One of the most common requests that we receive is about understanding estate planning expenses. It is important to understand what estate planning expenses are, how they could impact you, and what you may be potentially able to do to reduce them.If you have questions or concerns about estate planning expenses, Oklahoma estate law, or estate planning after reading this article, schedule a free consultation with the estate planning lawyers of Ball Morse Lowe.
Understanding Estate Planning: What Are Estate Planning Expenses?
There can be several estate planning expenses. However, the best part of understanding estate planning is the fact that not every expense will apply to your specific scenario. Your estate planning expenses will only reflect what your plan includes.
Common estate planning expenses include:
- Creating a Last Will and Testament
- Creating a durable power of attorney
- Creating a revocable trust.
Out of these three common estate planning expenses, a Last Will and Testament and a durable power of attorney are the two most common documents that most people use. Without a Last Will and Testament, the probate court will make decisions related to your assets as well as any minor children. This could mean that your assets go to people that you would prefer they not, as well as you not naming a guardian for your children. It also means that the probate process takes longer and is more expensive than if you had a will in place.
A durable power of attorney is an estate planning document that enables someone that you choose to make various decisions on your behalf even if you are declared incapacitated. That is what makes it durable: the fact that your agent, the person that you name to make decisions, holds the ability to make those decisions even if you are incapacitated. Common decisions that a durable power of attorney may include are:
- Medical decisions
- Business decisions
- Decisions related to personal assets
- Decisions related to real estate
If you are declared incapacitated and do not have a durable power of attorney, someone may be appointed to make decisions on your behalf. It could be someone that you would be happy to have made decisions on your behalf... or it may not be. Having a durable power of attorney in place could help you by giving you the ability to name a person you trust to make decisions on your behalf.
A revocable living trust, generally referred to as a revocable trust, is not an estate planning tool that is right for everyone. In fact, it may be a tool that can be used by some individuals to help lower certain types of estate planning expenses, such as certain taxes. Assets are placed into the trust. A trust document explains how your assets will be distributed upon your death. However, because it is revocable, you have the ability to change the terms or cancel it before your death.
Other estate planning expenses to consider include (and are not limited to) how you may be impacted by estate taxes, gift taxes, state taxes, and federal taxes. The good news is that, depending on your specific estate planning needs, there may be options that could potentially cut some of the estate planning expenses.
Choosing the Right Estate Planning Attorney
One of the best ways to control estate planning expenses is to choose the right attorney. Since your goal is proper estate planning, you need an experienced attorney. You need one whose goal is to look specifically at your needs. This is someone who is not interested in providing you with an estate plan that is not right for you. Ball Morse Lowe provides an experienced team of estate planning attorneys who provide individualized attention to their clients. Our goal is not to provide cookie-cutter solutions. We provide the appropriate estate planning packages to meet the needs of our clients, starting with a free consultation.
Setting Up Your Will & Power of Attorney
As mentioned above, the most common estate planning expenses are a Last Will and a power of attorney. Everyone needs a Last Will to help potentially decrease the time and expense of probate court. A durable power of attorney may help you in the future by enabling you to name someone to make decisions for you if you're unable to make them yourself. These documents benefit you regardless of how many assets you have. While they are an initial expense, they can save your loved ones time, money, and stress in the future.
Revocable Trusts and Life Insurance
As we stated earlier, revocable trusts are not a necessity for everyone. Oklahoma, unlike some other states, does not collect estate taxes. However, certain individuals may be required to pay federal estate taxes. Although life insurance on its own is generally not considered gross income for the person who receives it and is not taxable, any interest received off of it is considered taxable.
Depending on your wealth, you may find that a special type of life insurance trust is more beneficial for you since it may keep the total value of an insurance policy out of your estate. Additionally, a life insurance trust also provides several other benefits:
- You may be eligible for tax savings.
- You can hire professionals to manage the life insurance trust.
- You will have some flexibility with the trust.
- There will be a degree of asset protection for the beneficiary in regards to creditors.
However, there are some key considerations for this type of trust as well. Despite the fact that it is a trust, you must ensure that the life insurance premiums are paid. You must carefully consider who you will name as the beneficiary. Once you name the beneficiary, there is no changing it. If the policy is a whole life policy, you will be unable to convert the policy or borrow against it. There are other rules as well that you must consider. It is vital to consult with a seasoned estate planning attorney to determine if a life insurance trust is right for you.
Learn More About Estate Planning
If you're reading to learn more about estate planning and which documents are best for your specific situation, Ball Morse Lowe is prepared to help. Our estate planning attorneys provide individualized attention. You can get started now by scheduling your free consultation.