Estate planning or setting up a will is not just about death, but addresses other issues such as what would happen in case of a severe disability or the implications of state and federal taxes. Estate laws can differ from state to state and most estate plans are set up with the help of an attorney experience in estate law.

Estate planning is an ongoing process and should be started as soon as a person has any measurable asset base. As your life changes and goals shift, the estate plan should be adjusted to follow step with new goals.  A lack of adequate estate planning can cause serious financial burdens to loved ones (estate taxes can run about 40%), so at the very least a will should be set up even if the taxable estate is not large.

Without the proper planning you leave the door open for the states, local government, lawyers and healthcare providers to become involved and cost you or your family a lot of money. I tell my clients that Estate Planning can be the least costly protection you could do for yourself or your family.

Some of the estate planning tasks include:

• Creating a will
• Limiting estate taxes by setting up a trust for your beneficiaries
• Establishing a guardian for living dependents
• Purchasing life insurance
• Naming an executor of the estate to oversee the terms of the will
• Creating/updating beneficiaries on plans such as life insurance, IRAs and 401Ks
• Nominating a guardian in case of incapacitation
• Setting up funeral arrangements
• Determine healthcare and medical decisions
• Setting up durable Power Of Attorney (POA)

An estate plan not only lets you decide who gets what, it gives you the critical mechanism for choosing a guardian for your minor children or the right for a spouse, family member or love one to make decisions on your behalf. It also allows you to set things up in a way that can minimizes taxes and may prevent your estate from going through a lengthy probate process.

If your estate is worth more than the exemption amount for Federal estate taxes of $1,000,000 (for 2010), the amount over that could be taxed at as much as 35%, plus state taxes. On January 1, 2010, the federal estate and generation-skipping transfer taxes were repealed for one year until January 1, 2011, due to Congress’ inability to act before the end of 2009. To minimize the impact of taxes on your heirs, you should see an estate lawyer to draw up an estate plan.  It’s also important to know that changes in legislation and tax laws can occur, so any estate plan that you set up should be review each year.

Operation of law will supersede a Will. What does this means? Let’s say you have an IRA, life insurance policy or bank account, and you have listed your brother as the beneficiary or joint owner. If you had a will prepared and instructed that your wife would receive all of your assets when you die, your wife would get everything EXCEPT the account you listed your brother as the beneficiary (or joint owner). This is because you listed a beneficiary when opening the IRA or Insurance policy. If it is jointly held, the beneficiary would assume the entire account.

Writing a Will :

Whether you own a home, have a savings account, car, computer, and some household furnishings, if you want your property to go to the people that you designate, a will is a must do. A will is also the only way to designate a custodian for your minor children.  Without one, the state will determine who your heirs are and how much of your property each one will receive, regardless of your wishes. The process can be stressful and expensive for your loved ones. Not to mention that you would have family who you never knew existed before show up claiming to be you heir.

Create a Healthcare Advance Directive :

This document pertains to your healthcare and medical decisions. It allows you to name someone to make health care decisions for you if you’re unable to, such as whether to use life-sustaining measures to prolong your life if you are terminally ill or unconscious and unable to speak for yourself. In some cases even if you are fine but don’t want to be bothered by any one. There has been a lot of concern over healthcare and privacy issues and this document could be very important. Disability is more likely to impact a person or family and it may not be in your town, state or with your doctor.

Create a Durable Power of Attorney :

If you’re physically or mentally unable to take care of your financial matters, you need to appoint someone who knows you well and whom you can trust to do that for you. The way to do this is through a Durable Power of Attorney. This is a very powerful document and important to review. Without a decision maker legal and financial matters could get out of hand. For example, this document would appoint a person who could sign a tax return, pay a bill or take money from an account to help pay your medical expenses in your behalf.

Consider Setting up a Trust:

Trusts allow you to stipulate how your heirs can spend their inheritance and when they’ll receive the money or property you’ve left to them. Not everyone needs a trust, but if you’re not sure, speak to a lawyer who specializes in estate planning. Think of it this way, if you have young children or an irresponsible heir and you died leaving them your entire estate, that could be one heck of a keg party. The sad part is that the money could be squander away or lost to a lawsuit or worse. A Trust could also assist in reducing the amount of taxes to the estate depending on the value of your estate.

Other Tasks :

Set up a filing system that includes information on all of your assets and investments, insurance information, Will, and other financial documents and make sure the person you named in your Durable Power of Attorney knows where these documents are kept. Talk to your Financial Advisor and make sure that your investments are part of your Estate Plan.

When you go through life changes such as marriage, divorce, birth of a child or grandchild, remarriage, or significant changes in your health or financial situation, review your estate planning documents and update them as necessary.

To find an attorney who specializes in wills and estate planning, go to the National Association of Financial and Estate Planning website or Click Here to get information about attorneys in your home town or state. There is software and even websites that allow you to get these documents together. My best advice is to use a Certified Estate Attorney and make sure that they are tailored to your needs and updated as your life and the laws change. If you would like a Free Guide to Estate Planning Click Here and our staff will get one out to you.