It could seem as though arranging for the transfer of your assets to your loved ones after you pass away is a very simple matter. However, the “powers that be” have a way of complicating things and this is certainly true when it comes to estate planning.
At the risk of sounding flippant with regard to a serious matter, dying can be mighty expensive if you don’t plan for it properly. With this in mind one of the primary goals of estate planning is to do what is possible to make sure that the value of your assets is not significantly reduced as these resources are being transferred to your loved ones after death.
The estate tax is one of the major sources of asset erosion and there are many strategies that can be implemented to mitigate your estate tax exposure. Another thing that can whittle down the value of your estate is the process of probate. Probate involves a period of time when the probate or surrogate court determines the validity of the will and supervises the administration of the estate by the executor or personal representative. There a number of fees and other expenses involved in probate that can reduce the value of your estate by anywhere from 3% to perhaps as much a 7%. Probate is also time-consuming, taking several months to several years to run its course. And, it is a matter of public record.
A good way to avoid the expense and loss of personal control that comes with the probate process would be to create a revocable living trust. With these trusts you can name yourself as the trustee and the beneficiary while you are still alive and name a successor trustee and remainder beneficiaries to assume these roles upon your passing. With these trusts you get the best of both worlds: you retain full control of your assets while you are alive but you enable the smooth, efficient, and cost-effective transfer of your assets to your loved ones after you pass away.
Larry Parman
Founding Attorney
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