Estate Planning Overview
The following overview is intended for your reflection.
The job of the estate planning attorney is to “give life” to your objectives. Your estate plan should be designed to accomplish three main objectives:
1) It should contain clear, unequivocal language providing for the planned, managed transfer of property.
2) It should contain necessary provisions to minimize estate administration and other estate costs.
3) It should contain the most current provisions to minimize or eliminate taxation.
The estate planning process might begin by reflecting on your assets, and how those assets impact your loved ones.
Next, when you meet with your attorney, carefully consider the following five points:
1) Property Distributions
Upon your death, how would you want your assets distributed? Do you want your assets distributed outright, or, for example, would you want to leave the assets in trusts? Do any of your beneficiaries have special needs? Are their charities or other individuals outside the family to be considered?
Means that you must determine who will receive your assets. You may prioritize your property distribution to first, second and third levels of distribution. Beneficiaries may include, but are not limited to your spouse, children, grandchildren, parents, brothers and sisters, friends and charities.
2) Property Control
Provisions of your plan require consideration of when and how you want the designated beneficiaries to receive the estate assets. Many choices are available and can be explored in detail with your attorney. Before meeting with an attorney, consider these questions:
Do you have a blended family with children or step-children from prior marriages, which present special considerations?
Should the children and/or grandchildren benefit from my estate for education or health needs only after my spouse dies?
At what age should my children or grandchildren be free to manage or spend their inheritance for themselves?
What about other family members, friends, charities — When and how do I want them to benefit from my assets?
The answers to these questions will determine the provisions that govern which beneficiaries will receive assets and when. For example, you may want your estate professionally managed for your family through a trust or special needs. At the same time, provisions can be made for children, grandchildren or other family members' educational support or health needs.
3) Property Taxation
Property taxation analysis requires a review of your assets and liabilities. Designing an estate plan to minimize estate taxes depends upon the size of your estate, how the assets are owned and your marital status.
4)Life Planning
In addition to the Will that takes effect upon your death, a good estate plan will include life planning if you should become incapacitated or unable to manage your affairs. Additional important documents might include a Durable Power of Attorney, a Medical Power of Attorney, a HIPAA release, Designation of Guardianship (if one is ever needed), a Directive to Physician, commonly known as a “Living Will.”
It is also very important for the styling of your bank or brokerage accounts to be consistent with your estate plans. Accounts styled joint tenants with rights of survivorship (JTWROS) should be reviewed. In addition, beneficiary designations on insurance policies and retirement accounts should also be reviewed to assess the impact on the overall estate plan.
5) Property Conservation
The final estate planning consideration is who is going to manage your estate and any ongoing trusts for your beneficiaries. Who do you want as executor of your estate to carry out the Will?
Conclusion
Estate planning is a necessary and important function to help protect our assets and beneficiaries after we are gone and to protect us during life if we become incapacitated. At the end of the process, the final objective is for the client to receive peace of mind.