While nobody wants to think about death or disability, establishing an estate plan is one of the most important steps you can take to protect yourself and your loved ones. Proper estate planning not only puts you in charge of your finances, it can also spare your loved ones the expense, delay and frustration associated with dealing with an unplanned estate.
Caring for You (during incapacity)
In any estate plan, goal #1 is to care for the client during life! In a perfect world, you will be managing your affairs and your social calendar. However, estate planning does encompass a plan to care for you in the event that you become incapacitated. If assets are held in trust or you have a valid power of attorney for healthcare and a valid power of attorney for finances, your chosen caretaker should be able to care for you without court intervention.
For those individuals who either have or intend to obtain some affluence, it is important to remember that your estate plan can work as your road map when you acquire and hold assets. Combined with business and asset protection planning, during your life, your estate plan may become the most valuable plan you ever created.
Providing for Minor Children
For those of you with young children, this may be the reason that you are engaging in planning. With young children, you should give careful thought to your choice of guardian, ensuring that he or she shares the values you want instilled in your children. You will also want to give consideration to the age and financial condition of a potential guardian.
Planning for your Beneficiaries
Planning for beneficiaries is an area where many plans focus their time and rightfully so. Most inheritances are spent in less than one year. In considering these issues, you might consider: The future illness of a beneficiary? A future divorcing child? An incentive to encourage your children to develop civic duties or to attend college? Your spouse’s future remarriage (people who were happily married are the most likely to remarry after a spouse is lost).
Avoiding Probate
If leave leave your estate to your loved ones using a will, everything you own (that doesn’t pass by beneficiary designation) will pass through probate. The process is expensive, time-consuming and open to the public. The probate court is in control of the process until the estate has been settled and distributed. A well planned estate should help you avoid this cost.
Planning for Taxes
Often overlooked in estate planning is income tax planning. As more and more of us develop our wealth in IRAs or 401ks, we need to remember that the income taxes have not been paid on those assets. There are special rules to postpone the payment of taxes, but the IRS strictly enforces them. If you have significant assets in tax deferred vehicles, we would love to help you preserve this wealth for future generations!
For the tax conscious, the good news is that most individuals do not have a taxable estate – or at least they don’t today. However, when contemplating taxation, the simple formula is: everything you own (including life insurance) minus everything you owe. In 2011-2012, only those individuals with greater than $5,000,000 will experience estate taxation. The bad news is that this number is constantly changing and could go as low as $1,000,000.
Charitable Bequests – Planned Giving
Charitable planning may be listed last, but should not be overlooked! Sometimes charitable bequests create a significant legacy, not only for the charity, but as a message to your family, that you care about the bigger picture! Do you support a particular charitable organization or cause? Planned giving, both during life and at death can achieve amazing results by changing someone’s life or by saving significant taxes! The number of opportunities for planned giving are endless!
Peace of mind
A well-crafted estate plan should provide for your loved ones in an effective and efficient manner by avoiding guardianship during your lifetime, probate at death, estate taxes and unnecessary delays. You should consult a qualified estate planning attorney to review your family and financial situation, your goals and explain the various options available to you. Once your estate plan is in place, you will have peace of mind knowing that you have provided for yourself and your family and developed a plan for today and for the future -- no matter what might happen! |