Estate Planning

Many people assume that estate planning is mainly about saving estate taxes. Consequently, they don't bother putting together an estate plan because they assume their estate is too small to be taxed.

Yet estate planning provides many benefits beyond minimizing taxes. The most important reason to design an estate plan is to properly detail which assets are distributed to which beneficiary. Without planning, a court could step in and make decisions in accordance with state law, which may or may not fit your wishes.

Planning your estate has the following benefits:

• Controlling assets before and after death
• Providing care for dependent children
• Minimizing emotional and financial burden on heirs
• Minimizing feuding among heirs over the estate
• Ensuring the continuation of a business
• Maximizing the amount available for charitable donations
• Minimizing or avoiding the cost and delay of probate
• Providing a legacy of your values.

Essential Documents

Regardless of the size of your current estate, your generally should have four estate planning documents:

A Will

A will is a legal document that details where you want your estate's assets to go (after debts and taxes have been paid) and who is going to oversee the execution of the will. It may also state who is to care for minor children. Without a will, state law will determine what happens.

The will does not apply to any piece of property which has a listed beneficiary. For example, if you still have your ex-spouse as the beneficiary of your retirement plan, he or she will get the proceeds, not your current spouse who you named as sole beneficiary in your will.

Durable Power of Attorney

A durable power of attorney designates a representative, such as your spouse or adult child to perform certain actions for you should you become ill, incapacitated or otherwise unable to manage your affairs. Without a power of attorney, the court will need to approve needed financial transactions.

A Living Will

This document is an individual's written declaration of what life-sustaining medical treatments he or she will allow or not allow in the event they become incapacitated.

A Medical Power of Attorney

This document authorizes a person to make medical decisions on your behalf, ideally to carry out what you have specified in your living will.

Additional Estate Planning Tools

You may also need additional estate planning tools depending on the size and complexity of your estate.

Trusts

Trusts are legal vehicles for managing assets for the benefit of the trust owner or a trust beneficiary. Trusts are typically less vulnerable to legal challenges than wills.

There are over 50 kinds of trusts available. They serve lots of purposes. Some are:

      Increasing the amount sheltered from estate taxes by creating a credit shelter or bypass trust.

      Keeping life insurance assets from being subject to estate tax by creating an insurance trust.

      Managing money for a young, financially incompetent or troublesome heir.

      Ensuring that a person's assets go to their children rather than the children from a surviving spouse's previous marriage.

      Financially assisting a disabled child without disqualifying the child for government assistance.

      Providing increased benefits for charity and income for the donor.

      Protecting assets from creditors.

      Reducing the cost and public exposure of probate.

Titling assets correctly is a vital part of estate planning. Unless titled correctly, the trusts and tools you set up can end up being of little use.

How can Wealth by Design, LLC help?

Estate planning attorney's can provide an invaluable service helping people carry out their estate plans using their training and legal expertise to set up trusts or draft wills.

Although we are not qualified to provide legal advice, we at Wealth by Design, LLC help you design what kind of estate planning tools would benefit you and to coordinate your estate plan with other aspects of your overall financial picture.

Barbara Bachelder, CFP® and Kerstin Eriksson-Splawn EA, CFP® for Wealth by Design, LLC