Many people have questions regarding the process of setting up a Will or a Trust or administering an Estate. At the The Pollock Firm LLC, we are here to help. Please read below for short answers to some of the most common questions.
What is a Will?
A Will is a document that leaves instructions detailing where you want your assets to go, how you want your estate to be handled, who will be in charge of making sure your assets go where they are supposed to go, and who will care for your minor children after you pass away. In most cases, a will is a written document that is signed in the presence of witnesses and a notary in order to ensure that it is holds up in court.
Do I need a Will?
Everyone can benefit from having a Will. Some people think they do not need a Will because they do not have any assets. First, almost everyone has SOME assets. Even if you have a bank account with $50 or a car worth $1500, something must be done with those assets. Having a Will makes the probate process much faster, cheaper and simpler for your loved ones after you’re gone. Even if you have a Revocable Living Trust you should have a Will that says everything goes to your trust because often people forget to put all of their assets into the Trust.
How much does a Will cost?
This question is always difficult to answer because everyone’s situation is different. Some people truly have a simple situation, they don’t have much money, they don’t have minor children and they don’t have complex family dynamics – for you, the cost is likely to be between $700-$1000 for a professionally drafted Will. If you are on your second marriage, if you have minor children or a special needs child, if you have a business interest, if you have substantial wealth or if you have properties located in multiple jurisdictions, please contact us for a better idea of pricing because you will likely also need tax, trust, probate and asset protection planning. If you are a married couple and your Wills are reciprocal, there is usually a substantial discount for the second Will.
What is a Trust?
While there are many different types of trusts, generally the purpose for almost all trusts is create a way for you (the Grantor) to enable another party (a Trustee) to manage and administer funds for a third party (the Beneficiary). If you are setting up a trust for yourself to minimize probate, such as a Revocable Living Trust, you can be the Grantor, the Trustee and the Beneficiary. For most other trusts, the benefit is that the Grantor gets to control how the beneficiaries receive their money and designate a trusted person to manage it until the beneficiary can handle the funds on their own. Additionally, trusts can allow you to protect your financial privacy and to avoid probate.
Do I need a trust?
Not everyone needs a trust. The more complex your family situation, the more you have children or other beneficiaries that you cannot trust to manage their inheritance, the more wealth you have, the more you have assets in multiple jurisdictions and the more reason you have to avoid probate, the more a trust can make sense for you. Speak with an estate planning attorney to discuss your situation and find out whether or not you need a trust.
How much does a Trust cost?
This question is always difficult to answer because there are many different types of trusts. Some trusts can be created under a Will; these testamentary trusts are usually cheaper to create, but more expensive to fund upon your death. Some trusts should be created during your lifetime; these inter vivos trusts are usually more costly to create, but save more time and money upon your death. Adding a trust or multiple trusts to your Will likely will add $300 to $700 for people who have relatively simple situations – basically, people who may want to set up a simple Disclaimer Trust or Age Restrictions Trusts for minor children. Mid-level trusts, such as Revocable Living Trusts, Irrevocable Life Insurance Trusts and Special Needs Trusts are stand-alone inter vivos trusts that will typically add $1500-$3500 to the cost of a plan because not only is there more time involved in drafting them, there is also a fair amount of effort put in to making sure that you properly fund the trusts. Customized trusts can also be prepared to provide maximum tax, probate and asset protection planning. Frequently people prepare similar or identical trusts for a spouse or their descendants; we do not charge per trust, we charge for our time – so there is usually a substantial discount available for multiple similar trust documents.
What is an Estate?
When a person passes away, the assets that are still in that person’s name must be dealt with. Unless an account has a beneficiary named or is owned jointly with another person with rights of survivorship, it cannot simply be transferred to anyone else. The first that must happen is that those assets that are titled in the name of the decedent must be retitled into the name of the Decedent’s estate (basically a fictionally entity to deal with a dead persons assets). After all the assets are gathered up and the debts are paid, then the money can go according to the person’s Will (or according to the intestacy laws if there is no Will).
What is Probate?
Probate is the legal process by which one person obtains authority to manage the affairs of the Decedent and then makes sure that the funds go where they are supposed to go. Having a Will does NOT avoid the probate process, but it usually makes it much simpler, cheaper and faster. If a Decedent does not have a Will, the probate process will often require a special complaint be filed with the Court so that an Administrator can be appointed to handle the probate process.
How long does Probate take?
This will vary greatly depending upon the size and complexity of the estate. Usually a simple one can take a few months, the more complex ones can take over a decade, but most modest size estates can take anywhere from six months to two years. Unfortunately, in many jurisdictions, it seems to be taking longer and longer as many state surrogate’s courts, the IRS, and the state’s division of taxation are overwhelmed and understaffed. Frequently an executor or administrator must obtain clearances from various government entities, and this can create lengthy delays.
How much does Probate cost?
First, in most jurisdictions, you are not required to hire an attorney. However, we can often move things along more quickly and help you deal with a host of issues including troublesome beneficiaries, estate and inheritance taxes, and the preparation of accounts. Each estate we administer is very unique because everyone has different types of assets, some Wills and Trusts are more complex than others, sometimes there are difficult beneficiaries, sometimes there is a need to litigate an issue, and frankly, some executors/administrators are more capable than others. Accordingly, we will only work on a hourly basis. Our attorneys and paralegals have different rates depending upon experience so that we can try to make all fees as fair and reasonable as possible. Obviously this doesn’t help you budget, so let me also say that we have done some administrations for as low $2500 and some for over $100,000. However, many administrations for middle class decedents without too many complications tend to fall somewhere between $10,000 – $15,000. (Note, in Florida it is customary to charge a flat 3% of the value of the estate and in Pennsylvania, most attorneys follow the Johnson rule.)
Can my accountant do the estate tax return and inheritance tax return?
Yes, provided it is under the supervision of an attorney. In New Jersey, an accountant who prepares an estate or inheritance tax return without the supervision of an attorney is engaged in the unauthorized practice of law. Additionally, in Pennsylvania, an accountant who prepares an inheritance tax return outside the supervision of an attorney is also deemed to be engaged in the unauthorized practice of law.
What is the difference between a Will and a Living Will?
A Will – also known as a “Last Will and Testament” – expresses your desire regarding the handle of your estate after you die. A Living Will is document for while you are alive to express your wishes with respect to your medical care in the event that you become incapacitated.
What is a Financial Power of Attorney?
Power of attorney is an agreement granting one person the legal authority to manage the financial affairs of another person. Financial Powers of Attorney documents are often obtained together with a Will and a Living Will. A Durable Financial Power of Attorney is effective the moment it is signed and the agent need not wait until the Grantor is incapacitated to act on behalf of the Grantor. This is frequently used between spouses and between an older parent and a child. A traditional Financial Power of Attorney is effective only when it can be proven that the Grantor is incapacitated; this is something that is not always easy to prove. A traditional Financial Power of Attorney is more common amongst more distant relatives or between friends.
Do I need a lawyer?
That depends upon the lawyer! Seriously though, regardless of whether you decide to retain our firm, I strongly recommend that you speak with an attorney that focuses primarily on Wills, Trusts and Estates work. If you really do not need an attorney, most of us will just say so. This can be a very complicated area for those that just dabble in this field. If you have substantial wealth, make sure that the attorney has a Masters Degree in Taxation.