Estate planning starts with a conversation about one’s wishes with regard to ‘who do you want to get your stuff? And how & when should it go to them?’ It’s important to know not only to whom the estate should be distributed, but also how and when should one receive them. Some heirs may benefit from receiving assets as quickly as possible. Other heirs may require special care or assistance with their inheritance. Intended recipients who are minors or who are financially challenged or otherwise challenged may require special planning to allow for a guardian or other separate supervision over inherited assets. These are only some of the situations that may be considered in crafting a customized estate plan.
The other important piece of an estate plan is determining how the estate will be treated under state and federal tax laws. Rules and tax rates can vary depending on the size of an estate. While many individuals and couples don’t have to worry about federal estate taxes, those with a larger estate comprised of retirement accounts (i.e. deferred income) could be leaving their heirs with a sizable income tax bill upon distribution.
Estate planning is not restricted to planning for distribution of one’s property after death. It may also include your directions for your care and well being near the end of their life. The rise of Alzheimer’s, dementia, and other diseases that damage the mind has made more necessary than ever for individuals to protect themselves and their assets. Tools like living wills and powers of attorney can help an individual establish protections before they no longer have the mental capacity to do so.
Living wills and medical powers of attorney can also dictate how one is treated from a medical perspective. While end-of-life care may not be pleasant to think about, one can take control of their medical treatment by drafting these documents in advance.
After a thorough analysis of one’s wishes and financial situation, an attorney is better able to make a personalized recommendation of these and other estate planning tools. There’s no cookie cutter solution to estate planning. Each client and every situation is unique.