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Estate Planning Made Easy

How to Settle an Estate: A Manual for Executors and Trustees

Your Living Trust and Estate Plan: How to Maximize Your Family's Assets and Protect Your Loved Ones

Plan Your Estate: Everything You Need to Know to Protect Your Loved Ones, Property and Finances (Law for All Series)

70% of Americans don’t have a will.

Unless you’d like to “donate” your estate to Uncle Sam, it’s time to join the 30% who do. Though writing a will may not be fun to think about, a little foresight now will save your heirs and loved ones enormous hassles down the road. Learn to:

Understand the basics of wills, trusts, probate, charitable giving, and more
Set up power of attorney, a living will, and long-term care arrangements
Minimize the impact of estate and inheritance taxes on your heirs

Estate Planning Basics

Estate planning can help you preserve your hard-earned assets and ensure that they go where you want them to go after you die. By planning your estate, you can save your family and heirs considerable time, expense, and grief by eliminating uncertainty about inheritance. Only by planning your estate now can you be sure that all your wishes will be known and respected when you pass away.

What Is Estate Planning?

Estate planning is the process of ensuring that the assets you’ve accumulated during your lifetime go to the people or institutions you wish in the most efficient, tax-favored, and equitable way possible.

For most people, estate planning is a relatively simple process in which they work with a lawyer to produce a number of documents:

Will: A will is a legal document in which you set out the rights and responsibilities of others for your property and minor children and/or disabled dependents in the event of your death.
Planning directives: A will covers only a certain set of your assets. Planning directives are documents that support a will by covering financial and legal issues that wills do not and by providing directions for what should happen to your estate if a catastrophic accident or illness renders you incapable of expressing your wishes.

Everyone should at the very least have the above documents in order to protect their assets in the event of their death. For some people, though, particularly those with families or with larger estates, estate planning may involve a number of additional factors.

Assignment of guardians: If you have children who are minors (under 18), you should assign guardians to take care of them should you be unable to do so.
Life insurance and long-term care: If you have families or dependents—and even if you don’t—you should plan ahead in case of incapacity, long-term care needs, or sudden death.
Trusts: If your estate is considerable, you should speak with a lawyer about whether you should establish a trust to shield and protect some of your assets.
Gifts: Estate planning can help you decide if you’d like to make gifts of your assets to charities or institutions.
Business: Estate planning can extend into the business arena by ensuring that any business you own changes hands smoothly after you pass away.

Who Needs to Plan an Estate?

Contrary to popular belief, estate planning isn’t just for millionaires: it’s for anyone who cares about what happens to their assets after they die. That said, estate planning is particularly important for people in any of the following situations:

Married couples: Each spouse must have a separate will. Joint wills can create legal issues if you die within a few weeks or months of each other.
Divorced couples: Make sure your assets go to the “right” people, especially if you’d prefer that they not go to your former spouse’s new partner and his or her children. To protect your own children, you may need to establish a trust.
Business owners: Create a succession plan that specifies what should happen to your business, or your equity in the business, when you die. Be sure that the business will have enough cash on hand to survive the transition to new ownership.
Future millionaires: Currently, the estate tax provides an exemption for estates valued at $2 million or less (see The Future Estate Tax Climate). This exemption has historically been $1 million and will revert to that level in 2011. As a general guideline, if your estate totals $1 million or more now—or has a strong prospect of exceeding $1 million in value when you die—you should establish trusts to protect assets you may have beyond the $1 million benchmark.

Estate Planning Checklist

Planning your estate can mean the difference between a secure future for you and your heirs and a less comfortable financial situation. Estate planning begins with the following steps:

List your assets: Make a list of everything you own, including all bank accounts, investments, real estate, insurance policies, and any other valuable items of personal property. Split the list into assets with named beneficiaries (such as insurance or retirement plans), jointly held assets, and assets you own personally that do not have beneficiaries (cars, boats, and so on).
Assign heirs and beneficiaries: Determine to whom you would like to pass on each of your assets.
Write a will: Working with a lawyer you trust, write a will that specifies where your assets should go and who should serve as guardians for your children.
Write planning directives: Working with a lawyer, write a living will, assign powers of attorney, and develop letters of instruction for personal property not covered by wills.
Learn about probate: Make sure you understand what probate is, how it works, and how to avoid making estate planning mistakes that will deplete the value of your estate.
Consider establishing trusts: Review the Estate Planning and Trusts section of this guide. If you think a trust may be right for you, consult an attorney or a financial advisor.
Look into life insurance: Protect your heirs from financial catastrophe should you die from an accident or sudden illness.
Consider long-term care needs: If you’re in your late 50s or older, think about getting long-term care insurance.
Consider charitable giving and family gifting: Learn the benefits of giving assets to charity and heirs.
Plan the future of your business: If you’re a business owner, plan for the sale or transfer of your business or equity upon your death.

This Quamut guide provides you with the basic information you need to make informed decisions about estate planning. Before making any of these decisions, though, make sure to consult with appropriate financial, insurance, tax, and legal advisors. Since estate planning depends heavily on current laws and tax regulations, continue to consult periodically with these professionals to determine whether your plan remains ideal for you.

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