A Few Questions About Estate

Q: Just a few questions:

1. How am I to determine today if I will need life insurance to cover future estate taxes? We talked to an estate planner and he projected we would have an estate of $1.5 million today. We can't determine the government and what the exemption amount will be in the future either?

2. Does that mean... you think we need some type of permanent insurance (to cover future estate taxes)?

3. Can I use www.uslegalforms.com to obtain the correct documents to set up a living trust fund? I have looked over the documnets and for a small fee they will be sent to us and only need to be notarized. This seems like it would save us $$ instead of paying a lawyer, but I want to make sure I have my ducks in a row.

4. Probate - what are the odds that our estate will go through probate when we die if we have an estate of around $1M to $1.5 M? Do we really need a trust if our assets have beneficiaries identified? What will the government tax if we have beneficiaries for our IRA, 401(k), life insurance, already in place?

Thanks for your help with answering some of these questions

A: There are several issues here.

First, the size of your estate. It’s important what the size is, it’s important what the assets are and how the assets are titled. Currently, the estate tax exemption is $2 million per person. That means that, when handled properly, that a couple can shelter $4 million from estate taxes.

To speak more specifically to your question, I would need a general idea of what your assets are and how they are titled.

Second, probate. This is a completely separate issue from the estate tax one mentioned above. Probate is a legal process that ‘proves’ your Will and distributes the assets that the Will has authority over. Only assets that the Will covers go through probate.

As you mentioned in your question, a Will only applies to those assets that DO NOT have a beneficiary. So things like IRA’s, life insurance policies and bank accounts (assuming they have beneficiaries and those beneficiaries aren’t your ‘estate’) will already avoid Probate.

Normally the most difficult asset to have avoid probate is real estate. Some states now have the ability to name a beneficiary on your real estate, but not too many. This is where a Living Trust comes in. Since a Living Trust has a beneficiary and is considered a separate legal entity, an assets titled in the name of the trust avoid probate.

It’s also easier to have someone manage trust assets on your behalf in the event you become incapacitated.

There are several places you can go to get a low-priced living trust, powers of attorney, etc. I’m not familiar with the site you mentioned but have seen www.legalzoom.com and I know that Suze Orman has a Estate Planning kit that costs about $13 at Amazon.com. Suze’s trust may work well if you have a very basic estate. If you need tax provisions you will need to look somewhere like LegalZoom.

You can act as your own attorney, but it’s always a good idea to have a qualified attorney review it.

Let me know if I can be of further help.

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