Estate Planning FAQ

Q: What happens if I do not have a will or trust when I die?

If you die without having a will in place, your estate will be intestate. A court or other legal entity will then be responsible for distributing your assets.

Q: Does an AB living trust have any disadvantages?

There are a number of fees that must be paid to maintain an AB trust including: accounting, legal, and administrative. Further, a conflict of interest may arise between the surviving spouse and trust beneficiaries, such as children, as to how principal should be spent.

Q: What are some good questions to ask an estate-planning attorney to test his or her competence?

Ask questions such as how long the attorney has been practicing, the types of clients he or she has, tax implications, and whether or not he or she sells products like insurance policies that may present a conflict. Most importantly, ask to speak to a few previous clients as references.

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Q: How do attorneys charge for estate planning?

An attorney should offer a free consultation in order for both parties to determine whether or not the relationship is a good fit. Then, the client and attorney will agree on a fee that is either based on a flat rate or a percentage of the estate.

Q: How much does a typical will cost to draft?

The amount an attorney charges to draft a will is based on the amount of the assets, the distribution of assets, and the complexity of legal and tax considerations. Wills can start as low as a couple of hundred dollars and be as much as several thousands of dollars. Wills can also sometimes be written through online services for less.

Q: How should an estate plan disbursement be structured?

For those with estates under the federal limit subject to estate tax, a simple will should be adequate to disperse assets. For those with estates with a value above the federal limit, a trust should be established to ensure the majority of assets are passed to beneficiaries.

Q: Which should take higher priority, retirement planning or estate planning?

Both are important, but retirement planning should take priority because you can paint yourself in to a corner by not having enough funds to make ends meet. Estate planning is less important because it concerns the effective distribution of assets after death.

Q: At what age should I make out a will and start estate planning?

Age is less important than assets and dependents. You need a will as soon as you own property, get married, have children, or have a retirement, savings, or brokerage account.

Q: What will happen to my unpaid debt when I die?

Your beneficiaries are required to make good on all outstanding debt before inheriting assets.

Q: How can I prevent my spouse from receiving money from my parent's estate?

In the event of separation or divorce, you'll need to execute a new will immediately that names another beneficiary.

Q: What kind of tax exemptions do I get when I do estate planning?

If your estate is valued above the federal gift-tax exemption amount, you'll want to establish a trust, rather than simply allowing your beneficiaries to inherit the estate.

Q: What exactly does an estate-planning attorney do?

An estate-planning attorney will review the value of all of your assets and ensure that your will, trust, and power of attorney documents are executed according to the laws that apply in your state.

Q: What happens when there is not sufficient life insurance to cover the existing liability on a home?

The beneficiaries will have to decide whether or not they want to sell the home or other assets in order to cover outstanding liabilities.

Q: What is the difference between community property and separate property?

Community property is all assets and debts that were acquired from the date the couple was married until the date they agree on that ends the marriage. Separate property is all assets, including gifts and inherited assets that were given to only one spouse.

Q: Can I act as my own trustee?

If you are competent to do so, then yes, you can act as your own trustee.

Q: Will I still have access to the assets I place in my living trust?

Yes. While you are alive you have complete control and access to the assets in a living trust.

Q: Is my living trust still valid if I move to a different state?

Yes. Your living trust is valid in all 50 states regardless of the state in which it was executed.

Q: Can I name trustees and beneficiaries who live out of state?

Some states require that a trustee be either a blood relative or someone who lives within the state. Beneficiaries can be located anywhere.

Q: Who are living trusts designed for?

Living trusts can be useful for any single person or married couple with assets totaling $100,00 or more. Living trusts avoid probate, which means assets are distributed more quickly and exactly according to the wishes of the deceased.

Q: If I own partial property, can I transfer my share into a living trust?

In most cases, yes, you can transfer partial ownership of property to a living trust. You'll need to change the deed to reflect the change.

Q: Will I have to consult an attorney every time I buy or sell assets?

If your will or living trust does not specify distribution of specific assets but rather names a beneficiary or beneficiaries to inherit all of your assets, then no, you need not consult an attorney every time you buy or sell assets.

Q: Does my living trust need to be publicly registered or recorded anywhere?

A living trust is a private document that does not need to be publicly recorded.

Q: I'm married. Can I transfer my separate property to a living trust?

Yes. All assets, including separate property, can be placed in a living trust. Assets, however, are not commingled.

Q: Can I transfer out-of-state real estate into my living trust?

By all means, transfer out-of-property into your living trust. Otherwise, your estate will be subject to probate in every state in which you own property.

Q: What is the difference between a revocable living trust and a regular living trust?

An irrevocable trust can protect assets from long-term care costs such as nursing home expenses. A revocable trust will not protect assets from long-term care costs and may prevent the owner from benefiting from Medicaid.

Q: How can I change my will once it has been signed?

Simply execute a new will and be sure to sign and date it.

Q: Can't I just give all my property away before I die and avoid estate taxes?

Giving smaller gifts that are not subject to gift taxes is a better strategy than giving all of your property away at one time.

Q: What kind of property is subject to the probate process?

All assets are subject to probate if not included in a trust.

Q: How much does probate cost?

Probate costs vary from state to state, but in general can cost between 2% and 7% of the value of the estate.

Q: How can I draw up a health care proxy?

Visit the website of your state bar association. It will more than likely have several free forms that can be executed by you without the help of an attorney. You should also be able to obtain a health care proxy form from you health care provider.

Q: What are Alaska and Delaware trusts?

Also known as Nevada trusts, these are Asset Protection Trusts that prevent claims from future creditors.

Q: Which is paid first, federal or state death taxes?

A federal inheritance return is due nine months after the death. Most states also require a state return to be filed within nine months as well.

Q: Can an individual probate an estate without help from an attorney?

You can, but it is not advisable.

Q: Won't joint accounts take care of passing on my assets?

Joint accounts and payable-on-death accounts do not go through probate, but an estate typically extends beyond mere joint accounts.

Q: How long does the probate process typically take?

It depends on the value of the estate, how complicated it is, whether or not there are objections to the will, and how complicated the division of assets is.

Q: Do creditors have access to my estate or trust?


Q: What qualifies as an "estate"?

Property and assets qualify as an estate. Homes and other real estate, business or corporate ownership, the share of joint accounts, retirement savings accounts, life insurance policies, and any property or assets owned by a trust are part of the estate.

Q: What does a proper estate plan include?

At the very least, proper estate planning includes creating a will or trust and a method of passing assets to your heirs with the least amount of expense and tax implications.

Q: What is intestate succession?

Intestate succession happens when a person dies without a valid will in place. His or her assets pass to the heirs according to state law.

Q: What is the best way to preserve and grow a large inheritance?

Establishing a trust with a qualified estate attorney is the best way to protect assets for generations to come.

Q: Can my retirement account be passed on tax-free if I die?

Only your spouse can inherit your retirement accounts without having to pay taxes.

Q: Does my stock portfolio have to be liquidated when it's passed on to a beneficiary?

No. Shares of stock are inherited as is.

While we've covered the basics of estate planning here, there is much more to implementing a solid estate plan. To make sure you're on the right track, contact a licensed financial advisor. It only takes a few minutes, Start Now.

More Estate Planning Guidance

  • Estate Planning Guide — The complete guide to estate planning.
  • Wills — Learn how to draft a will, power of attorney, and a health care proxy.
  • Trusts and Tax-Free Gifts — Learn how different trusts can reduce tax liability.
  • Life Insurance — Learn how life insurance can be used to reduce estate taxes.
  • Estate Taxes — Find out how estates are taxed at the state and federal levels.