What is estate planning? Founder of Wasinger Law Office, attorney Matthew Wasinger explains that estate planning begins by putting a legal roadmap in place so your heirs and a judge know exactly how your assets and children should be taken care of after you die. This is also a tool to help minimize estate taxes and probate fees. This can be in the form of a Will or Trust.
A Will is a legal document that gives instructions on how your assets should be handled after you die.
A Trust is a sort of legal entity that provides a shelter for your assets and also provides a more comprehensive breakdown of how your assets and children should be handled after you die. This helps protect your assets from Creditors and even unscrupulous family members.
An Estate is what you would call all of your assets and family that you currently have.
A Trust is Legal Agreement or Entity to avoid taxes, court, and a road map on how to handle an estate.
Yes, everyone needs at the very least a Will, but in many cases a Trust to provide total peace of mind that your assets and children are completely taken care of and avoid court and the high costs of probate.
Estate planning should be done by everyone right away. Accidents and tragedies happen all of the time to people of all ages. It is never too early to put an Estate Plan together.
Guardians of your children are people you appoint to raise your children until they turn 18 after you die. They are the people you would trust and want to carry on the values you want your children to grow up with.
Probate is a lawsuit you file against yourself to have the Court determine what assets and debts you have, and how they should be disbursed and to whom. As well as determine who will be guardians of minor children and, depending on the size of the estate, who will take care of the money until your minor children turn 18. Probate is completely public and in the hands of the Judge. No one, not anyone, creditors, heirs, etc. can make a claim, challenge or attempt to receive the assets and children unless a valid will and nomination of guardians is in place. This may take months.
Everyone that has any assets of any kind and anyone with children needs some type of estate plan. Not everyone needs the same level of estate planning, as it is all determined based on the total amount of assets you own. But the only way to ensure your assets and family decisions are handled the way you want them to be after you pass is to set up an estate plan.
Your Estate Taxes are paid at the top tax rate based on your overall assets minus your debts. So, your total net worth determines you’re what your Estate Taxes will be.
The minimum net worth that triggers the Estate Taxes changes relatively often. Currently, it is set at $11.18 million dollars a person until 2025. But just a year ago was only $5.49 million per person, and can be changed again if Congress decides to do so.
So, it’s important to speak to a professional to know what the current estate tax threshold is, what it may be in the future, and to plan carefully to avoid it.
Probate Costs are set by Florida Statutes as a percentage of the value of your overall assets. Unlike the Estate Taxes, which subtracts your debts to get your net worth, Probate Costs are based on your gross assets and do not subtract your debts. That means if you have a $1 million dollar home, and owe $999,999.999 on a mortgage on that home, your Estate Taxes would be based on the $1.00 of the net worth of the value of your home, while Probate costs would be based on the total $1 million dollars. That’s why avoiding probate is financially beneficial.
The only way to completely avoid probate is to set up an Estate Plan with a Trust that outlines how all of your assets should be distributed, who will take care of your children, and who will be in charge of any funds left for your children until they are 18 or at an age/date you set. A Will alone cannot avoid probate. As we like to say, “Where there is a Will, there is a Probate.”
Probate can be as short as three months. However, that is for extremely small estates (called summary administration) with very, very few assets. The majority of people would fall into probate that could take a year or more to complete.
Estate planning is the only way to ensure your assets and family decisions are handled the way you want them to be after you pass. It is the only way to avoid estate taxes and lengthy public probate proceedings. It is the only way to ensure your children are raised by the people you want them to be raised by. It gives you peace of mind that all of your decisions will be handled in private, outside of the court, and protects the hard work and money you have made over your life to go to the right people.
Deciding who is getting your assets after you die is a very personal decision. It can be people you have always wanted to give your things/money to, or it could be people you feel need them the most. There is no right way or wrong way to give away your possessions after you die. But we can give you some advice on things to consider to help you make the decision that is best for you.