Estate Planning Section
1: You Need a Good Estate Plan
In This Section1: You Need a Good Estate Plan 2: What is a Good Estate Plan? 3: One Size Does Not Fit All 4: Minimizing Your Tax Liabilities 5: The Basic Planning Tools 6: Who Can Help You 7: What Are You Waiting For? Sample Bequest Language Download a Sample Codicil FormOpens new window
A good estate plan will help you prepare for the future and manage the present. It is the difference between deciding how your assets will benefit you, your loved ones, and the charity you care about, or letting the state decide for you.
Estate planning is usually not a do-it-yourself project. Having a professional guide you through the process ensures that you have a plan that will work as you intend. This is where people are sometimes penny-wise and pound foolish!
Estate planning isn’t just for rich people or older people. Everyone should do it. It can begin with simply writing a will, but it can also involve trusts, changing beneficiaries of life insurance policies and retirement accounts, selecting guardians for minor children, providing lifetime income for yourself and others, passing on business interests, providing for your charitable interests, and minimizing taxes and other estate settlement costs.
We can help you to get started. A little informed preparation can go a long way toward saving you money and building your confidence in this process.
Estate Planning Questions
We spend a lifetime building, preserving and managing our estates. Thus, it is only right that we make thoughtful choices about how our estate will be distributed at death. Another critical issue for people with minor children is who will become the legal guardian of the children in the event of an untimely death of both parents. A will is essential to accomplishing these objectives. (Jointly owned assets and named beneficiaries of a life insurance policy or retirement plan will not be affected by the lack of a valid will, unless those named are no longer living.)
A revocable living trust is a trust you create during your life, titling all or selected assets to it which will be managed by a trustee. It is revocable because you can terminate the trust at any time during your life. You can serve as the trustee during your life if you wish. At death, the trust will distribute or continue to manage the assets within the trust in accordance with your wishes. There are some distinct advantages to a living trust. They include:
A living trust is not a device that will save you estate or inheritance taxes, but it can assist you in reducing your estate settlement costs. You can still name and benefit your charitable interests in your living trust. You would use the same kind of bequest language that you would use in a will.
This is a legal document in which you appoint an individual as your "attorney-in-fact" giving that person the legal power to take charge of your financial affairs, even if you should become incompetent or disabled.
This is a legal document in which you appoint an individual to make decisions about your medical treatment in the event you are unable to do so. Such a power is often used in conjunction with a living will. In some jurisdictions, such as New York, the health care proxy must be a separate document appointing a health care agent. It is important to get competent legal advice when preparing all of your estate planning documents, but particularly this document, since it may control your end of life decisions and needs to comply with the laws of your state of residence.
This is a legal document in which you indicate whether or not you would want your life to be “artificially prolonged” in an injury, disease or terminal condition that prevents you from communicating your wishes to medical professionals. Living wills are often used in conjunction with a power of attorney for health care.
As opposed to a living trust which is created during someone’s life, a testamentary trust is created in a will and goes into effect only upon the death of a decedent. The purpose of such a trust is to provide assets and income for someone after your death.
Estates worth more than $5.43 million are subject to estate taxes. If you have an estate worth more than $5.43 million, now is an important time to meet with your attorney, tax professional and other qualified professionals to update your plans.
Depending on which state you live in, your estate may also be subject to state estate taxes and/or inheritance taxes. It is also important to consider how you attempt to pass IRA or other similar retirement fund assets to your spouse or children, because those distributions will always be subject to income taxes. For many estates, careful planning is essential to minimize the impact of taxes on the estate. A qualified professional should be able to assist you with this. Finally, any assets you wish to pass on to qualified charities for their charitable purposes will avoid all taxation. In some cases, it's a choice: give part of your estate to the government, or give it to charity. It is your choice if you do the proper planning.