Basic Estate Planning Strategies

Estate planning should be viewed as an ongoing process, as your estate plan should reflect both issues directly related to your personal situation as well as taking into considerations changes in tax laws and government regulations.  There are many different strategies depending on your financial situation (size of your estate, complexity, etc.).  As a starting point, most estate plans should begin with the following estate plan “basics”:

• A testamentary will
• A living will
• Revocable Trust
• Alternative Methods of Transferring Property
• A durable power of attorney
• Naming a guardian for minor children
• A health care proxy
• Updated Beneficiary Designation forms
• Life insurance for final expenses

Formal Testamentary Will

The simplest form of estate planning is a will, a legal document that transfers what you own to your beneficiaries upon your death.  If you die without a will, state statutes and a probate judge will dictate who receives your assets.  The intestate succession statutes, which set forth who will receive property, generally protect immediate family members.  State statutes vary on what property passes to whom upon the death of an individual, but spouses and children are typically the priority heirs.  Individuals uncomfortable with the heirs specified in their state’s statutes should execute a will to set forth an acceptable plan for the distribution of their assets.  Any person at least 18 years old and of sound mind may lawfully execute a will.

Who should have an Estate Plan?
Everyone should have an estate plan.  There are no minimum requirements – contrary to popular belief, estate planning is not reserved for the wealthy only.  And remember, should you die without an estate plan, will and/or trust you are exposing your family to serious financial risk. 
If one for more of the following reflects your personal situation, then you should consider the benefits of establishing an estate plan.

• I want to maximize the value of my estate and keep taxes as low as possible
• I have assets in excess of $2,000,000
• I have minor children who need an appointed guardian
• I have a large portion of my assets in a retirement plan
• I am the beneficiary of a trust
• If I am incapacitated, I wish to have someone act on my behalf

Why is an Estate Plan important?
Estate planning allows you to specify where each of your assets goes upon your death.  This involves deciding who the beneficiaries will be, the actual distribution of your assets, performing this transfer with the minimum tax consequences while making sure that the estate has enough liquidity to meet its obligations.

Without a comprehensive estate plan, a significant part of your retirement assets accumulated throughout the years through work and investments can be lost or given to unintended beneficiaries.  Furthermore, estate planning is equally important should you become incapacitated and need someone you trust to make important medical and financial decisions on your behalf.