Estate Planning Law
1. What is Estate planning?
Estate planning is a process, which legally effects the arrangements of your personal finances, investment, business and your healthcare matters in the event you unable to give directions yourself due to death or disability. Good estate planning can also typically minimizes potential taxes and fees, and make sure your wishes regarding health care treatment and finances are followed.
2. What sort of instructions are made as part of an estate plan?
An estate plan consists of one or more documents that set forth instructions. Instructions to control health care decisions, your property in the event of your incapacity, and other documents that controls the distribution of your property in the event of your death.
3. What is asset protection planning?
Asset protection planning is a tax-neutral device designed to create legitimate legal hurdles that creditors have to jump through before they can collect on a judgment. Establishment of a properly implemented asset protection plan results in the placement of assets in trusts or other investment vehicles and thereby place them beyond the reach of potential, future creditors. In essence, properly implemented asset protection planning will permit the maker of the plan to successfully file bankruptcy at some future point in time or settle future claims for less than 100% payment while still legally benefiting from his/her assets.
4. Will the Asset Protection Trust generate income?
It could and it should. The assets transferred to the trust are usually invested in income producing activities
5. Are taxes dischargeable in bankruptcy?
Some are, some are not. Income taxes are dischargeable provided the income tax year in question is more than three years old and the tax return was timely filed. For example: 1997 income taxes could be discharged in a 2002 case provided the return was filed in 1998. Other exceptions apply as well.
Trust fund taxes (such as employee withholding taxes) are never dischargeable in Chapter 7. Speak to your attorney regarding the dischargeability of other types of taxes.
6. What is Probate?
Probate is a legal process during which the court oversees the distribution of assets that were left in a Will or left when a person died without a will. This process can take months or even years to be completed.
7. What assets are subject to Probate?
All assets owned by you in your own name, not in joint tenancy, in trust or with a beneficiary designation, are subject to probate administration when you die.
8. What is a Living Trust?
A trust prepared while the testator is alive. Typically a living trust is amendable and revocable, unless specifically stated that it is irrevocable.
9. What is a Bypass Trust?
A Bypass Trust, sometimes called A-B Trust, is a way for couples of combined estates of more than $1 million (2002 and 2003) to be exempt from estate tax if one or the other dies. The exemption amount from Federal Estate Tax increases to 1.5 million in 2004 and 2005, 2 million in 2006 through 2008, 3.5 million in 2009 and then in 2010 there is no federal estate tax. However in 2011 the Federal Estate Tax is returned to the 2002 level.
