Estate Planning

How Can Individuals Prepare an Estate Plan?

Estate planning is the process of deciding how your assets, finances, and personal affairs should be handled during your lifetime and after your death.

An estate plan can help you organize your wishes, provide for your loved ones, address potential financial and tax considerations, and determine who should receive your assets.

Estate planning is not only for individuals with significant wealth. Anyone who owns property, has financial accounts, has children or other dependents, or wants to establish clear instructions for their affairs can benefit from thoughtful planning.

Why Is Estate Planning Important?

Without an organized estate plan, your assets may not be distributed according to your preferences. Decisions about your property and certain financial matters may instead be handled according to applicable laws and court procedures.

Estate planning can help you:

The specific documents and strategies you need depend on your family, financial situation, and goals.

• Determine how your assets should be distributed
• Provide for your spouse, children, or other beneficiaries
• Establish instructions for important financial matters
• Review and organize beneficiary designations
• Plan for potential estate and gift tax considerations
• Protect and transfer certain assets
• Prepare for incapacity
• Address charitable giving goals
• Coordinate life insurance and retirement accounts with your overall plan

Creating a Will

A will is an important part of many estate plans. It can specify how certain assets should be distributed after your death and may identify individuals you want to serve in important roles.

For parents of minor children, a will can also provide an opportunity to nominate guardians, subject to applicable law and court approval.

A will generally does not control every asset you own. Certain assets, such as accounts with beneficiary designations, may pass directly to the named beneficiary according to the account or policy terms.

Understanding Trusts

A trust is a legal arrangement that can be used to hold and manage assets according to specified instructions.

Depending on the type of trust and how it is structured, trusts may be used for purposes such as managing assets during your lifetime, providing for beneficiaries, controlling how assets are distributed, or addressing certain estate planning goals.

Trusts can be complex, and the appropriate structure depends on your individual circumstances. An estate planning attorney can help determine whether a trust is appropriate for your situation.

Beneficiary Designations

Beneficiary designations are an important part of estate planning because certain assets can transfer directly to the people or organizations named on the account or policy.

Beneficiary designations may apply to:

It is important to review these designations regularly. A beneficiary designation that is outdated may not reflect your current wishes.

Major life events such as marriage, divorce, the birth of a child, or the death of a beneficiary can be reasons to review and update your designations.

• Life insurance policies
• Retirement accounts
• Annuities
• Certain investment accounts
• Other financial accounts

Life Insurance and Estate Planning

Life insurance can play an important role in an estate plan.

A life insurance policy can provide a death benefit to designated beneficiaries and may help provide liquidity for certain expenses or financial obligations.

Depending on the policy and how it is structured, life insurance may also be considered when planning for business interests, estate expenses, charitable giving, or providing an inheritance.

The ownership and beneficiary structure of a life insurance policy can have important legal and tax implications, so professional guidance may be appropriate.

Estate and Gift Tax Planning

Estate planning can include consideration of potential federal and state estate and gift taxes.

The tax treatment of an estate depends on factors such as the value and type of assets, applicable laws, and the individual's circumstances. State rules can also differ from federal rules.

For individuals with significant assets, tax planning may be an important part of determining how property should be owned, managed, and transferred.

Because tax laws can change, working with qualified legal and tax professionals can help you understand the rules applicable to your situation.

Planning for Incapacity

Estate planning is not limited to what happens after death. It can also address what happens if you become unable to manage your financial or personal affairs.

Depending on your circumstances, legal documents may allow you to designate individuals to make certain financial or healthcare decisions on your behalf.

Planning in advance can help ensure that your preferences are documented and that someone you trust can act when necessary.

Estate Planning for Families

Families may have different estate planning needs depending on their circumstances.

Parents may want to plan for minor children, while blended families may need to consider children from previous relationships. Individuals with special financial or care considerations may also require additional planning.

An estate plan can help clarify how assets should be managed and distributed while taking family relationships and individual circumstances into account.

Estate Planning for Business Owners

Business owners may need to consider what happens to their business if they retire, become disabled, or die.

Estate planning can involve business ownership, succession planning, buy-sell agreements, key individuals, and the transfer of business interests.

Without proper planning, the transfer of a business can create financial and operational challenges for family members, partners, or other owners.

Business owners should coordinate their estate planning with qualified legal, tax, and financial professionals.

Charitable Giving and Estate Planning

If charitable giving is an important part of your financial goals, estate planning can provide opportunities to include charitable organizations in your overall strategy.

Depending on your circumstances, you may be able to include charities as beneficiaries of certain accounts, life insurance policies, trusts, or other assets.

The tax and legal treatment of charitable strategies varies, so professional advice can help you understand the available options.

Keep Your Estate Plan Updated

An estate plan should not be created once and then ignored. Your financial situation and personal circumstances can change over time.

Consider reviewing your estate plan after:

Regular reviews can help ensure your documents, beneficiaries, and overall strategy continue to reflect your current wishes.

• Marriage or divorce
• Birth or adoption of a child
• Death of a beneficiary
• Significant changes in your assets
• Buying or selling property
• Starting or selling a business
• Changes in tax laws
• Retirement
• Changes in your charitable goals

How Can Professional Guidance Help?

Estate planning can involve legal documents, financial assets, insurance, retirement accounts, taxes, business interests, and family considerations.

An estate planning attorney can provide legal advice and prepare appropriate legal documents. Financial and tax professionals can help address the financial and tax aspects of your overall plan.

Working with the appropriate professionals can help you coordinate different parts of your estate plan and understand the options available to you.

If you need assistance with estate planning, contact us today. We can help you review your financial goals, understand your options, and coordinate your estate planning needs with your broader financial strategy.