What To Look For In A Wills And Trusts Attorney
Most people don't want to think about their death. And even fewer think about what will happen to their loved ones when the inevevitable happens to them. Life insurance sales forces often try to combat this common aversion by resorting to fear tactics, or by trying to instill guilt. They, and their marketing materials, suggest that you will be letting your loved ones down or even abandoning them if you don't buy their products. Lawyers who deal with the financial consequences of death are not immune from fear and guilt-based messages, but there is another emotionally charged word that some of them can – and do – emphasize. That word is taxes. And one of the most important ways in which lawyers who handle this kind of work differ relates to their knowledge of tax law.
Before you can see what I mean with respect to taxes, there are several terms that you need to understand. There are a lot of euphimisms that relate to death—kicking the bucket, eternal rest, final exit and final curtain, just to name a few. Likewise, there are several specific terms that you come across in the law that relates to death and dying. One is estate. It has nothing to do with a large real estate parcel; it generally refers to the property left behind by the person who died, who is technically called the "decedent." Thus, lawyers who help you plan for what will happen to your money as you age and after you die are involved in "estate planning."
You will also likely come across the term probate. This refers to the legal process by which a court determines what to do with the instructions in someone's will. Probate can be used as both an adjective – as in probate court – and as a verb, as in to probate a will. Regardless of how it's used, the general idea is that you should try to pass along your property and belongings without the time and expense involved in going through probate court. That is one of the goals that estate planning lawyers try to accomplish for their clients—to avoid probate.
The final terms you need to know to evaluate lawyers in this area are wills and trusts. A will is the document that sets forth your intent and instructions about what to do with your property when you die. A trust is, in it's simplified form, a mechanism to hold things of value such as money, personal belongings, and real estate. A trust can be a very helpful tool to transfer your stuff to others. That is why a common nickname among lawyers for "wills and trusts" is "gifts and stiffs." At least that's what I called that class when I was in law school.
The connecton between trusts and gifts is an important one. Trusts are one way to transfer what you have earned to benefit people you like or want to support. A trust can be like a gift, if it is set up correctly. And that brings us back to taxes.
A good lawyer can set up trusts and use other techniques to help you and your heirs avoid or reduce taxes. The more stuff you have, the more you can lose to taxes. Thus, it is crucial to identify the extent to which your lawyer has tax-related experience. For many people, taxes are not a big issue when they die because they either don't have enough to trigger tax issues or they have a fairly straightforward plan to transfer their wealth. For example, federal law has exempted certain transfers between spouses from being taxed. The amount that can be transferred tax free from one spouse to another has changed several times over the past decade or so. Thus, you should not rely on random internet-based information (including this blog) to conclude that your plans will or will not be subject to tax.
There are several places on the Internet where you can get a basic format for a will. Remember, wills are subject to different laws in different states, so you need to be very careful. My general attitude is that an internet-based will is probbaly better than none at all. That's because people who die without a will (the legal term for this status is dying "intestate") often force their families to go through the probate system. That's not a cool thing to do to people you love. And the more money you have, the more likely it is that an Internet-based will is not going to be enough. Whether it's to save taxes or for other reasons, you may be able to benefit from a trust or many other techniques that experienced lawyers know about and you don't.
As with any other lawyer you are considering hiring, find out about about their specific experience in addressing your specific situation. One fairly good way to determine how often they work with monied clients is to find out about that their tax-related expertise.
I don't mean to lay a guilt trip on you, but don't you care enough about your loved ones to make sure that your wealth is transferred to them in away that doesn't cause them more grief than your death will cause?
Image courtesy of Isabella Perry flickr gallery under this creative commons license.
