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Goals of Estate Planning
1. To Select And Empower Trusted Individual(s) To Handle Your Affairs If You Become Incapacitated.
If you become incapacitated, your family will have a hard enough time without having to go through an expensive and hassle filled guardianship proceeding and dealing with the expensive and on-going probate court oversight. With proper planning, however, your selected individual(s) can assist with your health care and financial concerns without any of the costs or hassles or court oversight of a guardianship. Everyone needs this planning. If you do not have anyone that you would trust with this power, we can help you consider the available options.
2. To Provide For Others.
Estate planning is primarily unselfish planning. This planning is done not for you but for those you leave behind.
3. To Pass Your Property To Your Desired Beneficiaries As You Intend.
Estate planning allows you to benefit your family or other desired beneficiaries as you intend and not in the way the government mandates for cases where proper planning was not done. Who is to benefit from your property after your death? Is your property to be distributed outright to your intended beneficiaries or is your property to be transferred to one or more trusts for the benefit of your intended beneficiaries? Should the property benefit your intended beneficiaries but at the same time be protected from your beneficiaries' problems, such as creditor problems, future divorces or other marital problems, and estate taxes at their deaths? Do you want to limit the timing and/or use of your property? Do you want to benefit an older parent or disabled child or grandchild without affecting the individual's qualification for needs-based governmental benefits? Do you want to make access to your property subject to incentive and disincentive contingencies, such as educational and work related incentives and drug related disincentives? Your property belongs to you and, in most cases, proper planning allows you to control it as you desire.
4. To Select And Empower Your Fiduciaries (Executors And Trustees) To Handle Your Financial Affairs Upon Your Death And Beyond.
You have the power to choose who will carry out your estate planning desires. Should you choose your spouse, another family member, a friend or a trusted professional or should you choose a corporate fiduciary, such as a bank, brokerage, or trust company? You can give your fiduciaries maximum power and flexibility to carry out your wishes as set forth in your estate planning documents or you can limit their power and flexibility. You can normally waive most Probate Court requirements or you can require full probate court oversight. Proper planning allows you to choose.
5. To Select The Guardian For Your Minor Children.
While the Court usually has the ultimate authority to select a guardian in the "best interests of the child," the Court will follow your request, except in the unusual situation where someone brings evidence to the Court's attention showing that your choice would not be in the best interests of the child. Consequently, you can normally select who is to bring up your minor children in the case of your and your spouse's premature deaths. However, without proper planning, the Court must use its own judgement without having your knowledge and opinion. Of course, in some cases, your minor children could end up living in foster homes if you have not provided for the appointment of a specific guardian.
6. To Minimize Or Avoid Conflict And Confusion At Your Death.
Without proper planning, chaos will oftentimes reign following one's death (especially when one's death was not anticipated to occur in the near future) which creates unnecessary tension among heirs (which increases the chance of family dysfunction, disharmony and disputes), increases the expense of estate administration, and can jeopardize the survival of a family business or otherwise reduce the value of other illiquid assets.
7. To Minimize Or Avoid Wealth Transfer Taxes.
More than any other kind of taxes, the wealth transfer taxes (including gift, estate and generation skipping taxes) are a penalty tax for poor planning and ignorance of the law. In most cases, these taxes can be significantly reduced or even eliminated with proper planning.
8. To Ensure That Sufficient Liquidity Exists To Meet Cash Needs At Death.
A lack of cash at death can cause serious problems not only for your family's well being, but this could cause your illiquid assets to be sold at "fire sale" type prices. It is important to note that estate taxes are based on the date of death fair market value (i.e., theoretical willing buyer and willing seller, with neither being under a compulsion to buy or sell) and not based on the actual "fire sale" sales price. Real life stories exist where valuable assets actually turned into significant liabilities at death because the net sales proceeds from the sale of the asset to pay estate taxes (due within 9 months of date of death in cash) turned out to be less than the estate tax liability on the asset's date of death value.
9. Importance Of Estate Planning.
Estate planning takes time and energy and may be costly. However, when compared to the savings in taxes and expenses and the significant problems which can be avoided with proper planning, the professional fees to undertake proper estate planning are usually insignificant. After a lifetime accumulating an estate and protecting your family, it would be a serious waste for you to not spend an appropriate amount of time and effort to ensure that your assets pass to, and for the benefit of, your desired beneficiaries, at the right time, with the least amount of confusion and tension, and with the least amount of estate tax and expense. In some cases, ensuring that the appropriate person(s) serve as Executor, Trustee and guardian can be as or more important than avoiding taxes and other expenses.