Estate planning a gift to heirs
Not just for the wealthy
Carl R. Williams
Don’t put off estate planning. It isn’t only for the wealthy. If you have some assets, you need to plan.
Even if you don’t consider yourself wealthy, you should examine the value of your home, retirement accounts, and even life insurance benefits. If the value of these assets exceeds one million dollars, you could easily be paying huge taxes to the federal government. That is, if you die without establishing an appropriate plan.
Here are a few basic documents you should be put in place.
• Revocable Living Trust: In most cases, this is better than a standard will. With this type of planning, your assets are placed in a trust you create and manage while you are alive. The true
value of the trust is illuminated at the time of your death or incapacity. The person named as “successor trustee” can take over your affairs without having to petition the court, a process that can be quite arduous. The successor trustee is empowered to distribute your assets according to your directions, without the time-consuming and expensive process of probate. Finally, while you are alive, you can buy and sell assets in the trust, reporting the gains or losses on your personal tax return.
• Pour-Over Will: This document simply says that any assets you own, which are not titled in the name of your trust (perhaps your car, or your daily checking account) are moved into your trust at your death. Your successor trustee may then distribute them accordingly.
• Irrevocable Life Insurance Trust: This trust is used to hold title to your life insurance policies, allowing the proceeds to go to your beneficiaries, without becoming part of your taxable estate.
• Living Will: Also referred to as an advanced health care directive, this is a legal document that expresses specific instructions regarding the course of medical treatment to be taken by caregivers or, in some cases, the refusal of certain types of medical treatment. Once executed, the living will does not have any force or effect until you are unable, due to incapacity, to personally provide consent to proceed with certain medical treatments.
• Durable Power of Attorney for Health Care: This document nominates a specific individual to make all health-care decisions for you if you're are unable to do so. The decisions are based on wishes and representations expressly written in the health care power of attorney. This power of attorney may also limit the attorney (the nominated agent) by issuing certain directives not allowing some medical treatments to occur.
In a time when uncertainly seems to be flourishing, I recommend you take a few hours to protect the people and things you hold most dear.
Carl R. Williams is an attorney with the St. Thomas firm of Tom Bolt & Associates, PC, concentrating his practice in estate planning. He is also a local thespian, and an accomplished poker player.
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