Frequently Asked Questions
Following are questions and answers that will help bring clarity to your planning needs. We understand that reviewing this information may raise additional questions and we are here to help. We want to assure you that American Advisors attorneys will be here for you throughout the entire process. By choosing LegalLifeLine, you will always have access to qualified legal professionals that will work on behalf of you and your family. Have a question you don't see here? Submit it online to customerservice@legallifeline.net and receive a response by email, or call 1-800-385-5859, Monday through Friday, between the hours of 7:00a.m. - 6:00p.m. EST.
- What is Estate Planning?
- What problems are we trying to avoid?
- What happens to your estate if you do nothing?
- What is Joint Tenancy?
- Does a Will provide all the protection I need?
- What are the benefits of creating a Trust?
- Will I still own my property if it is placed into a Trust?
- What is Guardianship?
- Does Joint Tenancy avoid Probate?
- Does a Will avoid Probate?
- Does a Trust avoid Probate?
- What is Probate?
- How much does Probate cost?
- How long does Probate take?
- Are the details of my estate kept private in Probate Court?
- What happens to the real estate I own in another state?
- Are there any other problems with Probate?
- Do all estates pay Federal Estate Taxes?
- If I have a small estate, do I need to worry about Estate Planning?
- Ultimately, how will a Trust benefit me and my heirs?
- What is a Healthcare Power of Attorney?
- What is the benefit of creating a Healthcare Power of Attorney?
1. What is Estate Planning?
A. Estate planning is the creation of a plan for managing your wealth while you are alive and distributing it at death. An estate includes all assets of value that you own, including real property, investments, insurance proceeds, personal property, business interests and personal effects.
2. What problems are we trying to avoid?
A. We all face obstacles in planning our estates: Guardianship and Conservatorship – These are expensive court proceedings to manage your estate if you are disabled, or distribute your estate upon your death.
3. What happens to your estate if you do nothing?
A. Experts report that 70% of all Americans do not have an estate plan. Unfortunately, for the majority of people without a plan in place, state law will dictate how their estate is distributed at death with no particular concern for the best interests of the family. Failling to plan results in Probate costs, attorney’s fees and possibly higher estate taxes.
4. What is Joint Tenancy?
A. Joint Tenancy, with right of survivorship, is when two or more people hold title to an asset together. Unlike other forms of joint ownership, upon death of one of the owners, the entire interest passes automatically to the surviving joint tenant(s). The right of survivorship means that whoever dies last owns the entire property. Because a joint tenant’s interest passes to the surviving joint tenant(s) immediately at death, it is not controlled by the owner’s Will.
5. Does a Will provide all the protection I need?
A. A Will is an important first step in outlining your wishes. Many people plan their estates by creating a document called a Last Will and Testament. A Will is a legal document that outlines how you want your assets distributed at death. A Will does not control the distribution of all your assets. Wills do not take effect until you die, so they do not help with lifetime planning. Upon your death, your Will becomes a public document when it is filed with the Probate Court and is available to anyone who wishes to read it. Once your Will enters the Probate process, your estate is no longer controlled by your family. It is in the hands of the Court.
6. What are the benefits of creating a Trust?
A. Property left in a Trust will go promptly and directly to your inheritors without costly Probate Court proceedings. Trusts are an efficient and effective way to transfer property at your death to the relatives, friends or charities you’ve chosen. Essentially, a Trust performs the same function as a Will with the important difference that property left by a Will must go through the Probate process while property left in a Trust will not.
7. Will I still own my property if it is placed into a Trust?
A. While you live, you retain ownership of all property you’ve technically transferred into your Trust.
8. What is Guardianship?
A. If you become mentally disabled before death, the Probate Court will appoint someone to take control of your assets and personal affairs. These Court appointed agents must file strict annual accounting with the Court.
9. Does Joint Tenancy avoid Probate?
A. No, it is not automated. Each Joint Tenant is required to sign documents on all major transactions involving joint property. If one of the owners is mentally disabled and incapable of handling financial matters, everything will have to wait until the Probate Court takes control.
10. Does a Will avoid Probate?
A. No. A Will only takes effect at the time of your death and it starts the Probate process.
11. Does a Trust avoid Probate?
A. Yes, if properly funded. One of the most important benefits of a Trust is that it is designed to protect you while you are alive. Part of a Trust is a section that sets forth your instructions in the event you become legally incapacitated. You can create your preferred care plan in advance of sickness, disability and even old age. The Trustees you pick are bound by law to follow your instructions during these difficult times. With a Trust, there will not be any need for expensive “help” from the Probate Court, Probate lawyers or conservators.
12. What is Probate?
A. At your death, your assets need to be distributed to your heirs, your debts need to be paid and any additional loose ends need to be resolved. You obviously will not be able to sign deeds, write checks or handle your business affairs. The Probate Court takes over these duties and it can be a long, complicated process.
13. How much does Probate cost?
A. Probate is very expensive. It has been estimated that the average cost is over seven percent (7%) of the gross value of the estate. Smaller estates are very vulnerable because even reasonable fees will greatly reduce the value of the estate’s assets. Remember, every dollar paid to Probate could have been used to benefit your family.
14. How long does Probate take?
A. The slow progress of your estate through Probate can be very frustrating for your family. Although this complex process usually takes at least one and a half years to complete, many estates take years.
15. Are the details of my estate kept private in Probate Court?
A. No. All Probate proceedings are open to the public. Anyone who has an interest can pull your Probate file and examine every detail of your financial life.
16. What happens to the real estate I own in another state?
A. Probate proceedings must be instituted in the state where you lived, but also in every state where you owned real estate. This is called Ancillary Probate. Each state has Probate jurisdiction of the real property located within its borders.
17. Are there any other problems with Probate?
A. Yes. Perhaps the largest disadvantage of Probate is that your family loses control of the estate. During Probate, your family may not be able to sell assets without court approval even if they need money. Your family may also pay an emotional price during Probate, since the process takes so long and is a constant reminder of their loss.
18. Do all estates pay Federal Estate Taxes?
A. No. The Federal Government has given every person in the United States an exemption for estate tax purposes. If your estate (at the time of your death) is less than the exemption, there will not be any Federal Estate Taxes due. In deciding whether your estate is greater or less than the exemption, the Government includes everything you own, even the face value of your life insurance policies.
19. If I have a small estate, do I need to worry about estate planning?
A. Yes. Although an estate under the exempt amount is free from Federal Estate Taxes, you will probably not avoid a Living Probate if you become disabled or a Death Probate when you die. Probate and Federal Estate Taxes have nothing to do with each other. Estate Taxes are paid to the Federal Government for the right to transfer property at your death. Probate fees and costs are paid to the Probate Court, attorneys, and the Personal Representative(s) of your estate for supervising the administration of your estate and distributing assets to your Beneficiaries.
20. Ultimately, how will a Trust benefit me and my heirs?
A. A Trust provides many benefits:
- Allow you to appoint representatives to take over if you become incapacitated
- Avoids Probate if properly funded
- May reduce or eliminate Federal Estate Taxes
- Allows you to control how your estate is managed and spent even after your death
- Can protect children from previous marriages
- Insures that your wishes are carried out
21. What is a Healthcare Power of Attorney?
A. A Healthcare Power of Attorney allows you to appoint someone you trust to make healthcare decisions on your behalf if you become incapacitated.
22. What is the benefit of creating a Healthcare Power of Attorney?
A. A Healthcare Power of Attorney (with Medical Directive) allows you to outline your wishes regarding end of life care so your loved ones will not be forced to make these decisions.
