Estate Planning
Estate planning is a process that generally has two parts. One part involves planning for the management and disposition of your property both during your lifetime and after your death. The second part is planning for the management of your finances and health care if you are no longer able to provide for yourself.
The structure of your estate plan will depend upon your circumstances. In planning your estate, your goals and wishes should be given the highest priority, followed by your family and its needs and the nature and extent of your property. During the estate planning process, you will need to answer a few crucial questions. Depending upon your circumstances, you should determine:
- Who should receive your property after your death?
- Who should administer your estate after your death?
- Who should be the guardian of your children?
- How can federal estate (death) and other taxes be minimized?
- How will your executor or trustee pay for death taxes if any are due?
- How should you and your spouse hold title to your assets?
- If you cannot care for yourself, who do you want to take care of you?
- If you cannot manage your estate, who do you want to do so?
- Who should receive the proceeds of your life insurance or your retirement benefits?
What is an Estate?
Your estate consists of all property or interests in property which you own. This means that every tangible thing you own is part of your estate. Your estate may also consist of interest in business entities, money held in bank accounts, stocks or bonds, real property, life insurance, retirement benefits, etc.
Preparing for the process of estate planning, it is important to know about the property which you own and its value. The value of your estate is important in determining whether, and to what extent, your estate will be taxed after your death and the resources which you will have available in the event of your incapacity. It is also important to know about your current financial situation and how your financial status might change in the future, particularly after you retire.
Who Needs an Estate Plan?
Almost every individual, regardless of the value of his or her estate, needs estate planning. If your estate has a small value, your estate planning may only focus upon who is to receive your property after your death. If your estate is larger, a discussion about the various ways to preserve your property for your heirs is warranted. For example, estate planning often involves planning to reduce or defer the amount of federal estate (death) taxes which otherwise might be payable on your death, or to reduce or eliminate reassessment on the change of ownership of real property.
However, regardless of the size of your estate, you will want to designate who, in the event of your incapacity, is to manage your affairs, to care for you and to make health care decisions. You also will want to consider such alternatives as durable powers of attorney for health care and property and conservatorships of the person and estate.