There are many good reasons to plan for an estate. The obvious one is to provide for the orderly disposition of an individual's affairs and assets when that individual dies, and to direct who will receive your property when he/she dies. Through estate planning, you may reduce or eliminate estate taxes on property when the individual dies. By planning the estate, the survivors may avoid probate.
Estate planning is a process. The process generally has two parts. One part involves planning for the management and disposition of the property both during the lifetime and after death. The second part is planning for the personal and health care in the event that the individual is no longer able to provide for such care.
Like many people, you may think that estate planning only requires the preparation of a will. But estate planning encompasses much more. As you will see, estate planning may involve financial, tax, medical and business planning, as well as the preparation of a will.
What is Involved in Estate Planning?
The form of the estate plan will depend upon the particular circumstances. In planning the estate, the goals and wishes should be given the highest priority. In addition to the goals and wishes, the individual needs to consider the family and its needs and the nature and extent of the property. During the estate planning process, you will need to answer a number of important questions. Major questions concern that will receive your property upon the death and the manner in which your property will be distributed. Depending upon the circumstances, you should determine:
To help with estate planning, an attorney also will want to know about the current financial situation and how the financial status might change in the future, particularly after the individual retires. The attorney should review the important personal papers and records, including any existing will, deed to real property, pre-or post-marital agreements and federal and state income tax returns. The attorney also will need to know about any pension and profit sharing plans, in which the individual participates, any business or Life Insurance owned, and the mortgages and other debts that are owed.
The term “estate planning” can have several definitions but one is used to refer to arrangements for an efficient transfer of property during lifetime or at death from one person to another. The implications of this definition are important. First virtually everyone has an estate. Therefore, estate planning should not be limited to those with large estates. In fact, estate planning may be more important for the owner of a small or medium estate that it is for a wealthy person because improper estate planning may have a proportionately greater effect on those with small or medium estates.
The management of an investment program is part of the estate planning process when viewed broadly, but it is only indirectly related to the transfer of property. However, plans made during a persons’ lifetime may determine how property will be distributed. Thus it is incorrect to assume that estate planning is only important at the time of death.
Every person needs some form of estate plan since his or her assets will be distributed at death according to state in testate law in the absence of a consciously prepared arrangement.
The team members of the plan involved in determining the adequate Estate plan might be:
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