Pillar 2: Estate Planning Flashcards
What is a Will?
Will needs to be updated every 3-5 years, it has no plan if your incapacitated, it is public knowledge, any one can access what the will states from the county clerk for a few dollars after you die, it will always go into probate that taxes your family 18% and takes 3 years to settle, and it may be contested in court.
What’s a Revocable Living Trust?
A Revocable Trust contains durable power of attorney that names you as the principal and the person you choose the proxy/agent to make decisions on your behalf in case your incapacitated and happens immediately with no contest, it eliminates the probate process and financial hardship placed on your family, it’s 100% private not public information that can be accessed, and is settled in 60 days.
What is probate?
Probate is a serious of court hearings that validate your death and will, the court will pay off your debt to lenders first, the court will publicly inventory your assets that is accessible at the county clerks office, and the process takes 3 years before transferring assets to the living’s name.
How does Estate Planning avoid the Probate Process?
Estate planning is a private process. The estate documents are witnessed and notarized. To access the documents it is very difficult, a party would have to go through litigation and sue each person individually named in the estate, including the successor trustee, trustee, and beneficiaries. This process is very taxing and difficult on a party so it eliminates the risk of frivolous lawsuits.
What do we teach our clients?
We teach our clients to retitle the name of their assets and take the assets out their personal name and place the assets into the name of the family trust they create to eliminate any personal liability. As a result, there is nothing in your personal name for the state to probate against your family in court. A Revocable Trust is not a PERSON it is an entity that you control 100% and since it’s not a person there is no reason for the court to be involved.
The benefits of a Trust?
- Prevents court control of assets. The successor has immediate control and follows your planned outline for your assets.
- Eliminates expensive guardianship and conservatorship hearings. The successor trustee will work with your trustees to ensure any minor children our provided for in the trust.
- A Trust is settled in a manor of weeks and not years.
- The Trust eliminates the hassle of going through probate in multiple states. Each state you own assets has their own probate process.
- The Trust saves your family from financial hardship. The Trust doesn’t take 3 years to settle and doesn’t cost your family 18% of the money you leave them in taxes.
- A Trust is 100% private and does not become public information that is obtainable at the county clerk office. The litigation process of a Trust is difficult and eliminates lawsuits against the trustees for your assets.
- A Trust minimizes financial and emotional stress during the grieving process. The estate planning gives a detailed outline of your wishes with no back and forth difficulties that cause stress and financial hardship on your loved ones.
- In a Trust assets are distributed immediately or can stay in the Trust until you deemed they are distributed. It can put into place requirements you deem fit like finishing college, passing a drug test, or an age requirement. In the probate process a lump sum is dumped onto a loved with no guidance or direction from you to help them out in their future planning.
- A Trust can reduce the burden of Capital Gain Tax. A Trust provides what is called a Stepped-Up Basis clause, the heir only pays the Capital Gains on a large asset, like land or a house, at the value that you purchased it at and not the current value of the asset.
What is the role of Successor Trustee?
The Successor Trustee will act as you if you are incapacitated. They will collect money that is owed to you, pay your bills each month, and maintain your family’s livelihood. They will keep your family’s life running smoothly until you are well enough to take back control. They will ease the burden of transition when you are gone so your family may focus on the grieving process. It is one of the most important decisions a person will make in their lifetime.
Do I lose control of my assets if I take them out of my name?
Absolutely not! You remain 100% control of your assets. The Trust is attached to your social security number, but the assets aren’t in your personal name and relinquishing personal liability.
Do I have to own the home before I transfer the deed into the Trust’s name?
No you don’t. You will send the warranty deed you received at closing through an encrypted email to our team and we will restructure the warranty deed into the Trust’s name. This process is simple, but takes a little time to complete.
Does a beneficiary have to be an individual?
No, a beneficiary can be an individual or an organization. You may leave your assets to family members or an organization like a church or nonprofit. You can structure your Trust to allot a percentage to multiple entities with explanations on how to use the money and why. You will provide our team with a Letter of Understanding that gives as much details as possible of the why and how to use the money. It will provide the trustee with clarity and guidance.
Who decides if I’m incapacitated?
A medical doctor determines if you are incapacitated with a second opinion as an option. This will help your family avoid the Probate Process. Your family will also learn:
- Capital Gain and Death Tax
- 100% control of your Assets
- Make sure those loved ones with special needs have their benefits provided to them in the future
- It will ensure your outlined wishes are followed by your trustees
How can I be sure my Successor Trustee will follow my outlined wishes?
The Successor is legally obligated to follow your exact wishes because the Estate Plan is a legally binding notarized document. This why it is important to name the right person as your Successor to avoid litigation.
What happens if I move states?
The Trust won’t need to be rebuilt, but the Trust will need to be reviewed to adhere to any additional requirements or clarification the new state requires.
