Estate Planning FAQs
Whether you are just beginning to think about estate planning, or if changes in your life or family have called attention to your need to revise your existing estate plan, you likely have important questions about wills, trusts, asset protection and other important estate planning matters. Below are answers to some of the questions the attorneys in the Hancock Law Firm encounter most often as they help people in and around Jackson draft and revise their estate plans. If you have other questions or need advice and assistance in a particular estate planning matter, give us a call at (601) 853-2223 to visit with an experienced Mississippi wills, trusts and estates lawyer.Q. Can a will be valid if it was not signed by any witnesses?
A. A will that is written entirely in the maker’s own handwriting and signed by the maker is known as a holographic will. A holographic will can be accepted in the state of Mississippi even if it was not witnessed. However, it may be difficult to prove or easy to challenge a holographic will in probate court. The court will require proof that the handwriting is that of the testator, and also that the person intended for that document to be a will and not just some notes or a draft for some future formal will that was never executed.Q. What is a self-proving will?
A. Probate is the process of “proving” a will. When a will is submitted to probate, the judge may require the witnesses who signed the will to testify about the circumstances surrounding the signing of the will, in order to accept the will as valid. However, if the will was signed before a notary, then the court will accept the notarized will without having to call in any witnesses. Such a notarized will is “self-proving.” If you did not sign the will in the presence of a notary, you can still gather up your witnesses and go see a notary later, and sign an affidavit to make the will self-proving. This saves time and expense later by simplifying the probate process.Q. Should I use a will or a trust to dispose of my property?
A. A trust has many benefits to recommend it. The main reason to have a trust is that the property you place in trust does not have to be probated. Placing your assets in trust will reduce the time and expense of the probate process for your heirs and beneficiaries. Another attractive feature of the trust is that it is a private document, whereas your will becomes a matter of public record after you die. If you want the contents of your estate to be kept in a more confidential manner, the trust offers that level of privacy. Also, trusts are typically more difficult to challenge or contest than wills, so you have a degree of security that the trust you create will be given legal effect after you are gone. Finally, trusts often provide a level of asset protection and may protect your estate from being attacked by creditors.
Even if you are placing all your property into one or more trusts, you should still have a will to name an executor for your estate, appoint a guardian for any minor children, and make specific bequests or leave a legacy. Also, a will can have a “pour over” provision that makes sure any property you somehow neglected to place into trust will be “poured over” into the trust and distributed accordingly.Q. Should I have a revocable trust or an irrevocable trust?
A. It depends on your needs and goals, but when most people are considering a trust, it is usually a revocable trust that meets their needs. As their names imply, a revocable trust can be revoked at any time, meaning that after you create the trust and place property in the trust, you can later decide to cancel the trust and take that property back. Since you have this ability and control over the property, the assets in a revocable living trust are still considered part of your estate, and therefore they are subject to the estate and gift tax and other inheritance taxes. Once you create an irrevocable trust, the property in the trust belongs to the trust and not to you. Since you cannot revoke the trust, the assets in the trust are no longer part of your estate and are not counted for estate and gift tax purposes.
An irrevocable trust can be an excellent vehicle for avoiding estate taxes, but unless the value of your estate exceeds $5 million (or $10 million if you are married), then you really don’t have to worry about the estate tax anyway. A revocable living trust should meet your needs for the purposes discussed in the preceding FAQ.Q. What does a Family Limited Partnership (FLP) do?
A. An FLP is a closely held business entity owned by family members that is used for estate planning purposes. Consider the situation where parents or grandparents have a business or other property they want to leave to their adult children or grandchildren. The older family members can be general partners in the FLP with management and control over the property or business, while the younger family members can be limited partners with less of a say in how the business or property is handled, but with a substantial interest or share in the partnership. Eventually the younger members of the family obtain the property without there being any tax consequences to the older family members, who may otherwise have had to pay a capital gains tax when transferring property.