Estate planning is a task that can elicit complex emotions. People don’t want to think about their own demise or the death of a spouse. But getting your affairs in order is important for taking care of your family’s needs.

Without a will that defines your wishes, the Kentucky probate court will distribute your assets according to law. In blended families, or families with multiple children, that means descendants may receive only a fraction of your estate, or may have no inheritance rights at all.

Estate planning isn’t just for the wealthy or the elderly – it’s for anyone with property, retirement benefits, or other assets that could support their family. The Corbin lawyers at Hill & Hill can help you come up with the most beneficial plan for your survivors.

INHERITANCE LAW

In Kentucky, when you die without a will, your assets are distributed according to intestate succession law, meaning your estate passes to your closest relatives. If you are married but have no children, your spouse would inherit your entire estate. If you’re married with children, your spouse would be entitled to half of the estate and the children would receive one half.

If a decedent was unmarried and childless, the estate may pass to other relatives, such as parents, siblings, and half-siblings, although half-siblings receive half of what siblings-by-blood receive.

The problem with intestate succession is that it doesn’t account for individual needs. For example, if you have two children – one who earns a significant income and one who can’t work due to disability – you may not want them to inherit an equal portion of your estate. But without a will, that’s what would occur. In Kentucky, where 30 percent of people have been married more than once, families may be made up of a couple’s children-by-blood, stepchildren and half-siblings. Inheritance law becomes much more complicated in these types of blended families. For example, stepchildren have no claim to a decedent’s estate, unless the decedent had legally adopted them. Only through a will can you name a guardian or guardians who will look after your children in the event of your death. If there is no surviving parent, the court will appoint a guardian for the children. 

Estate planning ensures your family is taken care of according to your wishes.

If you don’t have a will, call us today for help at (606) 528-7181. 

TYPES OF TRUSTS

Many types of trusts exist to help protect survivors from tax penalties and other financial burdens. They fall within two categories: Revocable trusts, which the trust creator can modify or cancel, and irrevocable trusts, which cannot be changed unless the beneficiary agrees to it. Revocable trusts become irrevocable with the passing of the trust’s creator.

Some common types of trusts include:

Life insurance trust. A person creates this irrevocable trust during his or her lifetime and loses the ability to withdraw from or borrow against his or her life insurance policy. Upon death, life insurance policy proceeds go into trust, so they don’t trigger any tax penalties for survivors.

Living trust. This trust can be revocable or irrevocable and is funded during your lifetime. Similar to a will, a living trust specifies how your assets should be distributed. But unlike a will, a living trust does not go through the probate court, so distributions may occur more quickly, and off the public record. It is also more likely to stand up to challenges, should someone come forward and try to claim a portion of your estate.

Testamentary trust. A testamentary trust places conditions on your inheritance. For example, many people use this structure when leaving an inheritance to young children. You can specify at what age descendants may access their inheritance, and you can even specify how it should be spent.

Special needs trust. If you wish to leave an inheritance for a child or relative with a disability, a special needs trust is essential. Even a minimal inheritance could be an asset that jeopardizes a person’s Medicaid or Supplemental Security Income benefits. Money in a special needs trust does not count as an asset. An appointed trustee uses the fund to pay for the recipient’s expenses – items such as groceries, home furnishings, and medical expenses not covered by aid programs.

UNDERSTANDING YOUR OPTIONS

Even if you already have a will or trust, financial experts recommend reviewing those documents at least every five years. Changes in federal or state tax law, your assets, or your personal relationships could call for making changes to your estate plan.

We know it’s not easy to think about how your family will carry on after you’re gone. But creating an estate plan is one of the best things you can do for your loved ones. Let us help you. Call us at (606) 528-7181