A fear many people have is the cost and problems associated with probate, with probate being the court proceedings to transfer ownership of assets when a person has passed away. The cost of probate, depends upon the State and the complications of the estate. For example, Colorado has a probate system which is, relatively, quick and inexpensive taking up to eighteen months, allowing for all bills and costs to come in. Estimates on probate duration is anywhere from six months to several years.
From a legal perspective, all people should at least explore estate planning to some degree. The reason is simple, the government wants the assets to move. If there is no estate plan in place, the laws of the state where a person died will govern how and to whom the estate is transferred. For example, in many states if an adult child dies, does not have a spouse or children, the adult child’s assets will go to a surviving parent.
Talk with a lawyer in your state to see where your assets will go if you do not make the determinations yourself. If you decide that the distributions made on your behalf by the state are not to your liking, that attorney should be able to help you make an estate plan. This estate plan will be primarily created using wills and trusts.
One key element of estate planning is the will. People make wills for various reasons, peace of mind being one. Many in the emergency service world create wills for this purpose. After all, the next call a first responder could be on could involve a fire fight, a car chase, or a collapsing building. Perhaps the reason is because you want to take advantage of the process. Regardless of the reason, wills have a couple of benefits.
Having a will means you determine who among family and friends will receive what things. Say you have a sixteen year old nephew and a car, perhaps you will says the nephew gets the car. Or perhaps you have a cat that you want to give to a good friend. A will can help in these instances.
Wills also serve the purpose of avoiding certain taxes. Of course, Uncle Sam gets his cut. However, certain gifts are tax free, such as gifts under a certain amount. Perhaps the will gives money to charity, this has tax implications.
Another tool is the trust. One main benefit is that a trust can benefit you directly while you are alive. A trust can own property and act on that property, for example a trust can operate an apartment complex. The profits will go to the trust and then to you.
Additionally, a trust can augment the decisions made in a will. For example, you gave the cat to a close friend in your will. The will can also give money to a trust, with the trust giving money to the friend every year until the cat passes away. A trust can also exist for the purpose of holding property, such as a car, until the person you want to have the vehicle reaches an appropriate age.