Often estate planning focuses on the “big picture” issues, such as who gets what, how to avoid probate, and tax planning to minimize gift and estate taxes. Often, there are many smaller issues, which are just as critical to the success of your overall estate planning. Below are some of the issues that are often overlooked by clients.
Is there sufficient cash? Estates incur operating expenses throughout the administration phase. The estate often has to pay state or federal estate taxes, filing fees, and various legal expenses associated with settling the estate just to name a few.
How will taxes be paid? Although the estate may be small enough to avoid federal estate taxes, there are other taxes which must be paid before any disbursement to your beneficiaries occur.
What, exactly, is held in the estate? A list documenting what major items are owned by the estate should be left for your successor trustee.
Your estate can’t be settled until all creditors have been paid. As with your assets, be sure to leave your successor trustee a document listing all creditors and account numbers.
Some assets are not subject to the terms of a trust. Instead, they are transferred directly to a beneficiary according to the instruction made on a beneficiary designation form. By keeping your beneficiary designations up to date, the asset is not included in the probate estate and simply passes to your designated beneficiary by operation of law.
Fund Your Living Trust
Your probate-avoidance living trust will not keep your estate out of the probate court unless you formally transfer your assets into the trust. Only assets which are legally owned by the trust are subject to its terms. Title to your real property, investments, and other financial accounts should be transferred into the name of your living trust.