What Is the Purpose of Estate Planning? What Are the Common Tools of Estate Planning? Why Should You Have an Estate Plan?
You’ve just graduated from college and started your first job, or you’ve just married or had your first child. It’s not time to think about estate planning yet, is it? Isn’t that something that you do in anticipation of retirement? Not if you really want to protect your loved ones. Without an effective estate plan in place, your assets will pass under the laws of intestacy, set forth in a state statute. That may or may not be consistent with your intentions. With an estate plan, you can be very specific about who receives what from your estate.?
What Is Estate Planning
Estate planning is a legal process whereby you put measures in place to ensure the orderly distribution of your estate in the event of your death. Estate planning can also help you ensure that the needs of your minor children are handled, in the event you and your spouse die in an accident or otherwise leave your children without parents or guardians. An effective estate plan will consider the potential tax implications of different strategies, with the objective of maximizing the amount passed on to your heirs.
What Are the Most Common Estate Planning Strategies?
Assuming that you want to take specific steps to plan your estate, there are three ways to do that:
- You can make lifetime gifts of property (within limits)
- You can retitle property, so that it automatically passes to another person(s) upon your death
- You can create and execute dispositive documents, such as a will or trust, to identify how your property will be allocated upon your death
Lifetime Gifts
Under the federal tax laws, you can give up to $17,000 per year per person (married couples can double that amount) without incurring a gift tax. There is no limit on the number of years you may do this.
Retitling Property to Avoid Probate
Property that is owned jointly by two or more people does not pass through probate, but will automatically be conveyed to all remaining living owners in the event of the death of a joint owner. This strategy can allow you to transfer real estate, motor vehicles, bank accounts and investment accounts without going through probate or incurring any tax consequences.
Using Dispositive Documents
A will is a written document that sets forth how property will be distributed in the event of a person’s death. As a general rule, any property that passes through a will is subject to the probate process, where the court oversees the orderly distribution of the estate. When assets go through probate, there’s customarily a fee paid to the attorney who handles the probate proceeding.
A trust, on the other hand, is a legal entity created to own, buy, sell, transfer and otherwise deal with property. When you create a trust and transfer property to the trust, you no longer own the property (the trust does). Because you don’t own the property, it won’t be a part of your estate and won’t have to go through probate.
In addition to the distribution of your property, your estate planning can also identify who will act as your power of attorney (should you be incapable of managing your own affairs) and what type of medical treatment you will receive, should you be unable to make decisions about your medical care.
Contact the Proven Estate Planning Lawyers at Bailey & Galyen
At the law offices of Bailey & Galyen, we have more than four decades of experience successfully helping people across the Lone Star State create and implement effective estate plans. We have a comprehensive understand of the tools available to ensure the orderly distribution of your estate, and know how to tailor our counsel to respond to your unique circumstances. To learn more about your options and the ways that we can help bring you peace of mind, contact us by e-mail or 844-402-2992 call our offices at one of the convenient locations listed below. Our phones are answered 24 hours a day, seven days a week.
