How Can an Alabama Trust and Estate Lawyer Help?
If you’re reading this, you’re probably at a point where you’ve accumulated several assets of value or have a family to think about. So, you’re likely thinking about what will happen to those assets, including your life’s savings, should an unfortunate event occur, such as an untimely passing or accident that leaves you mentally incapacitated.
This is what estate planning is for.
Most people are under the guise that estate planning is for the wealthy when really, it’s for anyone who has something to leave behind. It’s essential when you have a family to think about, whether it be your immediate family, parents, or siblings.
Unfortunately, estate planning isn’t as simple as writing out your last will and testament on a piece of paper with your signature and the date. Whether you’re drafting wills or trusts, it’s something you need a dedicated Huntsville attorney that specializes in estate planning to help you with.
This article will talk about what an Alabama trust and estate lawyer does and how they can help you create an effective estate plan that will ensure that your assets and loved ones are taken care of should something happen.
Read on to learn more.
What Does an Alabama Trust and Estate Lawyer Do, Exactly?
An estate lawyer is a legal professional who explicitly helps individuals plan their affairs to ensure that the administration and distribution of their estate go according to their last wishes.
One of the most important things an estate lawyer will do for you is ensuring that everything has been officially documented and notarized so that your last will and testament cannot be refuted in probate court. They also ensure that your trust accounts are set up properly so that your named beneficiaries can directly receive the assets meant for them.
Your Alabama estate lawyer can also advise you on saving money regarding inheritance taxes and probate court costs and guide you in what types of trusts are most suitable for specific situations and other legal matters related to your estate.
More specifically, your Huntsville attorney will thoroughly understand Alabama’s state laws and the federal laws that determine how your estate will be inventoried, valued, distributed, and taxed after your passing. Not only will they walk you through the probate process so you and your family will have a firm understanding of what to expect, but they’ll also help you take care of the following:
The drafting and documentation of your last will and testament
Designating your beneficiaries and their inheritances
Establishing a durable power of attorney (POA) and medical advanced healthcare directive should you become mentally incapacitated and unable to handle your affairs
Guide you on ways to help your family avoid a lengthy probate process
Setting up any trusts that are necessary to protect your assets — to benefit you during your lifetime, in the event of incapacitation, and your beneficiaries after you’ve passed on
Additionally, you can appoint your Huntsville attorney as the executor of your will and even your trusts to ensure that your property and assets are protected, all necessary debts and taxes are paid, and that any accounts are correctly managed before they’re transferred over to their named beneficiary.
What Is an Estate?
One of the most common questions estate attorneys are asked is what exactly is an estate?
Essentially, an estate is everything that contributes to the net worth of an individual. So, your estate would include any land, properties, possessions, financial securities, cash, and other assets that you own or have a controlling interest in. This could consist of cars, antiques, artwork, jewelry, collectibles, stocks, and shares.
The value of an estate becomes especially relevant under two specific circumstances: When an individual declares bankruptcy and when an individual passes away.
If you were to declare bankruptcy, your estate would automatically be assessed by the state and federal government to determine which debts you can be reasonably expected to pay. Determining payable bankruptcy debts involves the same strict assessment during probate court proceedings.
If you were to pass away, your estate would be evaluated and assessed in probate court. Probate refers to the processing of organizing and distributing your money and assets after paying any taxes and debts. If you’ve left an official written will behind, the probate court must distribute your assets according to the will.
It should be noted that the probate process can take anywhere between six months to a year, with the average duration being nine months.
It should also be noted that there’s technically no such thing as an estate that’s too small. A “small estate” refers to the collective assets totaling no more than $25,000 in value in Alabama. If you have a small estate, your assets will go through a different probate process.
What Are the Basics of Estate Planning?
Aside from understanding what it means to have an estate, it’s also essential to know how to plan for your estate. While your Huntsville attorney will guide you through the planning, you should know what you’ll be preparing for and how you can meet them halfway.
Consider this your primary estate planning checklist:
Take an inventory of your tangible and intangible assets, and estimate their value. This would include everything from your property to your retirement accounts. In addition, you’ll want to get an up-to-date appraisal of your home and any recent financial statements.
Consider your family’s needs and how you want them to be cared for. This means ensuring you have enough life insurance, naming a guardian for any young children (if necessary), and documenting any wishes or guidelines for their care.
Establish your directives. This means writing up your last will, trusts, power of attorney, and medical care directives — and being as detailed and concise in each document as possible. Ensure that you can trust executors to carry out your last wishes as your beneficiaries. While your will and other documents may spell out your wishes, those wishes may vary in size. Make sure you name who your beneficiaries are and what you want them to receive within your will and any designated trusts.
Consider your estate taxes. One of the estate planning goals is to leave as much as possible to your heirs or beneficiaries. Therefore, you must minimize the number of assets lost to estate taxes, including estate tax, inheritance tax, and gift tax.
What Is a Living Trust?
A living trust is the single most important document (or documents) you can have in your estate plan aside from your will.
Generally speaking, a trust is most commonly characterized as a “legal fiduciary arrangement” that allows you to set up specific assets held and managed by a third party. The third party is the trustee or executor. They’re responsible for ensuring that the assets in your trust are handled accordingly. When you allocate assets into a trust, you essentially relinquish all rights and ownership to those assets — which is a form of asset protection.
Additionally, you can set up a trust to pay out to its beneficiary at a particular time. For example, it’s prevalent for financial trusts to have a disbursement date that correlates with a milestone, such as a specific birthday, graduation, marriage, etc.
Living trusts can also be revocable or irrevocable, depending on what suits your needs best. A revocable living trust is a trust that has a designated beneficiary. However, you remain in control of that trust until you pass away or decide to dissolve it. An irrevocable trust essentially stays put. Once the document has become official, and the account is set up, you no longer have rights to its assets.
Unlike wills, trusts automatically bypass the probate court. This is because the assets allocated into the trust account legally belong to the beneficiary, regardless of whether it’s time for the beneficiary to receive them. Trusts also provide privacy and protection from tax consequences and your potential Medicare qualifications down the road.
What Are the Basics of Planning a Trust?
It’s important to understand that while you can set up joint trusts, these accounts are usually individualistic by nature. Therefore, if you have multiple beneficiaries, you’ll need to set up separate trusts for each one. This is especially important if your beneficiaries receive different monetary amounts or different assets altogether.
Here are the basics of what going into trust planning:
Consider your assets and beneficiaries. In other words, which assets do you want to protect and keep within your family, and who will be receiving what? You’ll also need to determine when your beneficiaries will receive their trust benefits.
Who will you appoint as your trustee? Managing a trust fund or account is a great responsibility. You want to ensure that you choose someone who can be trusted not to mismanage the trust account under their governance. If you don’t think you can trust anyone to take on this responsibility, you can always appoint your Huntsville attorney.
Which type of trust will you choose? Remember that an irrevocable trust cannot be amended or contested once it becomes active. However, a revocable trust can be amended or closed if necessary.
If you don’t have any beneficiaries, you could also use a trust to make charitable donations to specific organizations or otherwise.
It should also be noted that if you’re thinking of setting up a trust for your children’s future education, there are other options to consider.
For families who don’t have the means to set up a trust to cover college costs, the most common alternatives include:
Direct payments to a college on behalf of a grandchild
Contributions to a Section 529 plan
Setting up a Uniforms Gifts to Minors Act (UGMA) account
The Section 259 plan and UGMA account can be set up through financial institutions and are often less costly and involved than independently established trusts.
Why Is it So Important to Have a Lawyer Drafting Your Estate Plan?
It can be tempting to attempt planning the details of your estate alone. Sure, Google can tell you what you need to know, and it can also offer you the official estate planning forms and templates that can quickly be filled out.
However, the internet gets a lot of things wrong — as will you if you forgo the help of an experienced Huntsville attorney.
Here’s why it’s essential to consult with a lawyer when drafting your estate plan:
Each state has different requirements. Unfortunately, online forms tend not to be state-specific, which means you could run the risk of filling out the wrong forms and missing out on specific requirements for the state of Alabama.
What if you need to make modifications? A lot can change in a small amount of time, which means you’ll eventually need to update your will and other documents. However, making modifications to your will can get complicated quickly, so it’s best left up to a professional.
A Huntsville attorney can offer guidance. When you plan your estate with an experienced attorney, they’ll walk you through the entire process and ensure that no stone is left unturned. They’ll also ensure that every document is filed correctly so that they’re effective when the time comes.
Your attorney can help settle disputes. Disputes are bound to happen — with or without you — and you’ll need someone there who has nothing to gain from your estate and can remain impartial. They’ll also be there to vouch for you or your family in court should someone attempt to contest your will or should probate court have an issue with certain documents.
An attorney will keep your documents safe. When you work with a Huntsville attorney to plan your estate, it’s their legal duty to keep a copy of your official estate plan. This is a form of reassurance that your affairs will be settled according to your last wishes no matter what happens. Without an attorney, you won’t have a backup for your estate if your documents are destroyed.
Hiring an estate attorney to help you draft, document, and officially file your last wishes should be non-negotiable when it comes to estate planning in Huntsville, AL.
It may take time and several referrals before you find an estate planning attorney that you feel you can trust. Just do your due diligence to ensure you’re in the right hands. Then, feel free to contact us to set up a consultation with Sarah S. Shepard or another experienced Huntsville attorney for your estate planning needs.