What is “Estate Planning?” Ever wonder? Attorneys and financial advisors use the term frequently. When you hear the words, you likely think first of an attorney drawing up legal documents, documents such as a Last Will and Testament, Powers of Attorney or a Trust. When speaking with your financial advisor, he or she might discuss with you issues such as probate and estate tax. It is completely understandable if you are still not entirely clear about the meaning of the term “estate planning.” It is understandable because estate planning is not paperwork and it is not a tax return. Estate planning is the sometimes complicated process of passing your assets to your loved ones after you die.
On the very first day I attended law school, the Professor who taught a class called “Trust and Estates” smugly announced to his young and eager students the following truth: “You Can’t Take it With You!” He spent the rest of the semester torturing his students with all of the laws that proved this legal concept.
After I graduated from law school, I spent many years helping clients with their estate plans. I learned about estate tax and probate rules. I helped them with Powers of Attorney and Living Care Plans. Over the years, I looked for a loophole to the rule that you can’t take it with you. I did this, if for no other reason, just to prove my law professor wrong. My search, however, was in vain. I have decided that, indeed, you can not take it with you. Sorry.
During my years of searching for an exception to the golden rule, it did occur to me that there was a better way to phrase the rule. If you can not take it with you, it is likewise true that the dead can not own property. We spend our entire lives accumulating property. We buy stocks, bonds and annuities. We also buy boats, cars and real estate. Much of this property has legal title to it. Your banking accounts have an account number and an account owner. The bank records your social security number and reports to the Internal Revenue Service cash deposits over ten thousand dollars and interest income earned on the account. You boats and cars have legal title. Your home not only has a title, i.e., a Deed, the Deed is recorded with the county so that title to the home is clear.
Do you see a problem? If you can not take it with you and the dead can not own property, then the second you pass away, the title to your property is wrong. After you pass, the bank where you kept your checking account freeze the account. The title to the real estate is clouded and will not clear escrow. Property can not be transferred or sold. Estate Planning is about solving this problem before it occurs.
Our firm believes in education. At the same time, we also believe that there is only so much you can learn from the internet, television, workshops or event the radio. We offer free consultations and our estate planning and elder law attorneys help clients with estate planning, elder law and long term care issues in the Puget Sound.