Frequently Asked Questions About Estate Planning
1. Why do I need an estate plan?
Most of us spend a considerable amount of time and energy in our
lives accumulating wealth. As we do this, there also comes a time
to preserve wealth both for our enjoyment and for future
generations. A solid, effective estate plan ensures that your
hard-earned wealth will pass intact to those you intend to be your
beneficiaries, instead of being siphoned off to government
processes and bureaucrats.
2. If I don't create an estate plan, won't the government
provide one for me?
YES. But your family may not like it. The government's estate plan
is called "Intestate Probate" and guarantees government
interference in the disposition of your estate. Documents must be
filed and approval must be received from a court to pay your bills,
pay your spouse an allowance, and account for your property and it
all takes place in the public's view. If you fail to plan your
estate, you lose the opportunity to protect your family from an
impersonal, complex governmental process that is a burden at best
and can be a nightmare.
Then there is the matter of the federal government's death taxes.
There is much you can do in planning your estate that will reduce
and even eliminate death taxes, but you don't suppose the
government's estate plan is designed to save your estate from
taxes, do you? While some estate planners favor wills and others
prefer a Living Trust as the Estate Plan of Choice, all estate
planners agree that dying without an estate plan should be avoided
at all costs.
3. What's the difference between having a will and a Living
A will is a legal document that describes how you want your assets
distributed at death. The actual distribution, however, is
controlled by a legal process called probate, which is Latin for
"prove the will." Upon your death, the will becomes a public
document available for inspection by all comers. And, once your
will enters the probate process, it's no longer controlled by your
family, but by the court and probate attorneys.
Probate can be cumbersome, time-consuming, expensive, and an
emotional trauma in a family's time of grief and vulnerability. Con
artists and others with less than pure financial motives have been
known to use their knowledge about the contents of a will to prey
A Living Trust avoids probate because your property is owned by the
trust, so technically there's nothing for the probate courts to
administer. Whomever you name as your "successor trustee" gains
control of your assets and distributes them exactly according to
There is one other crucial difference. A will doesn't take effect
until you die, and is therefore no help to you with lifetime
planning, an increasingly important consideration now that
Americans are living longer. A Living Trust can help you preserve
and increase your estate while you're alive, and offers protection
should you become mentally disabled.
4. The possibility of a disabling injury or illness scares
me. What would happen if I were mentally disabled and had no estate
plan or just a will?
Unfortunately, you would be subject to "living probate," also known
as a conservatorship or guardianship proceeding. If you become
mentally disabled before you die, the probate court will appoint
someone to take control of your assets and personal affairs. These
"court-appointed agents" must file a strict accounting of your
finances with the court. The process is often expensive,
time-consuming and humiliating.
5. If I set up a Living Trust, can I be my own
YES. In fact, most Living Trusts have the people who created them
acting as their own trustees. If you are married, you and your
spouse can act as co-trustees. And you will have absolute and
complete control over all of the assets in your trust. In the event
of a mentally disabling condition, your hand-picked successor
trustee assumes control over your affairs, not the court's
6. Will a Living Trust avoid income taxes?
NO. The purpose of creating a Living Trust is to avoid living
probate, death probate, and reduce or even eliminate federal estate
taxes. It's not a vehicle for reducing income taxes. In fact, if
you're the trustee of your Living Trust, you will file your income
tax returns exactly as you filed them before the trust existed.
There are no new returns to file and no new liabilities are
7. Can I transfer real estate into a Living
YES. In fact, all real estate should be transferred into your
Living Trust. Otherwise, upon your death, depending upon how you
hold title, there will be a death probate in every state in which
you hold real property. When your real property is owned by your
Living Trust, there is no probate anywhere.
8. Is the Living Trust some kind of loophole the government
will eventually close down?
NO. The Living Trust has been authorized by the law for centuries.
The government really has no interest in making you or your family
go through a probate that will only further clog up the legal
system. A Living Trust avoids probate so that your estate is
settled exactly according to your wishes.
9. Isn't a Living Trust only for the rich?
NO. A Living Trust can help anyone protect his or her family from
unnecessary probate fees, attorney's fees, court costs and federal
estate taxes. In fact, if your estate is greater than $100,000,
you'll find a Living Trust offers substantial benefits for you and
10. Can any attorney create a Living Trust?
NO. You should choose an attorney whose practice is focused on
estate planning. Members of the American Academy of Estate Planning
Attorneys receive continuing legal education on the latest changes
in any law affecting estate planning, allowing them to provide you
with the highest quality estate planning service anywhere.