Estate Planning: Questions and Answers
By Jerry Kessler, Esq.
Estate planning has become a hot topic, not only among professionals such as attorneys and CPA's but also among individuals and families who want to know more about their rights and options. Everyone's fact situation is a little different, but some issues do come up repeatedly. The following questions may be the very ones that you have thought about, yourselves:
1. What is Estate Planning? Estate planning is the process by which we arrange for the eventual transfer of our property to our beneficiaries without the financial ravages of probate fees and estate taxes.
2. What are the basic legal documents used in estate planning? The basic legal structures of estate planning are wills and trusts. Other useful documents include the durable power of attorney and the durable power of attorney for health care.
3. What is the difference between a testamentary trust and an inter vivos trust? The testamentary trust is a trust written in a will. It takes effect only at the death of the signer, and is subject to probate proceedings. The inter vivos trust, or living trust, takes effect at the time it is signed, and may therefore be used both to control assets during the life of the signer and to provide for transfer without probate at the signer's death.
4. I'm not rich. Do I need a living trust? If you have more than $100,000 of assets in California, your estate may be subject to probate. Even if you are not wealthy, you may save your beneficiaries thousands of dollars, to say nothing of considerable time, effort and delay, by holding your assets in a living trust.
5. Should my CD's be in my living trust? A major purpose of the living trust is to be sure you don't have assets in your own name which would be subject to probate at your death.
6. What is joint tenancy? Joint tenancy is a form of title which features an automatic right of survivorship upon the death of one joint tenant. Property held in joint tenancy is not subject to probate.
7. So, why have a living trust, if I can hold all my property in joint tenancy? There are several important disadvantages of joint tenancy, including possible adverse gift tax consequences, loss of significant income tax benefits and loss of control of assets. Before you put assets in joint tenancy, you would be well advised to discuss this matter thoroughly with legal and tax counsel.