Good estate planning is more than just a simple Will. It minimizes potential taxes and fees (including Federal and State gift and estate taxes), and sets up contingency planning to make sure wishes regarding health care treatment are followed before and after death. A good estate plan also coordinates what happens to a home, investments, business, life insurance, employee benefits (such as a 401K plan) and other property in the event of disability or death.
Trusts are estate-planning tools that can replace or supplement Wills and can also help manage property during life. A trust manages the distribution of a person’s property by transferring its benefits and obligations to different people. Maintaining assets in a Trust often makes it easier to minimize taxes and leave a larger inheritance. A Trust is also a way to provide a steady income to the Beneficiary over time (as opposed to distribution in a lump sum), thus reducing the Beneficiary’s tax burden, allowing the Trust to grow through investment, and keeping assets free from creditors of the Trust beneficiary. Trusts can also be established for the benefit of charitable organizations.
Probate is the legal process of transferring property following a person’s death. Although probate customs and laws have changed over time, the purpose has remained much the same: an individual formalizes his or her intentions as to the transfer of his or her property at the time of death (typically through a Will); his or her property is collected, certain debts are paid from the estate and the property is distributed accordingly.