Establishing Goals for Your Estate Plan

Nicole Cole |

Most people think estate planning is only for wealthy people.  Certainly, the 55% of Americans who died without a will thought so, even though all of their estates ended up in probate court subject to the laws of the state.  Sadly, the surviving families were thrust into a situation that resulted in unnecessary distress, expense and, for many of them, devastating financial consequences. 

It’s not enough to talk about estate planning and what you want to have happen. It takes planning and legal documentation. While it’s not a pleasant topic for most people to consider, the process for getting your affairs in order so that it is binding with the courts is fairly easy, and it doesn’t have to be a costly proposition.  As with anything, the more upfront planning you can do, the less time and money needs to be spent.  It all begins with your goals and objectives for how your affairs should be managed after you depart this earth, or live on it without the capacity to manage them on your own.

Estate Planning Goals and Objectives

Provide for the financial security of my family: This is perhaps the most important objective for anyone with concerns about the safety and security of their loved ones. Planning an estate means ensuring that your family has the funds it needs, that there are no delays in transferring assets in their names, and that there is sufficient liquidity to pay settlement costs, taxes and debts.

Establish a distribution timeline: This is especially important if your beneficiaries are young and may need to have some restriction placed on the amount of assets that are available to them.  Trust accounts are usually the mechanism for timing distributions.

Take care of the children: This is sometimes one of the more difficult aspects of planning an estate. In the event of your premature death or even a serious disability, your children will need a legal guardian.  For some people the choice may be obvious – close relative, godparents, even a grandparent. But, for many people, it requires careful thought and, often, serious conversations with candidates who will be asked to raise your children and manage their inherited assets.  The process of choosing a proper guardian should begin before a child is even born.

Form your trusted estate council: These are the people you will entrust with the management of your affairs. You will need to name an executor who is responsible for carrying out the instructions of your will. If you have a trust, you will need a trustee to execute the provisions of the trust.  If, as is recommended, you have executed a power of attorney, you will need to designate a person for that role. And for each, you will want to have a least one backup person to fill a role if one of them is unable or unwilling.

Address any special situations: It is not uncommon for special circumstances to arise during one’s lifetime that require special attention in the estate planning process. For instance, there may need to be specific provisions for spouses or children from prior marriages.  You will need to decide if your current spouse will have any power to change the provisions of the will or what the limitations will be in order to protect children from a prior marriage. 

Special concerns: Outline any sensitive family circumstances or concerns you have, that could affect your estate so your attorney is aware of them. Also, decide whether your surviving spouse should be able to change who inherits your share of the assets. This is especially important if you have children from a prior marriage.

Estate law, coupled with the estate tax provisions of the tax code can be very complex, which is one reason why many people avoid or procrastinate planning their estate. When establishing your estate goals or planning your estate, it would be important to seek the guidance of a qualified estate planning professional. You just need to know what you want your plan to accomplish. Let the professionals do the rest.

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2024 Advisor Websites.