What is “estate planning”?

When most people hear that expression they think that it means tax planning for your estate when you die. However almost everybody has an estate and most estates are not large enough to be taxable. The current federal level of taxation for estates is $3,500,000. The reference to an estate means the things you own at the time you die. It might be your car, your bank account, your house or an insurance policy. What happens when you die is that if you own things and someone wants to transfer the title they have to file with probate court an estate in order to get the authority of the probate court to make the transfer. That, as you might guess, involves time and legal expense. So many people try to plan their estates so that there is no need to go to probate court in order to get the authority to transfer assets. Tools commonly used in order to achieve that is to hold bank accounts jointly, real estate jointly and other assets so that there will be no need for a probate when someone dies. That is most easily accomplished between a husband and wife and not so easily accomplished by single people. A device that is commonly used to achieve that goal is called a revocable trust which is set up with the owner as the initial trustee and then provides on the owner's death for a successor trustee. The trust also spells out who'll get the assets of the trust on the owner's death. By use of the revocable trust the cost of a probate can then be avoided as well as the time delay inherent in a probate estate.

If you have questions about this or any other real estate matter, please contact Tom Bennett at (617) 531-6574 or tvb@barronstad.com.