The Planning Process – Where Do I Start?

Common questions include:

• How do I know if I need an estate plan? How large does my estate need to be before I should be concerned?
• Who do I talk to about the estate planning process? Do I talk with my Bank, attorney, financial planner, or CPA?
• What is the estate planning process and where do I begin?

Proper planning allows you to:

• maintain control of your finances and personal decisions during life and after death
• implement your choices in case of incapacity
• avoid Probate Court
• avoid Estate, Gift and Generation Skipping Taxes
• provide for loved ones while protecting your income.

Step One:
Carefully choose your Estate Planning Team
The complex work of estate planning is seldom the work of a single person. Understanding the legal, tax, and financial details of a comprehensive estate plan, requires the expertise of several persons. The team is usually made up of some or all of the following: an attorney, accountant, trust officer, or financial planner. Sometimes people assume that their existing financial advisors are already considering the details of an estate plan. One should not assume that advisors have already thought through an estate plan. Rather, ask the persons on your team, what kind of planning should I be doing? Be open minded about adding new members to the team who may bring fresh and innovative ideas to your planning.

Step Two:
Gather the Information about your Estate
Busy people are not always known for their attention to details. As a result, they can accumulate many assets and not be sure what they really own. The second step requires a person to write down all the assets and liabilities they have so that calculations can be made. This list should include everything that a person owns from personal property to real estate, cash, stocks, minerals, businesses, life insurance policies, and any other asset. After the list is compiled the assets should be identified by ownership -i.e. by husband, wife, or if jointly held. When the total of a couple's assets equals or exceeds federal estate exemption limits significant federal estate tax exposure could be present and more comprehensive estate planning techniques may be recommended. In addition, all documents such as Wills, Trusts, Powers of Attorney, Healthcare Powers of Attorney, and Buy-Sell Agreements should be gathered. With this essential information, the person is ready to proceed to the next step.

Step Three:
Analyze the Data of Your Estate Plan
After the data is gathered, it can be analyzed by you and your planning team. This allows you to plan and make present and future calculations. You can compare the size and current structure of your estate to the current federal estate tax tables. From this comparison, the analysis can show a person the impact of estate taxes and the amount that will be due if no planning takes place. You can develop a direction for all phases of your life from working years to retirement and beyond. You can develop a plan to pass your property to your heirs.

Step Four:
Consider Recommendations for Your Estate
After the numbers are analyzed, the estate planning team then begins to recommend ways to implement your goals and to reduce or avoid the estate taxes and settlement costs. Solutions can include any number of strategies. They can be simple or complex. They might include a Unified Credit trust, a Life Insurance Trust with Survivorship Life Insurance, or a Charitable Remainder Trust. Other family business techniques used may include the family limited partnership and the Section 303 Redemption, a limited liability corporation or all three. The recommendations and plans are tailored to a person, family or business.

Step Five:
Decide Which Recommendations Meet Your Goals and Implement them
Once you have carefully studied and understood the recommendations, you are ready to decide on which recommendations to accept and take action. The lists of options can seem complex and hard to understand. However, a good estate planning team can make the complex concepts clear.

Step Six:
Conduct Periodic Reviews of Your Estate Plan
Estate plans need to be reviewed on a periodic basis. This is done to update you on any changes that have occurred in estate tax law and what should be done to solve the problem as well as to account for any changes in your personal situation.