Assuring security for your future and the future of your loved ones is imperative. This can be accomplished with Estate Planning. First of all, what is an estate? An estate is all the property owned by an individual at the time of his or her death. This can include real property, life insurance policies, stocks and bonds, and all tangible items or personal property, such as artwork and jewelry. Second, what is Estate planning? Estate planning is the practice of arranging for the proper transfer of a person’s estate to specified individuals and appropriate disposal of any financial obligations upon the person’s death. With a carefully contemplated estate plan, a person can protect their assets and provide for their intended beneficiaries. Common estate and probate planning documents include wills, trusts, beneficiary designations, and advance directives. Many people believe that without the use of these common estate planning documents, a person does not have an estate plan. However, this is incorrect. If a person does not prepare an estate plan, the person’s assets, any transfers of ownership, and financial responsibilities are dealt with according to the Probate Code and State laws and regulations.

Things to Consider

An estate owner must carefully consider where and/or with whom they want their assets ultimately transferred to up upon the estate owner’s death. Various goals to consider when estate planning include ensuring the largest amount of the estate passes to the estate owner’s intended beneficiaries, paying the least amount of taxes, avoiding or minimizing the need for probate, and providing for and protecting the estate owner’s loved ones. Because estate planning involves several complex issues, estate owners should contact an estate planning or probate attorney. A common practice for attorneys in estate planning is to have the potential client complete a questionnaire. These questionnaires seek very private and personal information that is necessary in order for the attorney to effectively and efficiently handle one’s case. If you are requested to complete a questionnaire, you should be as thorough, clear, and complete as possible to enable the attorney to objectively and effectively evaluate your situation. While this questionnaire will help an attorney understand the basics of your situation, during the process of preparing an effective estate plan you will need to provide many more documents and much more information, including financial information, details about your life and your intended beneficiaries lives, and personal goals for your loved ones’ futures.

In addition to the benefits already mentioned, such as avoiding probate and securing your future and the future of your loved ones, there are many additional benefits of estate planning. Some of these benefits include easing the strain on your family and loved ones during the probate process, minimizing expenses, planning for sudden incapacity, and making your retirement years easier.

It is commonly believed that estate planning is for elderly people. However, this is not correct. In fact, far too many young and middle-aged people die suddenly or become mentally and/or physically incapacitated. The complications which arise due to sudden tragedies can be avoided with estate planning. Plus, estate plans are flexible and can be tailored to fit the needs of a younger individual or an elderly person. Regardless of age, any person with assets and/or children should contemplate estate planning and all the crucial benefits that come with preparing a well thought out estate plan.

Since Probate is often times misunderstood, before discussing how to avoid the painful and time consuming process, here is a brief explanation describing probate. Probate is the legal process of settling, in other words figuring out, the estate of a deceased person. This generally consists of resolving any and all claims and distributing to beneficiaries an estate’s assets. Probate proceedings occur in a state’s probate court. Most counties’ probate court is separate from the county’s State court. A judge presides over cases during the probate process. The probate process attempts to protect the directions and wishes of the decedent and protect the interests of the decedent’s loved ones. Probate typically lasts several months, sometimes even years. Probate can be very costly and can result in the estate, beneficiaries, family members, and others incurring hefty travel costs, attorneys’ fees, and estate taxes. Additionally, probate is a public proceeding, so any and most all phases of probate are subject to public scrutiny.

Ways to Avoid Probate

Because of the numerous disadvantages of probate, most people are advised to avoid probate. How, though, can a person avoid probate? There are numerous ways to avoid probate. All methods of avoiding probate can result in saved time, stress, and money, as well as preservation of privacy. A common notable misconception about probate is that by avoiding it, a person will avoid paying estate taxes. While this is the case in some situations, it is not true in every situation. Federal and state laws pertaining to estate taxes have been modified over the years and can be very complicated. One should consult an accountant, CPA, and/or probate attorney regarding estate taxes before depending on avoiding the taxes.

One popular, fairly simple, and very effective way to avoid probate is to execute a living trust. A living trust is a separate entity to which a person or persons transfer ownership of various assets from the individual or individuals to the trust. The assets become the property of the trust. Upon the death of the trust’s creator, the person or persons named as beneficiaries of the trust acquire ownership of the trust, in turn acquiring ownership of the assets belonging to the trust. Living trusts are less costly than probate, are often times easier and quicker to deal with, and preserve the privacy of the deceased and his or her beneficiaries and heirs.

Another method of avoiding probate is by setting up Paid on Death (P.O.D.) designations on all bank accounts, setting up Transfer on Death (T.O.D.) designations on all brokerage accounts, and naming beneficiaries on all other assets that allow it, such as real property deeds and life insurance policies. A crucial key to avoiding probate is having named beneficiaries on all assets that allow the naming of beneficiaries.

A third way to avoid probate, in states that have community property with the right of survivorship or joint tenancy with the right of survivorship, is to die intestate, meaning to die without a will. In community property/joint tenancy states, dying intestate results in the living spouse inheriting all of the decedent’s property. However, there can be complications. For example, when a decedent dies intestate in an attempt to leave everything to his or her spouse, the plan may be thwarted if the spouse died first, the couple dies simultaneously, or state laws are revised.

Other Options

While it is usually beneficial for all persons to avoid probate, you should carefully weigh your options and evaluate your assets, your ideal estate plan, and preferred path of securing your future and the future of your loved ones before making any permanent decisions.  If probate cannot be avoided, there is always the option of applying for an inheritance cash advance, which allows you to receive your inheritance without waiting through the entire probate process.

A will executor, also commonly referred to as an estate executor, is the person appointed to administer the will of another person. Generally, this individual is someone the creator of the will believed to be trustworthy, honest, and responsible. The estate executor is named in the will document and will have several specific duties and responsibilities.

The primary responsibility of an executor is administering the estate probate of the deceased according to the will instructions. This will generally consist of carrying out the wishes of the deceased individual and distributing the decedent’s estate to any and all beneficiaries according to the will instructions. This may sound simple; however, being the executor of will involves numerous steps, considerable risk, and can be a tedious and arduous process.

A person should give great consideration to the time and effort demands involved in executing a person’s will before agreeing to assume such great responsibility. The proposed will executor should discuss in great detail his or her potential duties with the will creator, as well as the potential size of the estate and other details that may help the proposed executor decide whether or not to accept the immense responsibility.

The various duties of a will executor may include:

(1) ensuring funeral arrangements are followed according to the will instructions, or the decedent’s wishes if the will is not attainable at the time of the funeral,

(2) consulting a qualified probate attorney, possibly the attorney who wrote the will, if applicable,

(3) filing appropriate papers with the probate court,

(4) communicating with any and all beneficiaries, including any charitable institutions that may have been included in the will,

(5) locating all assets, such as real property deeds, bank accounts, and insurance policies,

(6) preparing a detailed inventory of all estate items,

(7) paying taxes, debts, and applicable fees from the estate – in other words, settling any liabilities of the decedent,

(8) distributing assets to beneficiaries,

(9) commencing a lawsuit on behalf of the decedent, and (10) preparing and filing federal and/or state tax returns.

This is by no means a complete list of the duties required of a will executor. However, this list of duties should give you a good indication of the enormous amount of responsibility and probate planning a will executor may face. Also, keep in mind, not all executors have the same duties because individual wills and estates will require different duties, administration tactics, and unique instructions. No matter what, in executing the will, an executor must abide by state laws and regulations pertaining to wills and trusts. In addition, the will executor must comply with the terms of the will and cannot abuse powers conferred upon him or her. By being a will executor, an individual is subjecting himself or herself to the possibility of a lawsuit, either against the individual or against the decedent’s estate.

Besides having the honor, depending on how you look at it, of being a person’s will executor, individuals bestowed with this responsibility are compensated from the estate for their time and effort. Typical compensation is about 3% of the estate.  However, state laws vary on how much a will executor may receive. This should be thoroughly discussed between the proposed will executor and the creator of the will before the will executor agrees to undertake the responsibility.

The ideal probate attorney is one that will keep you and your loved ones OUT of probate. However, realistically that’s actually very difficult to do. Besides, if probate attorneys could keep all of their clients out of probate, then their profession would be moot. So what, then, should you look for in a Probate Attorney?

Types of Probate Attorneys

Generally, there are two types of probate attorneys: the ones that handle the administrative, or transactional, side of probate and those that handle the litigation aspect. Many probate attorneys provide services on both the administrative side and the litigation side, but some specialize in one area or the other. You will want to know which kind of attorney you should seek. In other words, if you suspect you will need to be represented in a battle over estate items, then an attorney practicing probate litigation is a good option for you. Often times, attorneys well-versed in estate planning and wills and trusts are fairly equipped to provide services in probate matters. However, your ideal probate attorney will be one that regularly handles probate matters and also knows about other fields of law that may be related to or may affect the probate process. For example, real property law may be involved, especially if the decedent (the dead person) has extensive or complicated real estate assets.

A good probate attorney will ask to see certain items when you meet with them. This may not occur in the first meeting with an attorney; however, at some point near the beginning of the attorney-client relationship the lawyer should ask for certain items. Some of the items probate attorneys should ask to see include copies of the decedent’s will, trust, deeds to real property, insurance policies, and trust agreements. In addition to the attorney’s questions and documents you should show the attorney, you will want to ask the attorneys several questions in order to decide whether they are your ideal attorney. Examples of questions you should ask attorneys you meet with include:

• What does the probate process entail?
• How many similar matters has he or she handled?
• How long has he or she been practicing the respective area of law?
• How would the lawyer charge for his or her services?
• What are the lawyer’s rates?
• How would the attorney go about handling your case?

Finding a Probate Attorney

One wise recommendation is to research several probate attorneys, prepare a list of a few attorneys that potentially suit your needs and meet with them all. By meeting with a few different attorneys, you can get a feel for how each attorney works, get varying information that is specific to your case, and compare prices. When researching attorneys, you should review a probate attorney directory or legal websites such as www.lawyers.com, www.findlaw.com, www.calbar.org and research attorneys’ biographical information. Additionally, check out each attorney’s website, if the attorney has one. Check whether the attorney has expertise in the area of probate, wills and trusts, and/or estate planning and whether state bar disciplinary action has been brought against them. Attorneys with certifications in specific areas, such as trusts and estates, specialization in estate or probate planning, or a Master of Laws (LL.M) in any of these areas are valuable attorneys to speak with because they have had a required number of years of experience and continuing legal education focusing on the relevant area of law. Although experience in itself does not make a good lawyer, often times it can help.

A common question that troubles the minds of individuals who are putting together their will is whether they will be able to leave their loved ones with enough inheritance money, or property, to take care of their estate’s outstanding bills. As many rightly know, before your beneficiaries can receive the inheritance that you intend to leave with them, your outstanding debts must be taken care of beforehand.

At present, the US and world economies are in bad shape. As parents, caretakers, or just caring individuals — we want to be able to ensure that not only what we leave behind is enough to take care of our own debts, but also to give extra to those who we care about so deeply. While we cannot predict tomorrow, and we cannot know with 100% certainty how our final wishes will be carried out once we have passed on, there are certain things that we can do to help ensure that our loved ones are taken care of.

Write a will

The most important thing that you can ensure that your loved ones will be taken care of is by writing a will. Sometimes life may throw a curve ball at us, or we put things off for too long thinking that we have plenty of time to put a will together. The fact of the matter is that there is no better time than right now to write a will.

By writing a will, you are not only allowing yourself to have the final say regarding who receives what from you after you pass on, but you are saving your loved ones time, money and potentially even from strife. Instead of relying upon the courts to divide your estate, where the costs and fees for the probate process can take away from your family’s inheritance, you get to decide how your final wishes are carried out.

Retirement funds, 401(k)s, and life insurance policies

Unbeknownst to some, certain accounts, such as 401(k)s, can be given directly to a beneficiary and will not be used as part of your estate for consideration of repayment of past debts or estate taxes. While the guidelines surrounding direct payment of benefits to beneficiaries can vary from state to state, by having these types of accounts in place, you are able to provide for your loved ones even if your estate is not able to hold up under the weight of your outstanding debts.

Give gifts to your loved ones now

One other way to ensure that you can place treasured belongings, or even property, into the hands of those whom you want to receive it, is to give it to them while you are still living as a gift. While the law has certain limitations on how much you can give away as a gift in a single tax year, giving gifts, financial or otherwise, is another way that you can help to provide for your loved ones. Giving gifts is especially important if you are concerned as to whether your estate will be able to take care of your outstanding balances.

You cannot predict what tomorrow might bring, and even while you may be buried under a mountain of debt to this very day, this does not mean that you cannot leave something behind for your children, your siblings, or even your friends. With a little bit of probate planning and maybe even a little bit of momentary sacrifice, you can help ensure that you leave behind as much as you can for your loved ones.

Some people would call it luck, while others would just say that it’s being born into the right family. Average Americans who have a keen ear for pop culture are becoming more and more interested in the lives of famous heirs who are waiting their turn to inherit more money than we could ever imagine spending. Here are some of today’s leading heirsand heiresses staking their claims on their relatives’ fortunes.

In an ideal world, we would like to hope that our belongings would be passed on to our family and friends in a way that we were comfortable with. While you may have your own ideas regarding who should receive what when you pass on, the unfortunate reality is that in many cases, passing your belongings on to your loved ones is not a simple, two-step process.

Even if you have undergone extensive probate planning, and you have a will, or maybe even a living trust in place- certain procedures must take place before your family will receive what you have left to them.

Payment of debts and taxes

Your estate, which is a compilation of all of your physical belongings and certain assets, has a fixed monetary value. When you pass on, before your belongings can be given to the heirs of your estate, certain taxes, as well as any outstanding debts, must be taking care of. Now, if your estate has enough liquid capital to take care of the debts and estate taxes — your estate may not need to be liquidated. However, if there is not enough money available to pay off your accounts or taxes, there is a good chance that at least a portion of your estate will need to be sold off in order to take care of these obligations.

Regardless of whether your belongings are distributed through the probate process, or whether a Trust oversees the distribution of your estate; before your beneficiaries can lay claim to the property, or belongings, that you have left to them — these outstanding debts must be satisfied.

Distribution to your family and loved ones

Once your estate’s financial obligations have been taken care of, your belongings are distributed to those who you have specifically left them to. The executor, or sometimes called an administrator, executes your final wishes regarding the distribution of your belongings. If your estate was liquidated to take care of your financial obligations, it is the executor’s job to try to distribute the remnants of your estate to your beneficiaries in a way that is as fair as possible while still respecting your final wishes.

If you do not have a will

If you do not have a will in place, this can complicate the distribution of your belongings to your loved ones. In these cases, the court system will ultimately decide who holds inheritance rights in regards to your belongings, and that will depend on the laws of your state. Leaving the final say of who receives what in the hands of the court system is not something that many people intend or want, but without a will, this is how the process works.

While the saying, “you can’t take it with you” is certainly true — this does not mean that you cannot leave your belongings to the loved ones of your choosing. For this reason, the importance of writing, and maintaining, a will cannot be understated. No, you cannot take your belongings with you, but you can definitely leave them in the hands of somebody who can use them.

Just as you are required to pay taxes in life, your property and belongings are subject to taxation even after you pass on. Moreover, in some cases, your beneficiaries must pay taxes on your belongings that you leave to them according to probate law.

Here are a few things that you should know about inheritance taxes, and even a few tips that may allow you to minimize the amount of tax that your beneficiaries must pay.

Inheritance taxes vs. estate taxes

Some people confuse inheritance taxes and estate taxes, and while they both, in fact, tax your estate, the differences between the two largely lie in who is responsible for paying these taxes. Estate taxes are determined by the overall value of your estate, and they are paid from your estate to the government — state, federal, or both.

In contrast to estate taxes, beneficiaries are responsible to pay inheritance taxes after they have received a portion of your estate. For example, if you intend to leave a valuable item to your best friend after you pass on, your friend may be required to pay taxes on the value of the inheritance that you have left for them. It is unfortunate, but in some cases, your beneficiaries may actually need to sell their inheritance or get an inheritance loan in order to pay the inheritance tax.

Inheritance tax rates and your relationship to heirs

In many states, your relationship to your beneficiaries determines, at least in part, their inheritance tax rate. If you leave property to your children, for instance, it is taxed differently than if you leave property to a friend of yours.

Typically, if you leave part of your estate to your parents or your children, this transfer of property will result in a lower inheritance tax rate than if you leave property for a brother, sister, aunt, uncle, or a friend. Likewise, if you leave a vacation home to one of your best friends, your friend will pay a higher inheritance tax rate than your brother would pay if you left the vacation home to him.

You may be able to bypass the inheritance tax system

Many people feel that inheritance taxes place an unfair burden upon beneficiaries, especially when they are dealing with the loss of a loved one. Moreover, some people feel that the government is essentially “double dipping” by taking taxes not only out of the estate, but also out of portions of the estate that are distributed to the beneficiaries.

Here are a few situations where you may be able to bypass the need for your beneficiaries to pay inheritance taxes, or at least to lower the amount that they must pay:

1. Require your estate to pay inheritance taxes - If you specify in your will that you want your estate probate to handle all of the inheritance taxes, you may be able to alleviate this burden from your beneficiaries.

2. Pass your entire estate on to your surviving spouse - In many states, when an estate passes to a surviving spouse, not only is the surviving spouse exempt from paying inheritance taxes, they are also exempt from paying estate taxes.

3. Minimize the value of your inheritance -Inheritance taxes are determined based on the value of the property that you are transferring to your beneficiary. In some states, non-spousal beneficiaries may be able to bypass the need to pay inheritance taxes if the value of the property that you are transferring falls below the state’s minimum tax requirements.

Final word on inheritance taxes

In a perfect world, your loved ones would not be taxed on gifts given to them after you pass on. However, the world is far from perfect. Nevertheless, by knowing how the inheritance tax system works, you will be in a better position to help alleviate some of the additional financial burdens placed upon your loved ones at an already difficult time in their lives.

Hard financial times can strike us all on occasion. Whether we are facing personal hardships, a local downturn in the economy, or even a worldwide recession –the effects can be felt in our own lives and can put a strain on our personal finances. If you are facing your own economic crisis and are on the verge of receiving an inheritance, here are a few things that you can do that will allow you to use your inheritance to your advantage.

Remember Inheritance Taxes

Something to keep in mind is that when you initially receive your inheritance, you may be required to pay taxes on the value of what you receive. Now, depending on which state you live in, your relationship to the decedent, or which deductions you can claim, your inheritance tax rate can vary from nothing to a significant percentage of the value of your inheritance.

If your state requires inheritance taxes to be paid, you generally have a pre-determined number of months to pay those taxes. Unfortunately, in cases where your inheritance consists of real property or personal property, you may actually need to sell off a portion of your inheritance just to satisfy the inheritance tax. For this reason, if you are set to receive an inheritance, it is highly recommended that you find out whether you are required to pay an inheritance tax, as well as your other inheritance rights.

Use Your Inheritance to Pay Off Debt

For some people, an inheritance can give them a way to start taking care of some outstanding debts, albeit a positive opportunity that has come about through negative situation. Now, sometimes individuals look at receiving a large inheritance, especially when it is cash, as a way to pay off major debts alone, instead of a way to help them get through their current financial hardships while paying off debt at the same time.

If you are in the middle of your own economic crisis, while commendable, it is probably not in your best interest to take the whole of your inheritance and apply it to a one-time debt. Instead, consider consolidating your debts and working out payment arrangements with creditors. This way, you can use your inheritance not only to take care of your outstanding debts, but also to provide stability for you in case you experience any fluctuations in your take-home pay.

Multiply Your Inheritance - Use It as an Investment

One of the best ways to use your inheritance, even amidst an economic crisis, is to use it as an investment tool. While there are a number of different ways to go about this, the result would be the same — multiplying the value of your inheritance.

For instance, let’s say that the current economic crisis has caused the prices of homes to go south considerably. If your inheritance consists of a large amount of cash, it may be worthwhile to consider purchasing property while the prices are very low. Now, obviously, you should do your research, but if you receive a large sum of cash, with house prices at an all-time low, and especially if analysts say that there will be an uptick in housing prices in the near future — this could be a very sound investment.

Another example of investing your inheritance could be if you receive an antique vehicle, piece of farm machinery, or even an old painting. If you have the means available, and it would increase the value of what you have received, restoring something and then selling it may very well help you to multiply your inheritance.

These are just two ideas that you could use, though they may not be applicable to your situation. Nevertheless, the point remains that if you are facing an economic hard time, you can try to use your inheritance money so that it brings you more money than you receive from the inheritance alone.

Using Your Inheritance to Your Advantage in an Economic Crisis

It is inevitable that at one time or another, we all will be faced with some sort of financial hardship. What is more, though, is that many of us will receive an inheritance or two throughout our lifetimes. While it is true that receiving an inheritance is a sad time due to the recent loss of loved one, it does not mean that we cannot, or that we should not, use the inheritance to help us out in our current situation.

In fact, the exact opposite is true — our loved ones give us an inheritance so that we can use it and benefit from it. By being smart with your inheritance, not only will you be able to take care of past due bills, but you also may be able to steady yourself through an economic hard time, or even multiply the value of your inheritance several times over.

Nobody likes to think about their own death, but to ignore the inevitable is to put the financial future of your family at risk.   Proper probate planning of your estate before you die can be the difference between providing for your family after you are gone, or leaving them with financial and emotional stress as a result of disorganized finances and an improper distribution of wealth.

Remember, you are never too young or too old to create a good estate plan – especially if you have children.  The steps below benefit every adult from the 20’s on through to their 90’s.

• Think about the big picture.  Take a few hours to sit down and think about your family and their individual financial situations.   Consider your spouse, your children and their children and how your passing might affect them financially, and what their needs will be in the coming years.  This will help you develop a “big picture” game plan for your estate planning.
• Talk to your accountant. If you have a family or business accountant, this is a good time to go through all your finances with them and make sure everything is in order.  By discussing these matters with a professional you will help ease the potential tax burden or debt on your heirs.
• Create a will and/or trust. Next, it is time to contact an estate planning attorney who can help you prepare a will or trust.  An estate planning attorney will be able to assist you with everything from the fair and equitable distribution of your assets, right on through to the writing and execution of your will.
• Consider important potential medical decisions.  Although we try not to think about it, there may be decisions required of those closest to you if you become incapacitated due to illness or injury.  Think long and hard about how you would like these situations handled, and who should make the decisions if you cannot.  Then, communicate this information to your estate planning attorney so that the direction can be incorporated in your will.
• Choose a representative.  One of the most important, yet often overlooked aspects of estate planning is the selection of a personal representative for the estate.  This is an absolutely crucial decision, as the representative (known as the executor) will be responsible for overseeing the distribution of funds and working with an attorney to resolve any disputes should they occur during the probate period.
• Create a detailed inventory of your holdings and property.  If there are items in your will that you are earmarking to be distributed to family and friends, the burden will fall on the representative to find them and get them in the right hands.  Make the representative’s job easier by creating a comprehensive inventory of your possessions and where they can be found.  In particular, make sure to reference the location of all your tax records and financial papers.  Note how you’d like any inheritance money to be distributed as well.  If there is a particular accountant you would like to work with you representative, name that individual as well.