Estate Planning

Why Estate Planning?

Life is a delicate thing that can be gone in a moment’s notice, and without a plan in place, your loved ones will be impacted greatly. An estate plan is critical in making sure that you have a say in what happens to your assets when you pass away, or become unable to make decisions for yourself. It is a misconception that estate planning is only for the wealthy. Everyone has an estate, no matter how large or small it may be. Capital City Law is dedicated to helping you create a plan for your estate, and making sure you and your loved ones are taken care of after you pass away.

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1. It protects you and your loved ones

Preparing for the unexpected is the best kind of security you can give yourself and your loved ones. With an estate plan in place, you are making sure your children receive the best care possible according to your specifications if you are unable to care for them yourself. If you do not put together a plan, you are leaving your children and loved ones in the hands of a court judge that will not know your situation, and may not choose the best option for your family.

Fee simple ownership

Fee simple property ownership is a term referring to the highest form of estate ownership. It entitles the property owner to full enjoyment of the property. The only limits are zoning laws, deed or subdivision restrictions, or covenants. This type of property ownership can be passed down through generations. In fee simple ownership, you own the property fully and can do whatever you like there within legal bounds.

Tenancy in common ownership

Tenancy in common allows two or more people to have ownership in a property. Upon the owner’s death, each shareholder has the ability to leave their share of the property to any beneficiary. The shares in the property may be of unequal size, and can be freely transferred to other owners during the owner’s lifetime and through a will. Even if there are unequal shares between owners, all owners still have a right to use and occupy all of the property.

Community property

Community property refers to joint ownership of assets between married couples in certain states. In Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, married couples are required to decide to have some or all of their property treated as community property between the two of them. In general, community property refers to all assets purchased or acquired by a couple during the course of their marriage. Those assets are owned equally by each spouse. Gifts and inheritances are not considered community property.

Joint tenants with right of survivorship

Joint tenants with the right of survivorship refers to a type of joint ownership in which co-owners have a right of survivorship. A right of survivorship means that if one owner dies, their share of the property will pass over to the surviving owner or owners by law, therefore avoiding probate.

Ownership by contract

In contractual ownership, the owner of the property has full control over the property during life, but then after death the property goes outside of probate to the beneficiaries designated by the original owner. The beneficiary will need to produce proof of death to claim ownership of the asset.

Your last will and testament is just one part of a comprehensive estate plan. If a person dies without a last will and testament, they are said to have died “intestate” and state laws will determine how and to whom the person’s assets will be distributed. Some things you should know about wills:

A will has no legal authority until after death. So, a will does not help manage a person’s affairs when they are incapacitated, whether by illness or injury.
A will does not help an estate avoid probate. A will is the legal document submitted to the probate court, so it is basically an “admission ticket” to probate.
A will is the only place to nominate the guardians (or back-up parents) of your minor children if they are orphaned. All parents of minor children should document their choice of guardians. If you leave this to chance, your children could end up with the wrong guardians.

Revocable trusts cover three phases of the individual’s life:

1. When the trustmaker is alive.

This is when the trust is initially drafted, and includes specifications allowing the trustmaker to invest and spend the assets listed in the trust for their benefit during their lifetime. The trust can be undone, hence the name “revocable”, and can be adjusted and changed throughout the trustmaker’s life. This is an important consideration because trusts become active immediately, rather than as soon as the trustmaker passes away.

2. When/If the trustmaker becomes mentally incapacitated.

The trust should specify what happens if the trustmaker becomes mentally incapacitated. Trusts generally name successor trustees, who are designated to step in and take over managing the trust in the event of the trustmaker becoming mentally incapacitated.

3. After the trustmaker passes away.

Because they can no longer make changes to their trust, once the trustmaker passes away, their trust automatically becomes irrevocable. The named successor steps in and pays the trustmaker’s debts, and distribute the assets as outlined in the trust.

Choosing What’s Right For You

Choosing the right option between a last will and a trust, depends on several factors. The best option for you will depend on both your circumstances and your personal preference. Considerations when deciding whether to invest in a will or a trust are:

Trusts do not go through the probate process. However, they are more expensive to create. Many people see the benefit in spending more money if they can avoid the long, and arduous probate process.
Trusts are more work to set up than wills are. But they are effective right away, rather than when you die.
You can’t use a trust to name an executor or guardians to your children. You can, however, with a will.
It’s important to consider the kind of property you own, and are distributing.
You have to consider whether you want to manage your estate plan, or want a lawyer to do so.
Trusts remain private, whereas a will becomes a public document when you pass away.
There is generally more legal protection in a trust than a will.
In a will, you can name guardians of minor children. You can’t do this with a trust.
You can name a property manager for property granted to children who are minors.
You can name an executor with a will, who wraps up your estate after you die.
Wills give you the freedom to leave instructions about how you want your taxes and debts to be paid off.

Choosing the right option for you is up to your jurisdiction based on your life’s circumstances and preference. It’s important in your estate planning process to consider all of your options, and all aspects of your life situation. If you need a second opinion, or simply answers to your questions, call Capital City Law today!

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ESTATE PLANNING

Estate Planning

Why Estate Planning?

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1. It protects you and your loved ones

2. Prevents potential conflict between potential beneficiaries

3. Puts your assets in the right hands

During your lifetime, you will acquire ownership of property in many different ways. Generally, they fall into five categories.

Fee simple ownership

Tenancy in common ownership

Community property

Joint tenants with right of survivorship

Ownership by contract

These two forms of contracts, and the corresponding decisions you make as to beneficiaries, are the most common forms of estate planning.

Your Last Will and Testament

What is a last will?

Steps involved in probate:

Revocable Trusts

Revocable trusts cover three phases of the individual’s life:

1. When the trustmaker is alive.

2. When/If the trustmaker becomes mentally incapacitated.

3. After the trustmaker passes away.

Choosing What’s Right For You

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