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Estate Planning

More than wills and trusts. It's about finding comfort in the circle of life.

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Throughout our lives, we spend so much time worrying about making a decent living. We ask ourselves questions like, "Will we have enough for a new house? Can I afford that new car? Can I take that trip I've always wanted to take?" But the years pass. You've built up an estate, and achieved success. Your focus shifts away from taking care of yourself to ensuring your loved ones are cared for after you're gone. That's what estate planning is all about.

Some traditional methods of estate planning include:


Wills are the most basic of estate-planning documents. First introduced in medieval England, wills are basic instructions to a court on how a deceased person wanted to distribute money and property. Everyone who is concerned how their estate will be divided should (at the very least) have a current and valid will.

What's in a Will?

Within a will, you describe several things:

  1. Who you are, and what right you have to give away property;
  2. A description of the property itself; and
  3. Exactly who you want it to be distributed to.

Wills are extremely easy to draw up. A qualified estate planning attorney, although recommended, is not always required.

Publicity vs. Privacy

While its simplicity is a definite benefit, a will has serious disadvantages. For instance, a will is only an instruction to a court of law, and therefore it can be contested. Once entered into court, your will is public record, eliminating any privacy.

Can a Will Be Invalid?

Unfortunately, when a will comes before a court, you are no longer around to vouch for it. A will can be found to be invalid for several reasons including:

  • Improper execution
  • The grantor was not mentally competent and able to understand what they were doing when they executed the will
  • The will was made under duress, or as a result of undue influence from another person

If the will is found to be invalid for any reason, the court will usually treat it as though you had died intestate, or without a will. At that point, the particular state you reside in will decide how your property will be distributed. And if there are no living relatives, the property reverts back to the state.

Wills and Probate

The process of having an attorney present your will before a court is called probate. Unlike living trusts, each and every will must go through the probate process. Probate usually ties up the estate anywhere from nine months to two years, and can cost approximately 2% of your entire estate value.

What Happens if You Become Incapacitated?

Wills only become effective when you pass away; they do nothing for you while you're still alive. For instance, if you should become incompetent, and not have named a trustee or given power of attorney to someone else, the court will decide your proper medical care and distribution of assets. By the time you pass away and the will goes into effect, there may be little of your original estate left for your family.

Nothing Worse than Death and Taxes

Wills do nothing for estate taxes. Individuals that have assets, including real estate, over $1 million are subjected to extreme estate taxes that climb up as high as 50%. Plus, if you're married, a will may not maximize the Unified Credit exemption for both individuals. In some cases, the $1 million exemption meant per individual is reduced to $1 million per couple.

Drafting Your Own Will

Each family's situation is different. For some, a will is sufficient; however, it is the most basic of estate planning documents. If you wish to preserve your wealth for generations to come, then you may want to combine a will with other advanced estate-planning techniques.


Over the last two decades, the popularity of Living Trusts has skyrocketed. No longer a tool just for the rich, Living Trusts are one of the most common estate-planning tools in use today.

This legal arrangement, usually drafted by an estate attorney, creates a separate entity called a Living Trust. A Living Trust is called that simply because it is created while you're alive (as opposed to a "testamentary" trust created after death).

The Parties Involved

The Living Trust document itself names three different parties:

  • The Grantor is the individual (or couple) that establishes the Trust
  • The Trustee is the person named by the Trust as the controller of the Trust’s assets (in many cases, the Trustees are the same people as the Grantors)
  • The Beneficiaries are the heirs that will benefit from the Trust once the Grantor’s have passed away
Who Needs a Living Trust?

Almost anyone with an estate of $100,000 or more can benefit from having a living trust. Estates of $100,000 or more are often subject to probate in their state of residence, which can cost anywhere from 2-4% of the estate's value in court and legal fees.

The living trust is also useful for individuals subject to estate taxes. Through a living trust, a couple is able to maximize their Unified Credit to its fullest. It even accomplishes protection for individuals wanting to avoid conservatorship.

Advanced living trusts can be structured for complicated family situations. Remarried spouses, with children from a previous marriage, can use an advanced revocable trust to ensure kids receive their proper inheritance.

Avoiding Probate

Living Trusts avoid probate, since they are completely private. Because a trust is recognized as a separate legal entity, distributions can be made by a Trustee to named beneficiaries without any involvement from the courts.

The courts maintain no control over the Trust's assets, and do not tie up the assets in a lengthy (and costly) probate process. The Trustee simply distributes assets to named heirs, but only if those assets have actually been placed inside the Trust.

Funding Your Living Trust

Once established, almost anything can be placed in a trust: bank accounts, stocks, bonds, real estate, life insurance and personal property. In "funding" the trust, you simply change the name or title on your assets to the name of your Trust. Many people worry about losing control of assets; however, that is not the case within a carefully constructed Living Trust.

Always There for You

Because control of the Trust is centralized, the Trustee can carry out your wishes when you're not able to. For instance, if you have children from a previous marriage and wish to leave them an inheritance, specific instructions to the Trustee will ensure that they receive what you’ve requested.

If you're institutionalized or unable to care for yourself anymore, the Trust can still function and make distributions as needed. The Trustee has a fiduciary responsibility to see that your requests are fulfilled exactly. He or she can even provide care and protection for disabled relatives or handicapped children in accordance with your wishes.

Reducing Estate Taxes

The Living Trust also minimizes estate taxes by fully utilizing every individual's Unified Credit. The Unified Credit, as mandated by Congress, shelters up to $1 million from estate taxes. With only a will in place, a married couple will receive a single $1 million exemption. However, if a Living Trust with "A-B Provisions" is in place and one spouse dies, the Living Trust separates into two separate trusts (commonly referred to as an A-B Trust), thus sheltering more of the Trust from estate taxes.

Easy Does It

Living Trusts are easy to start up and require little ongoing maintenance. They afford an extra measure of protection against loss of control, and ensure that your assets remain out of the public record even after your death. However, they do not provide protection against creditors or divorce, and do not reduce estate taxes for estates over $1 million in value ($2 million if married).


A power of attorney is used for situations where an individual cannot be present, but that individual has entrusted someone to do the job in their place. When someone holds "a power of attorney," they are able to enter into contracts, negotiate and settle matters as if they were that other person.

An ordinary power of attorney expires when a grantor becomes incompetent or passes away. The theory is that if the principal couldn't do it on their own, then the agent shouldn't be able to do it either. This makes sense in many financial and commercial situations, but makes little sense when dealing with elderly issues.

Durable Power of Attorney
Medical Power of Attorney

A Medical Power of Attorney (also known as a Durable Power of Attorney for Health Care) is critical because it allows a trusted agent to make healthcare decisions on your behalf.

  • The Medical Power of Attorney helps your doctors determine when life-supporting measures should be stopped. If your wish is to not use life-sustaining measures, you can convey this to the person you've named, and they will be able to fulfill your wishes on your behalf. A Medical Power of Attorney only has this responsibility to you for healthcare decisions and cannot make financial or other decisions on your behalf (unless you've granted both Powers of Attorney to the same person).
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