Pointers on the Estate Planning Process
Courtesy of : Laurence P. Gaudino, CLU, ChFU
6 Gansevoort Street, Bath, NY
A well-structured estate plan is invaluable. Through it you can control the distribution of your assets and possessions, as well as name guardians for your children or plan care for other dependents.
While the process of planning your estate can raise some difficult emotional and personal issues, your heirs will be glad that you do so, and you will be comfortable knowing your wishes are assured.
How should you begin?
Your first step should be to assemble a competent, professional estate planning team. Your attorney, financial consultant, bank trust officer, insurance professional, or accountant are all possible team members, depending on the size and complexity of your estate.
What needs to be gathered?
A thorough estate analysis requires the gathering of any and all materials involving current or future income, insurance, property owner- ship, and legal arrangements already in place. Once assembled, a complete analysis can begin, giving you the
basis for a solid estate plan.
Steps to estate preservation
If you begin planning in a timely fashion, there are clear, legitimate methods that allow you to take steps to preserve your estate and minimize estate taxation.
Draft a will - A will is a formal, legal document instructing your survivors in the settlement of your estate. It is crucial to the success of an estate plan that your will be properly written by a qualified, legal professional and witnessed simultaneously by two parties.
Establish trusts - Utilizing trusts can be an excellent method of accomplishing long-term estate planning goals. Trusts, while seemingly complex, are simply very powerful tools designed to help individuals handle a variety of family and tax-related problems.
Use your estate tax exclusion amount to the fullest - Each
individual can pass $625,000 (for 1998) to his and her heirs free of estate or gift taxes. Married couples, who structure asset ownership correctly, may pass $1,250,000 (for 1998) to heirs free of estate or gift taxes.
Plan a gifting program - Further tax shielding is gained through use of the $10,000 annual exclusion. This allows the gifting of $10,000 each ($20,000 for married couples) to any number of donees annually without payment of gift tax. Provision must be made for immediate use of the gift by the donee; gifts of future interest will not qualify.
Plan your charitable bequests - The value of all property transferred for "charitable" or "public" purposes is deductible with certain limitations, when determining valuation of an estate for tax purposes.
Utilize life insurance to its fullest advantage - Life insurance can fulfill two important function in your estate planning. First, it can help provide for the immediate cash needs of your spouse or other beneficiaries. Second, the use of an irrevocable life insurance trust can prevent inclusion of your life insurance proceeds in your estate and help fund estate tax liability.
Title assets properly - The simplest and least expensive estate planning technique for married couples may be to take title of assets as "joint tenants." This will exclude assets from probate at the death of a first spouse and may eventually save legal costs. {Note: Residents of community property states should remember all income and assets acquired by a married couple living in those states, except for individual gifts and inheritances, are considered community property, half of which is included in each spouse's estate valuation.}
Always remember: The careful planning of an estate requires a great deal of expertise. If you surround yourself with a professional, supportive team as you begin the process, work through its many stages and adjust your plans over time, you assure yourself---and those you love---that the future will be secure for all.
*This article is intended as informational and not as investment advice. You should consult your financial advisor and attorney for more complete information. Copyright 1998 Liberty Publishing Inc. All rights reserved. Steuben Arc Foundation extends its appreciation to Mr. Gaudino for sharing this information; however, we in no way endorse Mr. Gaudino's services.