The Purpose
First and foremost, estate planning includes living wills, and durable powers of attorney for health care and financial powers of attorney. These are very important documents because they pertain to you while you are still living. A living will expresses your wishes for end-of- life decisions, and powers of attorney designate trusted individuals to take action on your behalf, if you are not able to do so, about your care and assets. Every state has its own laws, so you need to have your documents reviewed every time you move to a new state.
The second part of estate planning involves providing for distribution of your wealth after your death. Successful estate planning transfers assets to your chosen beneficiaries quickly and usually with minimal tax consequences. The process requires making an inventory of your assets and creating a will. In addition, a trust is likely to be established if a key goal is to reduce estate taxes and/or to avoid probate.
Do I Need to Do This?
Estate planning is not only for the very wealthy. If your estate is worth $2,000,000 or more (2008 figure), estate planning may benefit your heirs. You can calculate the value of your estate by totaling your assets, subtracting your liabilities, and adding your life insurance. Figuring this value can be an eye-opening experience. By the time you account for your home, investments, retirement savings and life insurance policies you own, you may find that your estate is indeed in the taxable category. Even if your estate is below $1.5 million, a Will is useful to those loved ones who survive you, in assisting them in transferring your assets.
Also, establishing powers of attorney is critical because you never know when you will need them. If you do not already have these documents, contact an estate planning attorney who is licensed in the state in which you live. Laura K. Schilling is a licensed attorney in Florida and Georgia, and her law practice focuses on estate planning.
The laws for estate tax planning are changing. You should review any and all documents you already have established, and contact an attorney with changes you wish to make, or to ask questions regarding the new laws.