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“The life of the law has not been logic; it has been experience.”

-Oliver Wendell Holmes, Jr.

Back To Basics – Estate Planning Part I


With the federal estate tax exemption amount now set at $5.25 million for 2013 and $5.34 million for 2014, and increasing annually with inflation, it may seem like estate planning is no longer important. While it is true that most estates will escape this tax, (the estate tax will affect less than 0.2% of decedents over the next decade) there remain many critical issues that most families want to address in an estate plan once they become aware of them. These issues do not depend on your age or level of wealth, but they will make your survivors wish you had bothered to prepare a written estate plan!

If you have no will or trust, you still have an estate plan – it is the set of default rules that will impact your estate after your death. If you desire to change any of the default results, then you need a written estate plan. The issues that seem to matter most to the majority of our estate planning clients include:

1. Avoidance of Probate. Probate is an expensive and time-consuming court proceeding to settle a person’s estate, which can easily be avoided. Sometimes joint tenancies and beneficiary designations can avoid probate completely. But for an unmarried person, joint tenancy subjects assets to the claims of the joint tenant’s creditors. More appropriate ways to avoid probate on certain assets can include a land trust; a Transfer on Death Instrument; and a Living Trust. Remember, if you have real estate located in another state, your estate may be required to go through a probate proceeding in each state in which you own real estate.

2. Guardianship or Conservatorship. Should you ever become unable to manage your assets- even temporarily- a court must hold a hearing and appoint a guardian or conservator. A Living Trust can allow a successor trustee, chosen by you, to step in and manage your assets without the need for this court proceeding. A Power of Attorney can also avoid guardianship, and the choice between these options must consider the additional benefits to be gained by the use of a Living Trust.

View the next post in this series - Back to Basics - Estate Planning Part II

For more information, feel free to contact Patricia Kraft, Timothy Murtaugh or John Egan.

Categories Estate Planning Legal Updates

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