have.
Consider Life Insurance to Provide the Necessary Funds
Supporting a special needs child or grandchild can be expensive. While you are working or have a stream of income, you can allocate money as you see fit. However, not everyone has enough of a nest egg to continue covering these expenses for their special needs child or grandchild once they have passed away. By purchasing life insurance and naming the SNT as the beneficiary, you can guarantee that there will be sufficient money at the trustee's disposal to care for your child or grandchild. Life insurance can be an attractive option because it is paid out as a lump sum and does not have the same income tax liabilities as retirement accounts.
Review Your Retirement Accounts
With the passage of the SECURE Act, most beneficiaries lost the ability to stretch distributions from an inherited IRA over their life expectancies. However, Congress created a new class of beneficiaries called “eligible designated beneficiaries,” including disabled beneficiaries. These beneficiaries retain the ability to receive distributions over their life expectancies, reducing the amount of income tax due when those distributions are made. Congress also passed additional rules allowing the disabled beneficiary's life expectancy to be used for certain types of trusts. If you have a large retirement account, we must meet to discuss ways this money can be distributed after your death to maximize its benefits to all of your beneficiaries.
Give Us a Call
Ensuring that your special needs child or grandchild is cared for after you are gone is likely a top priority for you. Our priority is to help you craft a plan that will ensure continued support and prosperity for your loved ones. Call us today to schedule your appointment.
Hiring a lawyer can be a stressful thing, however, the Law Offices of Charles R. Frazier helps clients achieve the peace of mind that comes with planning for the future. Our experienced estate planning attorney can help you create a brand-new estate plan or modify an existing one. We guide clients through their fears and concerns and then help them find peace of mind. We are committed to providing all clients with personal service and attention to their legal matters.
Allow The Law Offices of Charles R. Frazier to Help
Contact our office today and allow us to help you plan for your future.