Estate Tax Planning

Estate planning is important for the orderly distribution of ones estate to their heirs. Your estate is the total property owned by you at your death such as real estate, stocks, bonds, business interests, bank accounts, personal property, and life insurance. It is also effective in helping minimize estate taxes and costs that can reduce an estate by as much as 55%. By using a variety of techniques, you can maximize the amount of your estate that will be passed on to your heirs. It is a fact that everyone has an estate plan, even if they do not know it. This is because without a will or a trust, the inheritance laws (laws of intestacy) of your state will determine how your property will pass to your heirs. Wouldn't you and your family prefer to make those important decisions? Wouldn't you like to direct how your assets would be inherited and not have it dictated by state laws?

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Because estate planning is not just about reducing taxes but also about making sure your assets are distributed as you wish both now and after your are gone, you need to consider three questions before you begin estate planning - or reconsider them if you are reviewing you estate plan.

1. Who should inherit your assets?

2. Which assets should they inherit?

3. When and how should they inherit the assets?

Transferring Property at Death

There are three basic ways for your assets to be transferred on your death:

Will - If you choose just a will, your estate will most likely have to go through probate. Probate is a court-supervised process to protect the rights of creditors and beneficiaries and to ensure the orderly and timely transfer of assets.

Living Trust - Acts as a will substitute, although you will still also need to have a short will, often referred to as a "pour over" will. You can transfer your assets into a trust for your own benefit during your lifetime. You can serve as trustee, select some other individual to serve, or select a professional trustee. In nearly every state, you will avoid probate if all of your assets are in the living trust when you die, or if any assets not in the trust are held in a manner that allows them to pass automatically by operation of law. The pour over will can specify how assets you did not transfer to your living trust will be transferred at death.

State Intestate Succession - If you die without a will or trust, state intestate succession law controls the disposition of your property that does not otherwise pass via "Operation of law," such as by beneficiary designation. Settling your estate in this manner likely will be more troublesome - and more costly.