What Happens if you Die Today? Estate Planning Basics I: Overview

Most of us don’t want to think about dying, let alone what happens to the ones we care about after we die. It isn’t a fun subject, besides, it won’t happen for a long, long time – right?

It’s not only the old that die. The news is full of stories about unexpected deaths – a pile up on the highway, climbing and skiing accidents, drownings and etc.

If you are truly interested in building your family’s legacy and wealth across generations, successful wealth transfer is obviously critical. An understanding of the basics of estate planning is a part of building a successful multi-generational wealth transfer plan.

This article is the first in a series reporting on the basics of estate planning.

Why have an estate plan?

• Avoid public court proceedings

• Do it YOUR way

• Pick your own stewards for care giving and finances

• Avoid unnecessary taxes at death

• Protect assets while still maintaining eligibility for certain government benefit

What is estate planning?

“At it’s core, estate planning is deciding who will get your property after you die and choosing how that property will be transferred at your death. Estate planning can also mean making some important personal decisions, such as who will provide care for your young children if you cannot and who should make medical and financial decisions for you if you become unable to handle things yourself.” (from Estate Planning Basics by Attorney Denis Clifford).

What is usually included in an estate plan?

Typically the estate planning process includes:

• review of what you own and of your responsibilities towards others (like your children)

• discussions with professionals (such as lawyers and accountants) to decide what you want to do

• decisions on how you want things handled if you can no longer function

• development of some legal documents (such as a will)

• discussions or letters with or to the people or institutions you select to handle property or care for dependents

• development of documents to help those who survive you.

Typical legal documents can include:

• a will

• a trust or trusts

• durable power of attorney for finances and for medical

• an advanced health care directive.

Do I have to?

• Develop a plan – No, the state you live in has a plan for you if you don’t take control

• Hire a lawyer – No, there are self-help legal forms that you can use, if you dare

• Hire an accountant – Probably, the tax laws are not easy to follow

• Use a financial planner – No, but you do need a financial plan if you intend to build wealth and hold onto it across generations

Next up in this series: Wills

Sources:

• Estate Planning Basics by attorney Denis Clifford copyright 2009 published by Nolo

• The Everything Will & Estate Planning Book by Kimberly A. Colgate copyright 2003

• Quicken WillMaker Plus – Estate Planning Essentials copyright 2010 published by Nolo

• The Executors Guide by Mary Randolf copyright 2010 published by Nolo

• Your Wills, Trusts and Estates Explained Simply by Margo Pierce copyright 2008.