Questions & Answers

How Do I Reduce or Eliminate Estate Taxes

For married grantors, the estate tax liability, which would otherwise be due at the death of the survivor, can be greatly reduced or completely eliminated by proper planning. This planning can be accomplished in a living trust (although it can also be accomplished through wills, this would require a separate probate at the death of each spouse). How much can be saved depends on the size of the estate and the estate tax laws at the time of the surviving spouse’s death. At the same time, the trust can also insure that the estate of the first spouse to die will ultimately go to his or her children or heirs; even though the surviving spouse is provided the lifetime economic benefit of all assets, and has complete management and control over the entire trust.

How Can I Avoid Probate Delays?

A living trust allows you to AVOID PROBATE.

Probate is a court procedure that is required if your assets are distributed without a will, under a simple will or under a will with a testamentary trust. In court probate proceedings, the court changes the legal ownership of your property when you die.

During probate the court must determine the validity of your will, supervise the payment of all your debts and taxes as well as the distribution of your probate estate to the people you name in you will. This process may take six months to a year, or longer, and is a matter of public record.

Assets that you leave to your heirs by a will go through probate, but property passed through a living trust does not. With a living trust you can avoid the delay in the distribution of your estate entirely; the assets of your estate can be distributed to your designated beneficiaries immediately upon your death.

Will a Living Will Save on Estate Taxes?

If your estate is subject to either federal or state estate tax, a trust can save substantial taxes for a married couple. These savings are obtained by being able to use the exemption amount at each death, instead of just at the death of the surviving spouse. However, a Living Trust will not save any death taxes for an individual unless other deductions are available, such as charitable deduction if you give a portion of your assets to charity.

We are Married. Can we still have a Joint Living Trust?

You have the option to prepare a Joint Trust along with all of the matching supporting documents for a “Non-traditional Couple”. We will determine the best type of Trust for you after taking into account your estate tax situation. Please note that only a legally married man and woman can use the Federal Estate Tax “unlimited marital deduction”; this means that, although the full exemption [currently $3.5M] is available at the first death, if the deceased party’s estate is greater that the exemption, there will be a tax due at the first death (even with the trust). However, by properly structuring the trust, you can keep the exemption amount from being taxed at the second death (which means the two of you can leave up to $7M in assets free of Federal Estate Tax!

What is a Living Trust?

A trust is merely an agreement, like a contract between two parties. The person establishing the trust (the “Settlor”) and the person holding the property (the “Trustee”) hold property for the benefit of another (the “Beneficiary”). In a typical living trust, these three legal “persons” are the same person; you. The term “living trust” means that the trust is established and funded during you lifetime, as opposed to a testamentary tryst which is created in your will and must go through probate to be funded. In order for a trust to be valid, binding instrument; all that is necessary is for the parties executing it to have the legal capacity to enter into a contract, including age and competency, and for the trust to actually own something (“the corpus”). To fund the trust, you can assign, deed and transfer your assets into the existing trust, including your real property. Once the trust is signed, dated and acknowledged by a notary Public, it is in full force and effect. Neither your trust nor will you need be recorded, with the exception that the deed transferring real property is usually recorded with the applicable Recorder’s Office.

I Have a Pet, Which I Want to Make Sure is Cared for After My Death. Can I do that with a Living Trust?

You can create a “Pet Trust” as an option; this trust can be for a specific animal or animals or for whatever animals survive you. You can designate different trustees for the care of the pet and the amount allocated for the care of the animal. You will also have the option to designate a trust “enforcer”; this person is a third party who has the right to make sure the funds are actually being used for the care of the animal.

How Do I Avoid Probate Costs?

When property passes through probate, you may incur many costs which can be substantial depending on the size of your estate and the location of any real property. All of these fees and expenses can reduce the estate to be distributed to your beneficiaries. With a living trust, these fees and costs can be greatly reduced.  Your assets are transferred immediately to your designated beneficiaries outside the court system in accordance with the directions specified by you in the trust agreement. Costs of administration of a living trust can be minimal and are generally based on the actual time and/ or services required.

Will my estate have to pay any Estate Taxes?

Whether your estate will be required to pay any tax on your estate at the time of your death depends on the size of your estate and the tax laws at the time of your death. Currently, an estate under $3.500.000 does not have to pay any federal estate tax; however, many states have separate state tax. Our estate planning, unlike most “on-line” services takes into account the state death tax as well as the federal estate tax. Generally, any part of your estate going to a surviving spouse of to a qualified charity is exempt from estate tax if your estate must pay tax, the federal estate tax rate is 45 percent. Typically state estate tax rates are considerably lower.

Can I Transfer Real Estate into a Living Trust?

Yes. In most cases real estate should be transferred into your Trust. Otherwise, upon your death, depending on how you hold the title, there will be a probate in every state in which you hold real property. When your real property is owned by your Living Trust, there is no probate necessary.

What is the Difference between a Living Will and a Living Trust?

A “Living Will” is a document that describes you wishes regarding life support if you are ever in a terminal condition or irreversible coma (think Terri Schiavo). As mentioned above, a “Living Trust” deals with your assets either in the event of incapacity or at death. Both are very important and necessary parts of a proper estate plan and both are included in our Trust Package.

Why Do I Need an Estate Plan?

Most of us spend a considerable amount of time and energy in our lives accumulating wealth. With this, there comes a time to preserve wealth both for your enjoyment and for future generations. A solid, effective estate plan ensures that your hard-earned wealth will remain available for your care and will remain intact when it passes to your beneficiaries.

What Would Happen if I were Mentally Disabled and had no Estate Plan or just a Will?

The possibility of a disabling injury or illness can be worrisome. Unfortunately, you may have to become the subject of a conservatorship or guardianship proceeding. If you become mentally disabled before you die, the probate court can appoint someone to take control of your assets and personal affairs. These court-appointed agents must file a strict accounting of your finances with the court. A Living Trust will help avoid this process because your assets are titled in the trust; and you have already appointed someone to act as the successor trustee of your trust if you are no longer able to act. Additionally, if you have created a Durable Power of Attorney and Health Care power; you have already given someone else the ability to make both financial and health care decisions on your behalf. In short, with a properly drafted and complete estate plan, you can eliminate the need for a guardianship or conservatorship.

Do I Need a Lawyer for a DUI Case?

You should hire a lawyer if anyone was injured or killed as a result of your DUI arrest; or you have several DUI’s; or your paycheck is based on keeping your license. Keep in mind Attorney Matthew Howell provides a free initial consultation to determine your circumstances and the possible consequences. Call now.

Do I Need a Lawyer to Incorporate My Business?

It all depends.  Do you understand the tax implications of a C-Corp, an S-Corp, an LLC?  Are there partners involved?  Is this a start up or are you purchasing an existing company?    Determining the appropriate corporate format will affect your future personal and tax liabilities. Call today for a free consultation with Attorney Jeffery J. Clark.  

Do I Need a Lawyer When Buying a Home?

The short answer is, “No”, but buying a home is a complicated purchase. A lawyer represents your interests, and will help you understand your rights and obligations. You are being asked to sign and understand documents that will affect your finances for the term of the loan, which is sometimes 30 years.  And how many stories have you heard about property right issues after the home was purchased? Call Attorney Jeffrey J. Clark for a free initial consultation.

(207) 363-5208


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