When it comes to leaving behind assets to loved ones after death, it seems like in today's world, it's anything but simple to do. If you've ever tuned in to ABC's hit “Modern Family,” you may get the impression that American families that extend beyond the traditional nuclear family and include second marriages, adopted children, step children, domestic partnerships, and same sex partnerships are—confusing, yes—but not uncommon. Similarly, the United States tax code and each state's estate and/or inheritance taxes can be a confusing arena to navigate on your own. When matters are complicated, it can be worth your time and money to seek the assistance of an estate planning attorney for personalized guidance on distributing assets and minimizing tax implications.
But how do you know when you should consult an attorney? While doing your own research is an excellent way to become more informed of your options, depending on what you find, there are some situations in which hiring an attorney can help.
You want to gift your estate to adopted children, or perhaps to natural children in differing amounts.
If you plan to leave part of your estate to adopted children or step children, your last will and testament needs to clearly specify this, especially if you gift to natural children together with adopted children and/or step children. If your last will broadly states that you gift some part of your estate “to my children,” without defining who is to be considered your child, it may not be clear to the executor whether adopted children were meant to be included. The same holds true for step children, foster children, god children, or other children who you may consider your children but are not considered your children under the law. If you want these individuals to receive some of your estate, you should specifically identify them in your will them as well as what there are to receive from your estate.
Similarly, if you want to completely disinherit one or more children, or leave unequal shares to your children, that too, needs to be very clearly stated in your last will. If someone is disinherited or left less than his or her siblings, the validity of the will may be challenged in court by the disappointed party. If your intent is not clearly stated, that challenge could be successful. Having an attorney clearly draft a will that has little room for misinterpretation could help ensure that your wishes are honored.
You want to use irrevocable trusts.
An irrevocable trust is a trust which cannot be revoked once papers are signed without a court order and or the consent of the trust maker (called a “Grantor”) and all of the trust's beneficiaries, depending upon the laws of the state in which the trust is managed. These trusts are most commonly used to receive gifts for the benefit of a spouse, children, or grandchildren while providing tax benefits to the to the Grantor. By creating an irrevocable trust, the Grantor gives up control of the assets to the trustee in order to avoid estate taxation of the trust property and protect the assets from the Grantor's creditors. It is crucial that an attorney creates these trusts because unless that the proper separations between trustee and Grantor are built into the trust, the trust property may be subject to estate taxation and claims from the Grantor's creditors. Speaking to an attorney in advance of preparing the trust will provide valuable insight as to whether an irrevocable trust is the correct estate planning tool for your specific needs.
Many people choose to leave their assets to individuals directly, with no conditions. That can be relatively simple to accomplish. If you take a more complex approach, for example, holding the assets in trust until certain conditions are met, creating a trust for the life of a beneficiary, or creating a trust for a disabled beneficiary, the advice of an attorney could help.
These are just a few of the not-so-straightforward situations when hiring an attorney can be valuable in your estate planning. Every family is unique and has different objectives—and on top of that, every state has different laws on estate planning matters. Although you may be able to take care of many matters on your own, in some situations, even a brief meeting with an attorney can eliminate confusion and help you move forward with confidence.
You can talk to an attorney about many estate planning matters through the LegalZoom Legal Plans for a low monthly fee (available in most states).