Frequently Asked Questions About Estate Planning in Kentucky
Estate planning is an essential step in making sure that you are properly cared for during your lifetime and that your property is distributed according to your wishes after you are gone, yet many people put off this important task. Below are some answers to basic questions about wills and trusts and estate planning in Kentucky, to get you familiar with the process. To talk to an attorney about creating or revising an estate plan, contact Lanna Martin Kilgore in Bowling Green.
How can I avoid probate?
Probate, as you may know, is the court-supervised process for distributing your property according to your will. Probate has a reputation for being an expensive and time-consuming process, so much of estate planning focuses on minimizing or avoiding probate by removing assets from the probate estate. This can be done by placing property into trusts as well as a variety of other legal instruments, including jointly-titled property, life insurance policies, joint bank accounts and many other options. Avoiding or minimizing probate is not the only goal of probate, however, and it is important to sit down with a qualified and experienced estate planning attorney who can advise you on the best instruments to minimize probate while meeting your particular estate planning needs and goals.
In Kentucky, there is also a simplified probate process for certain small estates. Ask your attorney if this process may apply to your situation.
What is the difference between a will and a living will?
A will is a legal instrument used to distribute your property after your death. A living will, on the other hand, is a legal document that lets you express your desires regarding end-of-life care, such as whether life-prolonging treatment should be used or not used, and your wishes regarding organ or tissue donation. A living will can also designate a health care surrogate to make decisions on your behalf if you are incapable of doing so. Along with a will, a living will and other kinds of advance directives are an essential part of your comprehensive estate plan.
Is it better to have a will or a trust?
Wills and trusts are both excellent estate planning documents, but they don’t do exactly the same thing. For many people, having both a will and a trust or combination of trusts will be the best way to meet all their estate planning needs. Trusts offer tax advantages to the owner of the trust and can be used for a variety of tax planning purposes. In addition, assets placed into trust are removed from the probate estate, making the administration of the estate faster and less costly. Wills, meanwhile, can be used to make specific gifts to individuals or charities, name an executor of the estate, and appoint a guardian for minor children. Even if using trusts to distribute your assets, it is important to have a will which can make sure all property is accounted for and that any missed assets will be located and “poured over” into the appropriate trust.
What is a Family Limited Partnership?
A Family Limited Partnership, or FLP, is a legal entity which is owned by certain family members, who assume the roles of general partners and limited partners. The general partners, usually the senior members of the family, assume the task of managing and investing the assets and property owned by the partnership. Younger family members, the limited partners, have less control over the assets but have a larger share or ownership interest in the FLP.
The FLP accomplishes both tax and non-tax estate planning goals. Through the FLP, property can pass from generation to generation without having to go through probate. FLP assets may also be protected from creditors of individual family members, and the general partners can reduce the size of their taxable estate by transferring property into the FLP. An FLP can accomplish many of the same objectives that certain trusts are used for, but with greater flexibility.