Everyone needs a will, a trust, or both. People with any level of means can benefit from having a clear plan in place to protect their loved ones, avoid unnecessary legal hurdles, and ensure that their wishes are honored. Even if your savings are modest or your property has mostly sentimental value, these planning tools provide peace of mind and control over what happens after you are gone.
The Risks of Dying Intestate
If you do not initiate the estate planning process, you risk passing away intestate (without a will or trust). If you die intestate, your accounts and property will go through a court process known as probate. Because you have not legally specified who will receive your money and property, the probate court makes that determination using your state laws in Iowa, Illinois, Kansas, or Missouri. The court, not you, will decide who raises your minor children. This may be a person you would never have wanted raising your child.
What Is a Will?
A will is a written document that is signed and witnessed. A will is considered a “death” document as it only goes into effect when you die.
When searching for a will attorney or an estate lawyer near me, it is vital to find a team that understands how to draft a legally valid document that serves several essential functions:
- It provides for the division and gifting of your accounts and property at death, but not accounts and property directed to others through beneficiary designations.
- It sends accounts and property that do not have designations and that are owned solely by you, in your individual name, through the probate process.
- It allows you to appoint permanent guardians for your minor child.
- It names the person you wish to wind up your affairs.
- It permits you to cancel or change your decisions during your lifetime.
What Is a Trust?
A trust (specifically, a revocable living trust) is a formal relationship where you name a trusted individual to manage accounts and property for your benefit and the benefit of others. Because the trust is effective during your lifetime and you can change it, it is referred to as a “living” document.
Whether you need a trust attorney in Okoboji to help protect a family lake cabin, or you are looking for a trust attorney in Overland Park to secure your Kansas assets, a trust offers comprehensive advantages:
- It provides for the division and gifting of your accounts and property.
- It avoids involvement of the probate court if the trust is fully funded.
- It provides for a back-up trustee upon your death or if you are no longer able to handle your own affairs.
- It allows for the continuous management of your accounts and property – even if you are still alive but unable to do so yourself.
- It often includes protective trusts for your beneficiaries and tax planning.
Probate Avoidance
Probate is a lengthy, public, and often expensive court process that becomes necessary when there is no legally valid estate plan in place for distributing your accounts and property after your death. If you use a will as your primary estate planning tool and you own property in your individual name, probate is guaranteed. The entire probate process is reflected in court records, so anyone can access information about what you owned, what you owed, and who will receive your money and property. Navigating this court-supervised process safely almost always requires a dedicated probate attorney, whether that is in our Overland Park office for Kansas residents or across our Iowa locations.
However, if you use a trust as your primary estate planning tool, the accounts and property are owned by the trust, not you, avoiding probate. One of the most important benefits of a trust is that the details and process of transferring accounts and property to the intended individuals are private.
Flexibility and Asset Protection
A trust allows you to maintain control of your accounts and property through your chosen trustee, avoid probate, and leave specific instructions so that your children are cared for. This structure ensures your beneficiaries are supported without receiving a lump sum of money at an age where they are more likely to squander it or have it seized from them by potential creditors or predators.
A robust estate plan prepared by one of our attorneys can also protect your beneficiaries’ inheritances from claims by divorcing spouses or creditors, pending lawsuits, or exposure to financial predators. This is critical, as studies show that 70 percent of family wealth is depleted within the two following generations and 90 percent within three generations. With thoughtful planning, you can avoid becoming part of that statistic.
Philanthropic Legacy
Charitable giving is another area where a well-crafted estate plan can prove especially helpful. If you are passionate about giving back, you can set up a charitable trust within your estate plan to support the causes you care about and leave a lasting impact on organizations that are important to you.
Through a charitable trust, you can donate accounts and property while potentially retaining income from those assets during your lifetime. This strategy not only allows you to ensure that your philanthropic legacy endures, but it can also provide significant tax benefits for your estate.
Planning for the Modern Era: Digital Accounts and Long-Term Care
Modern estate planning also addresses scenarios that traditional simple wills may overlook:
- Handling Digital Accounts: Almost everyone has at least one account or digital presence online. An estate plan ensures that your online photos, records, and accounts—including emails, social media profiles, and online payment platforms like Venmo or PayPal—do not get lost or locked.
- Medicaid and Nursing Home Care: The state Medicaid agency might try to recoup the money spent on your long-term care from certain accounts and property you own at the time of your death. A comprehensive estate plan designed by one of our elder law attorneys may be able to prevent or limit the state from recovering these costs from your bank accounts.
Tax Planning and Retirement Accounts
Including your retirement accounts in a proactive estate plan can help protect your nest egg and possibly limit your beneficiaries’ income tax burden when they inherit these accounts. While an estate or inheritance tax may not apply, the beneficiary may have to pay income tax based on the amount they received and their current income tax bracket.
Furthermore, trusts can be a powerful tool for broader tax optimization. By leveraging specific tax advantages, you can preserve more wealth for future generations and secure a more meaningful legacy. For example:
- Estate Tax Reduction: Certain types of trusts allow you to reduce your overall estate tax liability. A generation-skipping trust, for instance, lets you transfer assets directly to your grandchildren or further descendants. You can minimize estate taxes by avoiding the generation in between from being taxed on the assets, making it a valuable strategy for individuals with significant wealth.
- Gift Tax Avoidance: A trust can also help avoid gift taxes by allowing the grantor to transfer assets to their heirs without incurring gift tax liability. When you place assets in certain irrevocable trusts, you technically no longer personally own those assets, meaning they are not subject to the same gift tax implications.
Work With an Estate Planning Attorney
Discussing your wishes with your loved ones will not make your plan for the future legally enforceable. The only way to ensure that your goals are carried out is to work with an experienced estate planning attorney to create a will or a trust. Taking the time to plan will save your loved one’s stress, money, and heartache in the future.
An experienced estate planning attorney at Pearson Bollman Law, with offices in West Des Moines, Cedar Rapids, Dubuque, Bettendorf, Okoboji, and Overland Park, can help you navigate the intricacies and ensure that your plan aligns with your goals and aspirations. Call our office today; we will put together an estate plan that works for you and your loved ones—whether it be a will, a trust, or both.