If you hear the term “inheritance law,” the document called a last will may come to your mind. This is the most commonly used estate planning document, but the importance of inheritance law extends far beyond the ability to create a valid will.
There are various different ways that you can facilitate asset transfers when you are planning your estate. You should certainly explore your options, because a last will is not going to be the ideal choice in many if not most cases.
When a will is used to transfer personal property, it is admitted to probate after the passing of the testator. If an executor is named in the will, this person would handle the business of the estate during the probate process.
Probate provides an avenue for creditors to come forward seeking satisfaction before the assets are distributed to the inheritors. Plus, there is a proving of the will during probate. The court makes sure that the will was validly executed, and an argument could be presented before the court if anyone wanted to challenge the validity of the will.
This is all well and good for creditors and potential estate challengers, but there are some drawbacks that can impact the rightful inheritors. Probate expenses reduce the amount of the inheritances that will be distributed, and there is also the time factor.
The heirs to the estate do not receive their inheritances during probate, and it will typically take close to year if the case is a simple and straightforward one. It can take longer if there are complications.
There is also the loss of privacy. If everyone who may be interested knows exactly how you distributed your resources, there could be hard feelings among people who were close to you. Since probate is a public proceeding, anyone and everyone can find out how you decided to distribute your resources.
Inheritance Law Attorneys
If you discuss your options with an inheritance law attorney, you can find out about the strategies that can be implemented to avoid probate and the pitfalls that go along with it. The most commonly used probate avoidance tool is the revocable living trust. These trusts provide a host of benefits.
You can act as the trustee while you are living when you create a living trust, and you name a successor trustee to handle the business of the estate after you are gone. This trustee would be able to distribute assets among the beneficiaries outside of probate.
The avoidance of probate is a benefit, but there are others. You could include a spendthrift provision to protect the beneficiaries who will be receiving distributions from the trust after you are gone. Plus, you can instruct the trustee to spread out distributions over an extended period of time to prevent inheritance squandering.
A revocable living trust is one option that is available to you, but there are other types of trusts that are also used in the field of inheritance law. For example, there are irrevocable trusts that are used by high net worth individuals who are exposed to the federal estate tax.
There are special needs trusts that can be created to provide resources for a loved one who is relying on Medicaid coverage.
Speaking of Medicaid, many elders who were qualified for Medicare ultimately seek Medicaid eligibility late in their lives. This is because of the fact that Medicaid will pay for long-term care, and Medicare will not pay for living assistance.
You cannot qualify for Medicaid if you have significant assets in your own name. This is why special needs trusts are used to preserve benefit eligibility for disabled people.
If you are a senior citizen who is concerned about potential long-term care costs, you may want to convey assets into an irrevocable Medicaid trust so they are not counted if you ever have to apply for Medicaid to cover your long-term care costs.
These are a handful of scenarios that inheritance law attorneys assist clients with, but there are others.
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Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.