8 Tips for Estate Planning

Shelley Ward
Senior Director of Major and Planned Gifts

According to Rocket Lawyer, 64% of Americans do not have up-to-date estate plans to protect themselves or their families in the event of sickness, accidents, or death.

A carefully conceived estate plan can be one of the most important gifts you give to yourself and your loved ones. An estate plan provides peace of mind for you and gives clear direction to your loved ones about your wishes. Here are the steps you should take as part of the estate-planning process.

# 1 Make a will
Writing a will is the only way you can ensure that your assets are distributed, according to your wishes, to family members or other beneficiaries. With no will in place, federal or state law determines what happens to your property. A will permits you to place certain conditions on your assets, such as holding assets in trust for your children until they reach a certain age.

A will also permits parents to name a guardian who will care for their minor children should something happen to both parents. In the absence of this provision in a will, the court will appoint a guardian for the children.

# 2 Determine how individual assets should be distributed
Don't underestimate the importance of this step, and don't assume that family members will work things out among themselves. Instead, you should openly discuss with the individuals involved your desire for them to have items of sentimental as well as monetary value. This avoids misunderstandings and helps to ensure that your treasured possessions go to the people you have in mind.

# 3 Review and update your beneficiary designations
Life insurance policies, retirement plans, and payable-on-death accounts are all considered contracts in the sense that the beneficiaries you designate will inherit these assets directly, regardless of what your will states. Make sure you update your beneficiary designations after a marriage, divorce, or other major life event.

#4 Select a qualified executor for your estate
An executor is responsible for paying your debts and distributing your assets in accordance with your will. The most obvious choice for many individuals is their spouse or oldest child, but you may want to consider other options—particularly if settling your estate is likely to be a lengthy or complicated process. A professional executor, such as a certified public accountant or other trusted advisors, may be more experienced at administering estates and also add the benefit of impartiality in distributing your assets.

#5 Make sure your family members know where to find vital documents
It's a good idea to prepare a list that shows where all important documents and assets are stored. This should include birth, marriage, and death certificates, especially of children, spouses, and other potential heirs. You will also want to include important financial records, such as stock certificates, insurance policies, and retirement-account statements. Be sure to provide your executor with the names of your attorney, accountant, stockbroker, and other advisors.

#6 Maximize the annual gift-tax exclusion
To minimize future estate costs, you can make annual tax-free gifts of $14,000 each to any number of individuals. Couples can give combined gifts of $28,000 per recipient. In addition, the future appreciation on the gifted assets will be transferred out of your estate.

#7 Make a living will
Also known as an advance health care directive, a living will expresses to your family and to your health care providers what medical procedures (life-prolonging, pain-relief, etc.) you do and do not want and those you do not want performed in the event you are unable to express these desires yourself. You can also appoint a "health care proxy" to make decisions on your behalf that are not covered by your living will. Discuss your desires with your family and your health care proxy.

#8 Create a power of attorney
If you are incapacitated or otherwise unable to take care of your financial affairs, a durable power of attorney will give a trusted individual the ability to pay your bills and manage your affairs during your incapacity. Your will has no effect during your lifetime, and a living will only addresses your medical affairs. Durable powers of attorney fill in the end-of-life planning gap and avoid expensive court proceedings to have a guardian or conservator appointed to handle your affairs.

An effective estate plan requires the advice and experience of professionals skilled in estate planning. It also necessitates thoughtful planning, not only about the distribution of your property but also about how you want to manage certain health care issues. An attorney can work with your certified public accountant and other professionals to build an estate plan that meets your objectives. To find an estate-planning attorney in your area, please feel welcome to contact me at any time.

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