Estate Planning Overview | For Estate Planning Services, click here |
| Overview | Estate planning is the management of assets and properties that you have acquired so that you can transfer them at your death exactly as you wish. Of course, a major part of that is avoiding as much estate tax as possible. As usual, good research is key; it is important to familiarize yourself with state tax and property laws, and/or consult with a professional advisor who is familiar with the local laws and processes applicable to your estate. |
| Tax Planning How estate and gift taxes work
| Tax Planning ensures that assets are passed on to beneficiaries without being unnecessarily diminished through Estate and Gift taxes. It is important for an individual to be familiar with the taxes he or she may encounter when planning an estate, where they apply, and how best to circumvent them. Reducing and eliminating transfer taxes and income taxes wherever possible is one of the main focal points of planning an estate. The Gift tax, Estate tax, and the Transfer tax are the main methods by which the government attempts to get its share of your final estate. Most people are aware that the government imposes a Federal Estate Tax ('Estate Tax') and a Federal Gift Tax ('Gift Tax') liability on transfers of property. However, few people are aware that there is a second level of transfer tax imposed by Uncle Sam on transfers made by an individual during life or at death: the Generation-Skipping Tax ('GST Tax'). A lifetime gift-giving program to one's children which makes use of an individual's $10,000 annual exclusion from Gift Tax is generally a good estate planning tool. |
| Wills
| Wills are documents which define the administration and distribution of an estate when the owner dies. Beneficiaries and alternate beneficiaries are defined in a will and it effects all assets that are not automatically passed on through operation of law or contract. Wills are simpler and less expensive to prepare than a revocable living trust. Living wills are another type of will, in which the healthcare provisions of the trustor are defined in the event that he or she may not be able to express these preferences due to incapacity. |
| Trusts | Trusts are a useful instrument in estate planning for many reasons. A trust allows assets and properties to pass to the trustee or trustees directly without first going through probate. It protects the funds from any creditors who may wish to collect from the trustee, as well as providing a way for an estate to pass to beneficiaries without being heavily taxed. |
| Legal Forms of Property Transfer | An important initial step when preparing to plan an estate is to be aware of the legal forms of property transference upon death. Assets pass from an estate to recipients in one of three basic ways: Operation of Law: The immediate successor of some forms of assets are predetermined by law. These assets include life estates, joint tenancy, community property, and some accounts with a designated beneficiary. They are passed on at death and are do not go through the probate and ; will process Contracts: Some forms of assets, such as trusts (including revocable and irrevocable living trusts), retirement benefits, partnership agreements, life insurance, annuities, and buy-sell stock purchase agreements specifically define a beneficiary. This form of transfer, like operation of law, passes to the defined party without being subject to probate and wills. Probate: Any monies or properties that do not pass by operation of law or by contract is passed through probate or intestacy proceedings. The remainder of any assets are processed by a personal representative, called an executor or administrator. Any wills, if they exist, are administered at this point, with whatever leftover properties and funds passed out as defined by the executor. Proper planning can reduce administration costs, minimize estate and gift taxes, and prevent outside claims from complicating the execution of the will. Armed with this knowledge, you can ensure that your assets are properly passed down to the parties that they are intended for. |
