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Estate Planning

Money Manager | Monday, September 15th, 2008

Some of us are planners and some of us are not. The phrase “make a plan” can make some us run for cover. At some point in our lives we will all need to make plans and provisions for our loved ones we will leave behind. Estate Planning is a critical tool to ensure our loved ones are taken care of once we are gone by making sure that our estate is disposed of in the manner we desire it to be.

Estate Planning Defined

Estate Planning is the process of disposing your estate (property) in such a way that your designated beneficiaries receive the maximum benefit according to your wishes. The process of estate planning includes planning to pay the least amount of taxes; minimizing or avoiding probate court; designating guardians for minor children and planning in case of your mental incapacitation.

Estate Planning Elements

The elements of estate planning can include a will, durable financial power of attorney, durable medical power of attorney, living will, trusts (various types), beneficiary designations, gifting and life insurance policies. As with any type of legal decisions make sure you consult tax, financial and legal advisors before beginning your estate planning.

    Will . a will is a document where a person controls the rights of others over his or her property and/or family after death. The will is one of the primary elements in the estate planning process.
    Durable Financial Power of Attorney. A written instrument under which an individual, the principal, designates another person as attorney-in-fact or agent. This is a contract which creates and agency-principal relationship and becomes effective upon the principal’s becoming incompetent, incapacitated or unable to manage his or her affairs.
    Durable Medical Power of Attorney . Not to be confused with a living will, the durable medical power of attorney, an important part of estate planning, is used to give decision-making authority to another person (typically a family member or close friend). This person, the attorney-in-fact , then makes all medical decisions leading up to the person’s death, but has no such power to make end of life decisions for the patient.
    Living Will . The living will controls only those decisions that must be made at the end of the patient’s life. These decisions are made by the patient not by the medical attorney-in-fact (durable medical power of attorney). In the absence of a living will, and where the patient is incapable of making end-of-life decisions the choices are then left to family members. Be sure to include a living will in your estate planning to take this burden off your family members.
    Trusts . Trusts are used in estate planning for various reasons. Two common uses of a trust in an estate are 1) when parents wish to leave money or property to their children once the children reach a certain age (typically 21 or 25) and 2) when a person wishes to leave some or all of their estate to a charitable organization. A trust is a fiduciary relationship in which one party holds legal title to another’s property for the benefit of a party who holds equitable title to the property. The trustee is a natural or legal person to whom property is committed to be administered for the benefit of a beneficiary (as a person or charitable organization).
    Beneficiary Designations . the person(s) or legal entity(s) that receive money, property or other benefits as specified by the deceased through the will, insurance policies and financial accounts. A beneficiary is a person or entity (as a charity or estate) that receives a benefit from something such as a trust, money or property. It is recommended to also have contingency beneficiary(s) named to receive the proceeds if the primary beneficiary dies. Beneficiaries are also critical to estate planning.
    Gifting . Gifting is the act of an intentional and gratuitous transfer of real or personal property by a donor with legal capacity who actually or constructively delivers the property to the donee with the intent of giving up dominion over the property and investing it in the donee who accepts it. There are many laws surrounding gifting. It is strongly recommended that you consult a tax attorney and/or financial advisor before making or designating any gifts over $10,000 for estate planning purposes or any other.
    Life Insurance Policies . Most people have life insurance policies as part of their estate planning process. Life insurance is policy insurance providing for the payment of money to a designated beneficiary(s) upon the death of the insured.

Define Your Estate Planning Goals

When defining your goals in estate planning it is important to consider all factors: children, other family, money, property, medical decisions and last wishes. Below is a list of questions to consider when beginning the estate planning process. It will get you started in defining your goals. This list is not exhaustive but it is a good place to begin the estate planning process and establishing your priorities.

  • Who will become guardians for your minor children?
  • Who will become guardians for your elderly or dependent parents?
  • How do I want to handle passing of assets to my heirs to meet my family.s needs and not overwhelm anyone?
  • How can I avoid family conflict and future ill-will?
  • How can I minimize the expense, delay and publicity of the probate process?
  • What stipulations will I make in regards to whom will operate the business and handle family affairs during a disability or after my death?
  • How can I eliminate unnecessary income and estate taxes?
  • How can I provide adequate liquidity to pay final expenses and taxes?

Estate Planning Resources will find the perfect financial advisor to help you save, invest, and retire. Take your time, browse our library, and then let an experienced professional financial advisor work with you to reach your financial goals. Simply follow our matching process above to be matched with a qualified advisor, which is always a free service to you.

There are literally thousands of estate planning resources available. A word of caution . find a resource that you trust. The estate planning decisions you make can have lasting implications for your loved ones and others. It is strongly recommended that you consult your tax, financial and legal advisors while you are in the estate planning process.

There are also many other resources online such as to help educate you on the estate planning process. Listed below are some additional resources.


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