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10 Things Estate Planning Can Do for You

What are the advantages to estate planning?

By taking the time and effort necessary to plan your estate, you will be able to:

  1. Provide for your immediate family
  2. Couples want to provide enough money for the surviving spouse. Couples with children want to assure their education and upbringing. If you have children under 18, both you and your spouse should have a will nominating personal guardians for the children, in case you both should die before they grow up. Otherwise, a court will decide without your input where your kids will live and who will make important decisions about their money, education, and way of life.


  3. Options include insurance paid directly to beneficiaries, joint tenancy, and living trusts, as well as using simplified or expedited probate and taking advantage of laws that provide partial payments to beneficiaries while a will is in probate.


    During estate planning, you can also plan for possible mental or physical incapacity. Living wills and durable health-care powers of attorney enable you to decide in advance about life support and pick someone to make decisions for you about medical treatment.


    Good estate planning can keep the cost of transferring property to beneficiaries as low as possible, leaving more money for your beneficiaries.


    Choosing competent executors/trustees and giving them the necessary authority will save money, reduce the burden on your survivors, and simplify administration of your estate.


    You can take a burden from your grieving survivors and plan your funeral arrangements when planning your estate. Or you may want to simply limit the expense of your burial or designate its place.


    Your estate plan can help support religious, educational, and other charitable causes, either during your lifetime or upon your death, and at the same time take advantage of tax laws designed to encourage private philanthropy.


    Every dollar your estate has to pay in estate or inheritance taxes is a dollar that your beneficiaries won’t get. A good estate plan can give the maximum allowed by law to your beneficiaries and the minimum to the government.


    Do you have an elderly parent or disabled child, or a grandchild whose education you want to assure? You could establish a special trust fund for family members who need support that you won’t be there to provide.


    If you have a small business, you can provide for an orderly succession and continuation of its affairs by spelling out what will happen to your interest in the business.

  4. Get your property to beneficiaries quickly
  5. Plan for incapacity
  6. Minimize expenses
  7. Choose executors/trustees for your estate
  8. Ease the strain on your family
  9. Help a favorite cause
  10. Reduce taxes on your estate
  11. Provide for people who need help and guidance
  12. Make sure your business continues smoothly

SOURCE: American Bar Association

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Advantages of Various Estate Planning Tools

There are a lot of estate planning tools available to you. The following table summarizes the benefits provided by some of the more common estate planning techniques. Talk to your estate planning attorney for the details. (Note: For definitions of the estate planning tools compared in this table, i.e. "Pour-Over Will", scroll to the bottom of this page)

 

Benefit of Planning Tool No
Will
Basic
Will
Pour-
over Will
Living
Trust
AB
Trust
QTIP
Trust
Selectivity
Permits you to select the beneficiaries of your estate No Yes Yes Yes Yes Yes
Permits you to select the executor of your will No Yes Yes Yes Yes Yes
Permits you to select the trustees of your trust No No Yes Yes Yes Yes
Permits you to select the guardians for your children No Yes Yes Yes Yes Yes
Probate
Avoids the time-consuming and expensive probate process No No No Yes Yes Yes
Timing of Distributions
Permits distribution of assets to children other than simply upon reaching the age of majority (Ex. 1/3 at age 25, 1/3 at age 30, 1/3 at age 35) No No Yes Yes Yes Yes
Protection
Prevents conservatorship of estate owner No No No Yes Yes Yes
Protects assets from creditors No No No Yes Yes Yes
Estate Taxes
Assists married couples in reducing estate taxes No No Possibly, if properly designed to save estate taxes No Yes Yes

Allows the first spouse to die to name the ultimate beneficiaries of his/her estate while still permitting the surviving spouse to utilize the assets and while still deferring estate taxes

No

No

Yes

No

No

Yes

No Will means you have no will, and your estate passes to your heirs based on the laws of descent and distribution of your state.

Basic Will means you have a will that distributes everything to your spouse, if living, otherwise to your children when they reach the age of majority.

Pour-over Will means you have a will that distributes everything to a trust.

Living Trust means a trust designed to avoid probate and provide asset management. A basic living trust does not effectively use the $675,000 unified credits of both spouses. Remember, each person is entitled to have the first $675,000 of his or her estate pass to his or her heirs without estate taxes. This is referred to as the "unified credit." Because of this deficiency of a basic living trust, an AB Trust is often recommended instead to married couples with substantial assets.

AB Trust means a trust designed to make sure the $675,000 unified credit of each spouse is used to the full extent possible, while allowing the surviving spouse to have the use of the assets of the deceased spouse during the remainder of the surviving spouse’s lifetime.

QTIP Trust means a trust designed to permit a spouse to transfer assets to his/her trust while still maintaining control over the ultimate disposition of those assets at the spouse’s death. QTIP Trusts are particularly popular in situations where a person is married for a second time but has children from a first marriage for whom he/she wants to reserve assets.

SOURCE: FindLaw

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