Estate planning arranges for the transfer of an individual's estate at the time of death. An estate consists of all property owned at death before it is distributed by will, trust, or intestacy laws. An estate may contain both real property (real estate, including houses and investment properties) and personal property (all other property, including bank accounts, securities, jewelry and automobiles). Typically, the process of estate planning involves extensive consultation with a number of professional advisors, including lawyers, financial counselors, accountants and life insurance representatives.
Purpose of Estate Planning
Estate planning benefits those with large estates, as well as those with modest assets. Creating an estate plan ensures that all property will be distributed according to the personal wishes of the deceased, and that those who are benefiting from the estate receive the largest distribution possible with a minimum amount of delay. Specifically, estate planning allows an individual to decide exactly who will benefit from their estate, and to what extent. Estate planning also ensures that the estate will not be destroyed by taxes imposed on the transfer of assets at death. In addition to providing financial security, estate planning encourages individuals to make important decisions, such as appointing a guardian for minor children, choosing healthcare preferences, and securing funeral arrangements.
Estate Planning Tools
An estate plan is created to reach the specific goals of the estate owner. A number of tools may be utilized to ensure the best possible distribution of assets. The basic instruments used in estate planning are listed below. However, individual estate plans depend on the size of the estate, the number of beneficiaries, and the purpose of distributions.
- The Will. The most common estate planning instrument is the will. A will sets forth who will inherit what property. Additionally, wills often appoint a guardian for minor children or specify what funeral arrangements should be made at the time of death. All wills must pass through probate, which may be a lengthy and expensive process. As a result, the will's beneficiaries may not receive the entire share specified in the will, and there may be a considerable delay in the distribution of assets. In the absence of a will or other testamentary instrument, the state will distribute an individual's estate according to the laws of intestacy. Generally, under the intestacy system, assets are divided in a particular order, to provide for a surviving spouse, issue, parents or siblings.
- The Trust. A trust is an arrangement by which a trustee distributes payments or property to a beneficiary according to the terms of the trust. A beneficiary may be a family member, a friend, a charity or a pet. A trust may be created during the individual's life, or it may be created by will. A trust created by will transfers property to the trustee at the time of the individual's death. By creating a trust, the beneficiaries to the estate bypass the probate process.
- Health Care Directives. Health care directives ensure that an individual's medical wishes will be carried out when they become unable to make their own health care decisions. Health care directives include a health care declaration and a power of attorney for health care. Health care directives, also known as "living wills," set forth an individual's personal decisions regarding healthcare at the end of their lives. A power of attorney for health care gives a family member or friend control of all health care decisions leading up to the person's death.
- Financial Power of Attorney. Finally, a financial power of attorney appoints a third party to handle an individual's finances when they can no longer take care of their own financial affairs. A financial power of attorney may designate a friend, family member, or a trusted professional to fulfill this position.
- Bill Introduced: S. 3470: Support for Iraq Oil Trust Act of 2008 September 10, 2008 A bill to require United States Government representatives to present to the Government of Iraq a plan to establish an oil trust.
- Bill Sent To President: H.R. 6331: Medicare Improvements for Patients and Providers Act of 2008 July 8, 2008 To amend titles XVIII and XIX of the Social Security Act to extend expiring provisions under the Medicare Program, to improve beneficiary access to preventive and mental health services, to enhance low-income benefit programs, and to maintain access
- Bill Introduced: H.R. 6289: Save Family-Owned Farms and Small Businesses Act of 2008 June 17, 2008 To amend the Internal Revenue Code of 1986 to increase the maximum reduction in estate tax value for farmland and other special use property, to restore and increase the estate tax deduction for family-owned business interests, and for other
- Bill Introduced: S. 2856: Optional One Page Flat Tax Act April 14, 2008 A bill to amend the Internal Revenue Code of 1986 to provide taxpayers a flat tax alternative to the current income tax system.
- Bill Sent To President: H.R. 3508: 2005 District of Columbia Omnibus Authorization Act September 24, 2006 To authorize improvements in the operation of the government of the District of Columbia, and for other purposes.September 25, 2006: Cleared for White House.
- Letters Non-Testamentary July 20, 2014 Kansas Law Review, Vol. 62, No. 3, 2014, Drexel University School of Law Research Paper No. 2014-A-03
- The 'Digital First Sale Doctrine': A Necessary Piece of the Digital Estate Planning Puzzle July 16, 2014 Kathleen Farro
- State Law Reporting and Disclosure Mandates Under ERISA July 16, 2014 33 Tax Management Weekly Report 919, July 2014
- In Search of the Probate Exception July 12, 2014 Vanderbilt Law Review, Vol. 67, Northwestern Public Law Research Paper No. 14-28
- Women, Law, and the Pursuit of Happiness in Early Harford County July 11, 2014 Harford Historical Bulletin, Number 81, Summer 1999, pp. 3-41., University of Baltimore School of Law Legal Studies Research Paper
- Moving may affect estate planning - St. George Daily Spectrum July 28, 2014 St. George Daily SpectrumMoving may affect estate planningSt. George Daily SpectrumThese documents usually consist of what is commonly referred to as a "living will" ("Directive to Physicians") and a durable power of attorney for medical matters.
- 'Hidden' real estate tax: Fodder for frontal election-year assault in NH - Insurance News Net July 28, 2014 'Hidden' real estate tax: Fodder for frontal election-year assault in NHInsurance News NetJuly 27 --What do we make of the Senate Republican attack against Gov. Maggie Hassan for pursuing a "new, hidden tax" on ground leases by
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- Free estate planning set - The Bryan Times (subscription) July 27, 2014 Free estate planning setThe Bryan Times (subscription)ARCHBOLD There will be a free estate planning workshop hosted by CLA Estate Services on Wednesday, Aug. 6, from 9:30 a.m. 12:30 p.m. at the Sauder Heritage Inn, 22611 Ohio 2,
- 'Hidden' real estate tax: Fodder for frontal election-year assault in NH - Nashua Telegraph July 26, 2014 'Hidden' real estate tax: Fodder for frontal election-year assault in NHNashua TelegraphWhat do we make of the Senate Republican attack against Gov. Maggie Hassan for pursuing a "new, hidden tax" on ground leases by expanding the state tax on
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- CLE on the POLST Paradigm April 21, 2014 The American Law Institute Continuing Legal Education (ALI CLE) is presenting a CLE entitled, Physician Orders for Life-Sustaining Treatment: What Estate Planning, Elder Law and Health Law Attorneys and Health Law Professionals Need to Know About the
- Special Needs Trusts for Disabled Beneficiaries April 21, 2014 As we see the greying demographics take shape, more older parents are coming in to our office to make arrangements for their adult disabled children. Last week's couple were a joy to work with, but I was a little anxious that they had waited until
- Undue Influence by Some Beneficiaries Invalidates Only the Portions of Will Benefitting Those Beneficiaries April 20, 2014 The testator's will gave his estate to five friends and expressly excluded his family. Two family members filed objections to the will and the jury found that the testator had capacity but that three of the five beneficiaries exercised undue...
- Article on ATRA and the Heckerling Institute April 20, 2014 The changes wrought by the American Taxpayer Relief Act of 2012 were at the forefront of the 47th Annual Heckerling Institute on Estate Planning, a week-long conference for estate planning advisors. For a summary of the speakers' remarks on