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lanning an estate is one of those chores that is very easy to put off. That being said, no retirement is complete without a proper estate plan. The unfortunate reality is that if we slack on getting an estate plan in place, we are setting our family up for significant stress and expense once that inevitable day comes. In this article, we are going to walk through the most common steps necessary to get a solid estate plan in place. Of course, no two situations are alike, so it’s always a good idea to speak to an attorney and assess your own unique needs.

1. Look Into Estate Taxes for Your Situations

Estate taxes are taxes placed on the estate of an individual who has a high net-worth. It is possible to optimize your estate to minimize the impact of these taxes on your loved ones. Because estate tax liability can vary so much from case to case, it’s a good idea to speak to a professional if you think they may apply to you. A good attorney can make an in-depth assessment of your situation and help you craft a strategy that protects your loved ones.

2. Name a Beneficiary on All of Your Financial Accounts

There are many types of accounts that provide the ability to name a beneficiary. The funds within the account can be earmarked as “payable-on-death” and transferred to the beneficiary immediately upon the account owner’s passing. This has the benefit of avoiding the time-consuming and expensive process of probate court. You can often set beneficiaries on bank accounts, investment accounts, insurance policies, and more. Get money into your loved ones’ hands immediately so they are prepared to handle the array of expenses that will be facing them.

If taxes are your client’s main concern, have them focus on using this as a tax-deferred savings account that compounds their cash while also providing peace of mind to their beneficiaries. If the transfer of wealth is their concern, there is no more efficient means to doing so than through using life insurance.

3. File a Beneficiary Deed for Real Property

Deeds can be filed to name a beneficiary for specific property as well. It is important that you familiarize yourself with the laws in your area as they tend to vary from state to state. For example, according to Colorado probate law a beneficiary deed can be applied to any real property that you would like transferred to a beneficiary. However, laws in your area might be more restrictive in exactly what kind of property they consider transferable via a deed. An attorney in your area will be able to help you navigate these questions.

4. Enable Your Family to Help with Decisions

Unfortunately it is not an uncommon occurrence for critical decisions to not be considered due to illness to injury. This can be avoided by assigning a power of attorney over to a trusted agent, like a family member or close friend. These powers of attorney can be worded to behave in whatever way is best for your situation. For example, it is possible to only pass these powers to a trusted agent in the event that you become somehow incapacitated. You can also limit powers to only apply to, say, medical decisions. The important thing here is enabling the continuity of decision making regardless of what circumstances arise in your life.

One thing to keep in mind is the “durability” of your POA. A durable power of attorney simply means that it remains intact even if you become incapacitated. It is important that you understand whether or not this will be the case for your situation so you don’t inadvertently leave your family in a situation where they are unable to assist.

5. Consider The Benefits of a Living Trust

For higher net-worth individuals a living trust can be a great way to distribute their estate to their heirs. This is also true for individuals who have ownership in a business. A living trust can actually provide the ability to circumvent probate court altogether. In most cases this is overkill, an estate planning law firm can help you decide whether or not a living trust would be beneficial for your situation.

6. Everyone Should Have a Last Will

A last will and testament is a staple in every estate plan. This is a document that will instruct the court on how to distribute your property to your heirs. You will assign a trusted person as the executor of your will who will work with the court to get your instructions executed. Having a will in place will significantly streamline the probate process, saving your family significant time and expense.

7. Consider Speaking to a Professional

While following the steps in this article will certainly be a good start, the fact remains that every situation is unique. Consider speaking to a professional estate planning law firm regarding your estate. A local attorney will be familiar with your state laws, which are guaranteed to carry their own idiosyncrasies. They will also be able to speak with you at length to get an understanding of your exact needs.

Thank you,
Kyle Rutten

Brestel Bucar, Ltd.