Estate Planning Memo «
Getting Started
The first step is to make a list of your assets, including estimated values, how assets are titled and any debts, ownership obligations and restrictions (e.g. pre-nuptial agreement and divorce decree) which may limit your ability to dispose of your property. Then, consider your goals regarding distribution of assets and how and when you want assets available for your beneficiaries. Consider the impact of taxes on your estate and take simple steps now to protect your assets from future creditors. Minimizing income tax should be considered. It is also a good time to review your insurance policies (e.g., life, professional, business, liability, auto, real estate, umbrella, collectibles, long term care, property, casualty, liability) and consider the amounts and types of coverage, the pros and cons of keeping or increasing coverage, who is named beneficiary and related matters.
We recommend that you review your estate plan at least every few years. Following are some significant factors for you to consider from time to time:
- Couples can shield their marital home from creditors of one spouse by holding title as tenants by the entirety;
- Consider creditor protected categories of assets which may include qualified retirement plans, IRAs, cash surrender value life insurance payable to your family, trusts established for you by another person and so on;
- Consider the pros and cons of a pre-nuptial agreement if you are planning to marry;
- Consider ownership and beneficiary designations for all of your property;
- Update your estate plan documents if your assets, family, marital and/or personal circumstances change;
- If you expect or receive an inheritance, consider disclaimers, possible exercise of a power of appointment and other options (encourage your loved ones to do their own estate planning);
- Consider required minimum distributions, options for payout, naming of primary and contingent beneficiaries as well as income tax and estate planning aspects of your IRAs and other retirement accounts;
- Monitor changes in state and federal estate tax laws;
- Ask your lawyer to review employment agreements, stock ownership agreements and other contracts before signing and later, to consider the impact on your living trust;
- Have a succession plan for your business; keep your buy/sell agreement up to date;
- Consider life insurance options (e.g., need, insurability, replacement policies, ownership, beneficiaries and so on); and
- Review your estate plan documents if you move to another state or country; documents executed in one state are typically valid in other states, but it is a good idea to have your documents reviewed by a lawyer in your new home after you move.
Conclusion
This Memo addresses basic elements of estate planning. Many legal and tax law requirements apply to the general principles mentioned in this Memo. The guidance of an experienced lawyer should be sought before taking any action with regard to your estate plan.
Actual resolution of legal issues depends upon many factors, including variations of facts and state laws. This memo is not intended to provide legal advice on specific subjects, but rather to provide insight into legal issues. The reader should always consult with legal counsel before taking action on matters covered by this memo.