What is included in an estate?
It includes all of your property, such as:
- Real estate (for example, your home or an investment property)
- Personal property (such as cars, furniture, antiques, coins or art)
- Intangible property (which includes bank and investment accounts, stocks and bonds, Social Security benefits, life insurance policies and loans you made to other people)
Types of Asset Ownership:
- Jointly owned
- Right of survivorship – surviving owner receives immediately
- Tenants in common – your share of assets goes to your heirs
- Named beneficiary – for example, life insurance policy
- Solely owned – owned solely by you
Elements of Estate Planning
- Power of attorney – another person can act on your behalf
- Living will – advance medical directive regarding health care
- Will – specifies how assets are to be distributed on death
- Trusts – legal arrangements to hold assets and property
Types of wills
- Simple – specifies distribution of assets
- Testamentary-trust – establishes a trust to receive assets
- Pour-over – puts estate in trust before death
- Holographic – handwritten, not witnessed
- Oral – not written
- Joint – one document with two wills (for example, husband and wife)
Types of trusts
- Testamentary – activated after death
- Bypass – funded up to “lifetime exemption”
- Marital power of appointment – assets put in trust for spouse
- QTIP – qualified terminable interest property, benefits spouse of second marriage and children of first marriage
- Living – all assets placed in trust while person is alive
Advantages of trusts
- Reduce or eliminate estate taxes
- Avoid probate
- All assets under one plan
- Can be changed
- Quicker distribution of assets
Disadvantages of trusts
- Transfer all assets
- Keep transactions separate
- Cost
- State law
- Conflicts
Estate Planning Checklist
- Identify your assets
- Decide how assets will be distributed and to whom
- Consider having a power of attorney prepared
- Complete a living will
- Prepare a will
- Update your beneficiaries on life insurance, benefit plans
- Learn about and consider a trust
- Learn about estate taxes
- Consider retaining an attorney to prepare key documents
- Enjoy the peace of mind of a completed estate plan!
For more information: Web Resources
- estateplanning.com
- nolo.com (enter “estate planning” in search box)
- elderlawanswers.com (enter “estate planning” in search box)
- A Guide to Living Trusts, www.legalzoom.com
- Understanding Trusts, www.usa.gov
- Estate Planning, American Bar Association, http:// tinyurl.com/estate1
Software
- Quicken Willmaker Plus: www.nolo.com (enter “Quicken” or “Willmaker” in search box)
Books
- Plan Your Estate, Denis Clifford
- Kiplinger’s Estate Planning: The Complete Guide to Wills, Trusts, and Maximizing Your Legacy, John Ventura
- 60-Minute Estate Planner: Fast and easy plans for saving taxes, avoiding probate, and maximizing inheritance, Sandy Kraemer
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