PLANNING YOUR ESTATE: A CHECKLIST

Estate planning may sound forbidding, but it’s really about your concern for your family and others you care for. It’s how you plan ahead for your loved ones, seeing they are provided for, and making sure your hard-earned property is distributed according to your wishes.

Your estate consists of all your property, including

• Your home and other real estate,
• Tangible personal property such as cars and furniture, and
• Intangible property like insurance, bank accounts, stocks and bonds, and pension and social security benefits.

An estate plan is your blueprint for managing your property while you are alive and providing for where you want it to go after you die.

Dying Without a Plan

If you die intestate (without a will), your property still must be distributed. By not leaving a valid will or trust, or not transferring your property in some other way (such as through insurance, pension benefits, or joint ownership), you’ve in effect left it to state law to write your will for you. The state will make assumptions about where you’d like your money to go – assumptions with which you may not agree.

Depending on your state, intestacy laws may give all to a surviving spouse, or may split the estate between spouse and children. If you are not survived by a spouse or children, intestate laws generally require distribution to your closest kin as defined by statute – but perhaps you wish your property to go to friends or more distant relatives. Only by planning your estate do you exercise control over who benefits from your estate and how much they benefit.

Taking Inventory

One good way to begin is to think about what you have and where you want it to go. Think too about what you’d want to happen in the event that you’re incapacitated – how would you want your property managed and your loved ones cared for? Now that you’ve established your general objectives, it’s time to get specific. Your planning with your lawyer will work best when you’ve done the preliminary groundwork needed to prepare a solid estate plan. Make up a checklist of assets and debts – what you own and what you owe. Below is a list of important estate planning information that will provide a good idea of what you and your lawyer will need to consider.

• The names, addresses, and birth dates of your spouse, children, and other relatives whom you might want to include in your will. List any disabilities or other special needs they may have.
• The names addresses, and phone numbers of possible guardians of your minor children and executors or trustees.
• The amount and sources of your income, including interest, dividends, and other household income, such as our spouse’s salary or income your children bring home, if they live with you.
• The amounts and sources of all your debts, including mortgages, installment loans, leases, and business debts.
• The amounts and sources of any retirement benefits, including IRAs, pensions, Keogh accounts, government benefit, and profit sharing plans.
• The amounts, sources and account numbers of other financial assets, including bank accounts, brokerage accounts, certificates of deposit, T-bills, annuities, outstanding loans, etc.
• A description of any closely held business, with estimate of value.
• A list of life insurance policies, including the account balances, issuer, owner, beneficiaries, and any amounts borrowed against the policies.
• A list (with approximate values) of valuable property you own, including your home and other real estate, automobiles, jewelry, furniture, jointly owned property (name the co-owner), collections, heirlooms, and other assets. This list should be cross referenced with the names of the people you want to leave each item to.
• Any documents that might affect your estate plan, including prenuptial agreements, marriage certificates, divorce decrees, recent tax returns, existing wills and trusts, property deeds, and so on.

Try to locate as much of this information as you can, but don’t let the task daunt you. The important thing is to give your lawyer a good overall picture, not necessarily to track down every single piece of paper.

With this preliminary thinking and document gathering done, your conference with your lawyer – and the drafting of a will or trust – should go smoothly, and the alternatives you select will be right for you.

KEEPING TRACK

One of the hardest tasks for an executor is figuring out just what money the dead person had coming in, and what bills and other payments need to be made. Think about your personal finances for a moment. If someone else suddenly had to step in and take over, would they know (or be able to figure out) about the money you have coming from a buyer who is paying you over time? Or the payments you promised your friend Mac (orally, not in writing) for that boat of his?

Now is the time to put yourself in an outsider’s shoes and write down all such expenses and income that might not otherwise be apparent to an executor. In doing so, you’ll put your life in better order. It’s another example of how estate planning can made your life a lot simpler.

TEN REASONS TO PLAN YOUR ESTATE

1. Provide for your immediate family. Don’t just think of money (perhaps through life insurance) nominate personal guardians for the children, in case both parents die before they grow up.
2. Provide for disabled adult children, elderly parents, or other relatives. You can establish a special trust fund for family members who need support that you won't be there to provide.
3. Get our property to beneficiaries. Option include avoiding or greatly easing probate (the court process for distributing assets left in a will) through insurance paid directly to beneficiaries, joint tenancies, or living trusts or through using simplified or expedited probate.
4. Plan for incapacity. You may also plan for your own possible mental or physical incapacity, perhaps through a living trust, as well as health-care advance directives.
5. Minimize expenses. Good estate planning can reduce significantly the expenses of transferring property to beneficiaries.
6. Choose executors/trustees for your estate. Your executor will be responsible for carrying out the directions you express in your will. A trustee carries out the directions contained in a trust. Choosing a competent executor and trustee and giving them clear directions is essential.
7. Ease the strain on your family. Take a burden from your grieving survivors by good planning, including planning now for your funeral arrangements.
8. Help a favorite cause. Your estate plan can support religious, educational, and other charitable causes, either during your lifetime or upon your death, and possibly save you money in taxes.
9. Reduce taxes on your estate. A good estate plan can give the maximum allowed by law to your beneficiaries and the minimum to the government.
10. Make sure your business goes on smoothly. You can provide for an orderly succession and continuation of your business through estate planning.