Estate Planning Basics

There are a variety of estate plan options. For most people, an estate plan consists only of a Will. Others might prefer a Will and a Revocable Trust. And others might need advanced estate tax planning that requires documents such as Tax-planned Wills, Bypass Trusts, Marital Deduction Trusts, or a variety of other strategic documents. In addition to advanced estate tax planning, some individuals might need advanced asset protection planning, which involves forming corporate entities such as Limited Liability Corporations and Limited Liability Partnerships.

Further, every sound estate plan should include peripheral documents such as a Financial Power of Attorney, Medical Power of Attorney, and Advance Medical Directives. Unlike a Will or certain types of Trusts that only become effective after death, these documents are effective only during life. Even though they do not affect your estate after you pass away, they permit you to formally make important pre-emptive decisions about how your affairs should be managed if you become temporarily incapacitated or are otherwise unavailable to make a decision.

So, what kind of estate plan do you need?

It depends on your family, your finances, and your wishes about how your estate should be managed after you pass away.

Some preliminary questions to consider: Do you have children? How would you like them cared for if you pass away while they are still minors? Do any of them have special long-term health needs? Does it matter to you how your property is managed after you pass away? Specifically, would you like it managed through a Trust or through the probate process? Would you like to pay upfront during life for a Trust, or would you prefer the probate process and thereby defer estate management costs until after you pass away? Will your estate be subject to the estate tax? If so, how would you like to address that? Do you own a business that subjects you to a degree of litigation risk from which you’d like to protect your assets?

As you can see, we quickly become overwhelmed by questions and considerations. There are a variety of things to consider when preparing your estate plan. Your financial adviser and an experienced estate planning attorney can assist you as you sift through everything so that you can ultimately identify the right strategy for you and your assets.