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Estate Planning Defined
The major objectives of estate planning are often to maximize the estate left to the survivors and to minimize the tax burden. The following information is general in nature. You should seek the advice of an attorney for some of your estate planning needs.
1. At death, taxes and fees usually must be paid within 9 months.
A. Federal and State death taxes can apply to estates larger than $600,000.
B. Executor, attorney, accountant and probate fees can be a substantial expense to an estate.
2. Estate planning can also address the potential problems of::
A. Estate liquidity. Can estate settlement costs be paid from liquid assets? (Assets that are in the form of cash or that can be quickly converted to cash). If there are not sufficient liquid assets, will valuable assets have to be sold at a lower price just to raise cash? (A business interest, real estate, or securities when the market is depressed, etc.)
B. Insufficient income to maintain the surviving spouse and/or minor children, provide for college education.
C. Having all estate assets be subject to the expense and delay of probate.
D. Having to pay additional Federal and State death taxes because estate planning was not done.
E. Proper care for minor children and competent management of assets.
WHY HAVE AN UP-TO-DATE WILL?
1. If a person dies without a valid Will, state intestacy laws will decide who will receive the estate assets, i.e., percentage to surviving spouse, children, etc. A Will permits you, rather than the state, to decide who will receive your assets. Some states may impose limits, e.g. a spouse's elective share, although some states have rules which can override even the Will.
2. The Will can designate whom you want to serve as your executor to pay debts, death taxes, and to distribute your assets. The attorney can draft your Will to designate an individual, or a corporate trust company, or to designate co-executors to perform these functions.
3. The Will can specify who gets items of jewelry, property, furniture, collectibles, autos, etc., and prevent family "squabbling" over specific assets, including interest in a family business. Charitable and other bequests can also be made in the Will.
4. Unless your Will nominates the guardian for the care of minor children and for the property bequeathed to them, a court may step in to appoint the guardian. Are there relatives you would like to nominate? Often relatives nearer your age rather than grandparents are preferable. Will the relatives be willing to serve? Are their finances sound? What if there is a divorce? These questions should be discussed with your attorney and incorporated into your Will or Trust.
5. Over time, family and business situations change, as do laws and taxes. A Will that encompasses one's feelings and desires today may not reflect your wishes later on. Periodic review with your attorney is strongly recommended, particularly when there is any change in the family situation, such as a death, divorce, major illness or accident, birth of children or grandchildren, or a major change in income or assets.
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