2017
Estate Planning Frequently Asked Questions – Answered by a Cleveland, Akron Area Estate Planning Attorney
Eric Valente / 0 Comments /
Estate planning is a very broad term used to describe the process through which an individual designs, executes and implements a series of documents that provide for the management and distribution of assets. Estate planning also includes planning for your healthcare. I will answer some of the most frequently asked questions from my Cleveland, Akron area estate planning clients. However, if you have any other questions about estate planning, please take a look at our main Wills, Trusts and Estate Planning Lawyer Page.
Q: What is the purpose of estate planning?
A: The purpose of estate planning is to give direction and authority relating to the handling of your self, your assets and your family. Through estate planning, you accomplish this while you are healthy and able to make decisions, rather than under emergency situations or applying default rules. The purpose of estate planning is to plan for 2 main, separate matters. 1) Planning for your finances and assets. 2) Planning for your healthcare.
Q: What are the main components of estate planning?
A: The main components of most estate plans include:
Will : A Will distributes your personal assets to your heirs, and allows you to appoint a guardian for your children. The Probate Court will use the will to determine what happens to your assets and your family upon your death. If you have an estate plan with a revocable living trust, and you don’t have a probate estate, your Will won’t come into play after your death, but you will still need one.
Trust: A Trust provides extra control over your assets while you are alive and, more importantly, after you pass away. Rather than giving your children a lump sum upon your death, you can leave in Trust for their ongoing, extended benefit. A trust is totally private. A trust also allows you to save significant money and stress by avoiding probate court.
Power of Attorney: A Power of Attorney allows you to appoint an agent to handle your affairs if you are ever unable to do so yourself. There are a few different types of Power of Attorney authorizations, including:
Springing Power of Attorney: A Springing Power of Attorney is the same as a standard Power of Attorney, except it does not become effective until your incapacity.
Durable Power of Attorney: A Durable Power of Attorney is the same as a standard Power of Attorney, except it maintains its effectiveness even after your incapacity.
Heath Care Power of Attorney: A Health Care Power of Attorney allows you to nominate an agent to make health care decisions for you if you are ever unable to make them yourself.
Living Will: A Living Will allows you to direct your doctors to take you off artificial life support once you are terminally ill and permanently unconscious.
Q: What is Probate Court?
A: Probate Court is a court in every county which deals primarily with personal, family law related matters. In relation to estate planning, probate court has jurisdiction over all assets included in a decedent’s estate. A decedent’s estate is comprised of all assets that the decedent personally owned upon his death.
Q: Why is Probate Avoidance Important?
A: Probate Court is problematic and best to avoid for many reasons.
Probate estate administration is totally public. All of the decedent’s financial information needs to be provided to the Court and then uploaded onto the Court’s database. This is a major breach of personal privacy!
The probate estate administration is a slow process. A probate estate normally needs to be open for at least 6 months, because Creditors have a 6 month deadline to file claims against the estate. If there are any disputes or setbacks, the probate estate could stay open for years.
The probate estate administration is very technical, and easy to miss a deadline, or simple rounding errors confuse the technical accounting. The Court is during normal work hours only, so your family will have to miss work if they have to attend court.
The probate estate administration is EXTREMELY COSTLY! The executor is entitled to a fee for their service, and so is the executor’s attorney. The executor charges a fee set by statute starting at 4% of the first $100,000 in personal assets, and the attorney charges a similar fee. That is $8,000 of just the first $100,000! The cost of a probate avoidance trust is much less than $8,000, so it is a very wise investment.
Q: What’s the difference between a Will and a Trust?
A: In all probate avoidance estate plans, there will be a Will and a Trust. Everyone should have both, not one or the other. A Will is invoked by the Probate Court to control the probate estate, which is comprised of all assets decedent personally owned upon his death. A Trust is a separate document which allows you to appoint a Trustee to take legal title to your assets. The Trustee is required to hold the assets according to the terms set forth in the Trust Agreement. If the assets are properly funded into the Trust, then they will not be included in the Probate Estate. You can find more info on Trusts here.
Q: Is a Trust based estate plan better than a Will base estate plan?
A: Yes! A Trust provides total privacy, a faster process, much lower fees, much greater control over the distribution of the assets and taking care of the surviving spouse and children. The only reason not to have a Trust, is if you simply can’t afford it. A Will based estate plan without a Trust will generally be much cheaper than a trust based plan. This is the only downside of a trust versus a will based plan However, if cost is a prohibiting factor for you, you should call me to discuss flexible payment terms.
Q: What is Asset Protection?
A: Asset Protection is the process of shielding your assets from potential claims and lawsuit judgments. Normally, asset protection is achieved by transferring your assets into an asset protection trust. Ohio has a specific asset protection statutory law section called the Ohio Legacy Trust Act. You can find more information on Ohio Legacy Trust’s here.
Q: Where is my Probate Court?
A: Here are links and contact information for nearby courts, but I recommend you consult with me or another attorney before discussing anything with the court:
