Estate planning allows people to provide direction about the disposition of their assets before they die and after their death. Estate planning can include wills and trusts, as well as powers of attorney and other documents. Both state and federal law impact estate planning, and some may find that more elaborate or creative legal means are necessary to achieve their desired outcomes. Some of these more complex techniques include family limited partnerships (FLPs) and limited liability companies (LLCs). Estate tax and other estate-related issues are hot legislative items. That’s why a competent and experienced estate planning lawyer is an essential ally in assuring that your unique estate planning goals are understood and carried out. If you have estate planning-related legal questions, call one today.
Estate Planning Basic Documents
Estate planning is important for everyone, even if the estate is likely to be small. It allows a person, while they are still living, to ensure that their property will go to the people they want, in the way they want, and when they want. It permits them to save as much as possible on taxes, court costs, and attorneys’ fees – plus, it means that their families will have an easier time coping with the administrative and financial aspects of the loss.
All estate plans should include, at minimum, two important estate planning instruments: a durable power of attorney and a will. The durable power of attorney helps manage property during an individual’s lifetime by giving directions to a proxy who can carry out his or her wishes if he or she is ever unable to do so. A will sets out the plan to distribute a person’s property after his or her death. In addition to these planning instruments, more and more Americans today are using revocable (or “living”) trusts to avoid probate and to manage their estates both during their lives and after they’re gone. Medical directives can also be part of an estate plan; a health care proxy, a durable power of attorney for health care, a living will, and medical instructions are documents to consider. These documents help with medical decisions should a person become incapacitated and unable to express his or her preferences.
Estate Planning & Financial Goals
Proper estate planning can help to increase the size of an estate, whether large or small. Its basic purposes are to (1) choose how property will be distributed after death, (2) help assure that property will be distributed in an orderly and efficient way, and (3) minimize taxes. Most estates pass to beneficiaries free of federal estate tax. A spouse can leave an unlimited amount to a surviving spouse without having it be subject to federal estate tax. Currently, people can leave other survivors up to $2,000,000 (for the years 2006-2008) without paying federal estate tax. This amount will be raised to $3,500,000 in 2009. In 2010, it will be repealed and the estate tax is eliminated. However, in 2011, the estate tax is scheduled to return and the amount exempt from estate tax will be only the $1,000,000 amount allowed for the 2002-03 tax year, unless Congress enacts additional legislation. Thus, under the current law, the federal estate tax is repealed only for those dying during the calendar year 2010. In addition to federal estate tax, state inheritance taxes, which vary from state to state, must also be considered.
Other Estate Planning Goals
In addition to reaching financial goals to provide for their beneficiaries, comprehensive estate planning includes ensuring one’s security and peace of mind during their lifetime. To that end, asset protection strategies, health care directives, powers of attorney, and other estate planning devices are an integral part of the services that an estate planning attorney will provide. Although wills and trusts are the foundation of solid estate planning, businesses and tax planning may also play a role in developing the best possible plan in a given case. A professionally developed estate plan can be highly creative and tailored to meet the specific goals of each person.
Conclusion
No matter the size of a person’s estate, every adult should protect themselves and the interests of their loved ones by developing some type of estate plan. For some people, this will be a will and durable power of attorney for health care and property. For others, a combination of a wills, trusts, business formation, and other estate planning devices will be in their best interest. If you have questions about estate planning or need to have estate planning documents drafted, contact an experienced estate planning attorney to ensure that your unique estate planning needs are met.
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