The Many Ways That An Estate Plan That Avoids Probate Can Help You

It is true that, is some situations, the probate process can be very time consuming. While your family might find this disadvantageous due to the stress of having this legal process hanging "over your head," the possible drawbacks of a time-consuming probate process go beyond that. In some circumstances, a drawn-out probate process can mean that your money might be tied up for weeks or even months without your loved ones having it available. That means that, while your bills, ranging from final expenses (if you don't have final expense insurance) to property taxes and utilities to legal fees all must be paid without access to that money. With an estate plan that successfully avoids probate, your money may be made available to pay for your final bills in a much faster manner.

Some people are also concerned about the potential loss of privacy that goes with many probate processes. In this age of identity theft and a wide array of other scams and predators, creating a public record of your wealth and the amount of wealth your loved ones will receive from you is something a lot of people might reasonably want to avoid. Creating this public record has other possible drawbacks, as well, depending on where you live. In some states -- Michigan is one such example -- the easiest way for your unsecured creditors to go after your assets is through your probate estate. If your estate avoids probate, and there is no need to open a probate case file at all, then you may be able to transfer your wealth to your loved ones without those creditors even knowing. 

Probate can be costly. Like most any legal process there may be lots of fees. A fee to open a probate estate. A fee to obtain what's called letters of authority or letters of administration. Inventory fees. And so on. What's more, the more wealth you have in your probate estate. the bigger those fees often are. Many states have considered or enacted significant increases in probate fees as a way to pay for a shortage of the funds needed to keep the state's courts running.

A few years ago, to address a budget shortfall, the state House of Representatives in Florida considered raising formal probate administration fees from a few hundred dollars to as much as $5,000. In Connecticut, the state addressed a $32 million probate court budget shortfall by increasing the price of probate fees such that those fees now pay for the probate courts' entire budgetary needs. An estate of just $600,000 (which for some people, is just the value of a home and personal property) carries a filing fee in excess of $2,000. If, for example, you are a small business owner with a $5 million probate estate, the administration fee, under the new law, is now more than $20,000. If your estate is more than $7 million, it's more than $30,000. 

However, with a carefully crafted and executed estate plan that avoids probate, you can protect yourself against the many threats, logistical hurdles and ever-increasing costs that go along with the probate process. A qualified estate planning professional can help you decide what type of plan works best for you.

Summary: If you've done much research about estate planning, you're probably familiar with probate and the notion of avoiding it. Avoiding probate may be beneficial because the probate administration process can be costly in terms of time, money and privacy. But the potential issues with the probate process, and the possible benefits of probate avoidance in terms of time, money and privacy, go beyond just want you may immediately think of. The advantages of an estate plan that is properly constructed and carried out to avoid probate, when it comes to saving you and your loved ones time, money and privacy, are actually even greater than what may appear on the surface.   

3 Dangerous Estate Planning Techniques When it Comes to Your Home @LegacyAssurancPlan

Legacy Assurance Plan: Fans of Saturday Night Live during the early 1990s will likely recall one of the show's most famous parody commercials, "Bad Idea Jeans." The crux of the joke in this sketch is that each idea the actors espoused was blatantly, obviously bad ... yet they discussed them as if they were perfectly common-sensical notions. The difference between good and bad estate planning techniques is often the exact opposite of a "Bad Idea Jeans" commercial -- things that are potentially very dangerous are often far from obviously bad; rather, they may often appear to make perfect sense. With that in mind, here is a list of 3 ill-advised yet common estate planning techniques related to your home that may seem like good ideas, but are really very bad ones.

(1) Adding your children to your home's deed. One method some people use to avoid probate is simply adding to the property's deed a child or other loved one to whom they would have left the home in their will or trust. While this can effectively avoid the need to probate that asset upon your death, this benefit will come at a steep price. First, it exposes your home to any potential liability that may cross your child's path. Whether it's a divorce, a failed business or an injury lawsuit, any court judgment that is entered against your child could place your home in jeopardy of being lost to that creditor. Even if your child is never sued, this technique carries certain tax consequences. Adding your child to the deed is actually a taxable gift in the eyes of the IRS and may require you to file a gift tax return and/or pay gift taxes. Furthermore, this technique may have very damaging capital gain tax consequences if your child later decides to sell the property.    

(2) Pocket deeds. This a technique where you, as the owner, execute a deed transferring your home to the person you want to receive it on your death. Instead of recording it, you simply store the deed someplace secure and, when you die, your loved one records the deed and takes possession of the property without the need for a probate administration. Like adding children to a deed, this can successfully avoid probate but carries numerous potential dangers. One is possible loss of control. The person to whom you deeded the property is under no legal obligation to wait under your death to record the deed. Legally, she could record the deed, take possession of the property and demand that you leave immediately... and be 100% within her rights. Also, the use of pocket deeds may increase the risks for other future problems, like a cloud on the title of the property, which may cause problems with obtaining title insurance. Furthermore, this method can cause harm in terms of capital gain taxes. For calculating this tax, the pocket deed will lead to your loved one having a smaller "basis" in the home, meaning that her capital gain tax obligation will be higher if she sells it.

(3) Transfer-on-death deeds. Transfer-on-death (TOD) deeds are not universally bad ideas. There are several situations where they can serve an essential role in an estate plan. In some other situations, though, they have the potential to be problematic. Say, for example, that you have several children and that your plan goals dictate that all of your children take an equal portion of your wealth, including your home. In this scenario, a TOD deed has the potential to generate more headaches than benefit. If you name all of your children as co-beneficiaries on your home's TOD deed then, once you die, all of them must agree in order to act. All of them must agree on a realtor who will sell the property. All of them must agree on the sale price. All of them should chip in equally to pay for the home's upkeep until it sells. Even if all of your children are agreeable when it comes to decisions about the home, securing consensus on all of these decisions can be a logistical hassle. In this case, placing the home in a trust where decisions are managed by a trustee you name might make more sense and save your children time and stress.

Legacy Assurance Plan (Summary): Estate planning, like any form of planning, has a wide array of tools and techniques that can be used. Some tools can be very helpful in some circumstances, and very harmful if used in the wrong situations. Other techniques are almost always very bad ideas that can have very dangerous consequences. For many people, the centerpiece of their estate is their home. In order to make sure that your plan accomplishes your true goals regarding your home and does so with the least amount of stress upon you and your loved ones, it is important to make sure that your plan avoids the potential pitfalls presented by using tools that are "bad ideas."

Legacy Assurance Plan - Estate Planning for Your Treasured Collectibles

Legacy Assurance Plan - In 2012, the New York Times published an article that mentioned a Georgia woman named Sandy Paschal and her collection of "Department 56" holiday villages. While the name "Department 56" may conjure to mind your mother or grandmother's collection of Snow Village pieces she dusts off and displays every year at Christmas time, Paschal's menagerie was something much more. It numbered thousands of pieces and had an appraised value in excess of $100,000. Many people today possess collections, ranging from coins to baseball cards to comic books to model trains to vintage dolls. Whether your collection has a large monetary value like Paschal's or holds much more worth in terms of sentimental value than dollar value, you probably care about what happens to your collection after you die. Creating an estate plan and including your collection in your plan is a great way to help ensure your goals for your collection are met.

As a starting point, it may help to know how much your collection is worth. Given that some individual stamps, coins, comic books, baseball cards and "Star Wars" figurines are worth thousands of dollars, your collection, especially if you've had it a long time and taken great care of your pieces, could hold more monetary value than you'd think. This is important for multiple reasons. For example, if you have a coin collection that turns out to be worth $25,000, and you have a specific loved one you wish to receive it, you may want to factor that $25,000 figure in when you decide how much to leave that person (and your other loved ones.) Also, if you consider giving that collection to your preferred recipient during your lifetime, there are tax implications of doing this that you should take into consideration before you transfer the collection's ownership.

Regardless of whether your collection is worth $100 or $100,000, you likely cherish it very much and want it to pass to someone who will enjoy it as much as you have. You may have a child whom you love and trust and definitely desire to include in the distribution of your wealth, but whom you anticipate would take you beloved collection and immediately put it on ebay, donate it to a thrift store or simply unload everything in a yard sale. There are ways to plan to avoid that outcome. One way is to sell the collection yourself. By selling the collection in your lifetime, you control the way in which the collection is offered for sale, and vastly increase the odds that the person who receives the collection is a like-minded collector who will appreciate the collection for more than just its dollar figure. Similarly, giving your collection away during your lifetime also allows you to assert some greater control over who receives your collection.

If you decide to hold your collection until your death, it is very important that you make sure your estate planning documents are sufficiently specific so that your loved ones know how how to handle your collection. Things like china or collectible figures generally do not have ownership documents and, in the abstract, would be considered to be just another part of your household effects. So, if you don't want your 19th Century china collection and your Department 56 villages lumped in with the dishes and the knick knacks you bought at Target last year, your plan documents need to say so in clear detail. If you have an estate plan that includes a revocable living trust, your trust has a place (often labelled as "Schedule A") that can help you in doing this. You can specifically list things like your Cabbage Patch dolls or your collection of Lionel trains or your vintage Louis Vuitton handbags as assets that you are expressly funding into your trust using your Schedule A. Then, in the section of your trust that spells out the details of the distribution of your trust's assets, you can state exactly what you want to happen to each of those collectibles.

Summary: One of the great benefits of estate planning is control. If you are someone who possesses a cherished collection, that control may be particularly important to you. Through proper planning, you can make sure that the person who owns your collection after you is someone who will appreciate it as much as you have. If you have an estate plan with a revocable living trust, you can control the distribution of your collectibles by funding them into your trust using Schedule A and then providing detailed distribution instructions in the asset distribution section of your trust. 

5 Common Mistakes When It Comes to Estate Planning - Legacy Assurance Plan

As with any area knowledge, estate planning is something that may seem very mysterious or overwhelming to some. For others, they may think they know about estate planning, but as the old quote from English essayist Alexander Pope says, "a little learning is a dangerous thing." In order to make informed decisions about your estate plan, it helps to know what is truth, what is misconception and what is myth. With that in mind, here is a group of five erroneous thoughts people have about estate planning, and why they can be dangerous.

(1) I don't have enough wealth to justify creating an estate plan. Experts universally agree that, regardless of the size of your estate, you should create an estate plan. Even if you have only modest wealth, chances are that you care about the legacy you'll leave behind and who receives your assets. If you don't create a plan, the state makes one up for you and the distribution plan your state creates probably won't match your wishes. Additionally, a thorough estate plan does a lot more than just distribute your assets. It also can enhance your control regarding who manages the affairs of your estate after you die, who would make decisions for you if you became incapacitated and who takes over as the guardian of your minor or special-needs children.

(2) I already have a will, so my estate plan is set. Not necessarily. A will is an integral part of any estate plan, but a will by itself is rarely enough. Your will allows you to dictate directions regarding the distribution of your assets, but it does provide you any assistance regarding who acts on your behalf if you were alive but unable to make decisions for yourself. A complete estate plan would, in addition to a will, also include a financial power of attorney that allows you to designate an agent who would step in to manage your finances when you're unable, as well as documents that would allow a person of your chooisng to make decisions for you regarding personal, healthcare and end-of-life choices.

(3) Living trusts are only for the very rich. Not true. While it is true that living trusts can offer certain tax-related benefits to people with large estates, they also provide advantages that people with any size estate can receive. Properly created and maintained, they avoid probate. This has the potential to save your family time and money distributing your wealth after your die. Also, probate administrations matters are public in most states, while the process of wrapping up a living trusts is typically carried out without the creation of any public records. So, if you're concerned about privacy, this can be a substantial benefit.

(4) I created a plan with all of those documents. They're signed, notarized and safely stored. I'm all finished. Also not true. Your estate plan is similar to your car, your home or your health. They need regular care and maintenance. A periodic analysis, or check-up, can ensure that the plan you executed is still in optimal condition. Maybe something in your life has changed. Maybe the law has changed. Or maybe you just changed your mind about something. A periodic review can make sure that your plan meets your goals as they stand today.

(5) Anyone can create an estate plan. This is a mistake, too. You may have found a form book at a library or an office supply store. Or maybe it was a page on the Internet. Those documents were probably drafted by capable professionals, but they may not have been lawyers from your state, and they definitely weren't created based upon a personal consultation with you. The best estate plans are those whose documents are customized based upon the unique estate planning laws of your state of residence and the specific parameters of your desires and objectives. Also, be careful about picking just any lawyer. You probably wouldn't want an expert in patent law to defend you in a murder trial and you also probably wouldn't choose a mergers-and-acquisitions attorney to handle your child custody case. Similarly, an attorney from your home state who deals regularly with estate planning cases can offer you advice, insight and strategies that other lawyers might not have.

Summary: People have lots of things they think they know about estate planning. Sometimes they're right, sometimes they're a bit off-base and sometimes they're wrong. By educating yourself, you can learn why experts universally agree that everyone needs an estate plan, as well as how to move pro-actively to ensure you get the best plan possible for you.