Estate Planning

By definition, estate planning is a process designed to help you manage and preserve your assets while you are alive and to conserve and control their distribution after your death, according to your goals and objectives. However, what estate planning means to you specifically depends on who you are as an individual. Your age, health, wealth, lifestyle, life stage and goals are several factors that can determine your particular estate planning needs. For example, you may have a small estate and may be concerned only that certain people receive particular things. If this is the case, a simple will is probably all you would need. On the other hand, you may have a large estate, and minimizing any potential estate tax impact is your foremost goal. In this case, you will need to use more sophisticated techniques in your estate plan, such as a trust.

At The Hotaling Group, we invite you to discuss your estate planning objectives and concerns with one of our members so that we can help determine the right plan for you. For example, a comprehensive life insurance policy and retirement plan is an essential part of most estate plans. We understand that each person’s estate plan should be unique to their individual financial situation, needs and long term goals. Please review the following recommendations that we have provided to address popular estate planning needs that are common among broad groups of individuals.

We hope that these resources will help you understand what estate planning means to you. Think of these suggestions as simply a point in the right direction and seek the professional advice of one of our members to strategize and implement the right plan for you.

Since incapacity can strike anyone at any time, all adults over 18 should consider having a durable power of attorney and a medical directive. A durable power of attorney is a document that lets you name someone to manage your property for you in case you become incapacitated and cannot do so. The three main types of medical directives are a living will, a durable power of attorney for health care (also known as a health-care proxy) and a Do Not Resuscitate order. Be aware that not all states allow each kind of medical directive so make sure you execute one that will be effective for you.

If you are young and single, you may not need much estate planning. But if you have some material possessions, you should at least write a will. If you don’t, the wealth you leave behind if you die will likely go to your parents, and that may might be what you would want. A will lets you leave your possessions to anyone you choose such as your significant other, siblings, other relatives or favorite charity.

For those who are committed to a life partner but are not legally married, a will is essential if you want your property to pass to your partner at your death. Without a will, state law directs that only your closest relatives will inherit your property and your partner may get nothing. If you share certain property, such as a house or car, you should consider owning the property as joint tenants with rights of survivorship. That way, when one of you dies, the jointly held property will pass to the surviving partner automatically.

Married couples are effectively treated as one economic unit for federal gift tax and federal estate tax purposes, as long as each spouse is a U.S. citizen. This is accomplished using the unlimited marital deduction – a powerful estate planning tool, because you can conceivably give or leave your entire estate to your spouse tax free. The deduction not only allows spouses to shift wealthy between each other without incurring gift tax or estate taxes, but also allows spouses to maximize the benefits that results (e.g., equalizing your estates to take full advantage of the applicable exclusion amount). This is especially important since the passage of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which made significant changes to the federal gift and estate tax laws.

If you are married and have children, you and your spouse should each have your own will. For you, wills are vital because they can name a guardian for your minor children in case both of you die simultaneously. If you fail to name a guardian in you will, a court may appoint someone you might not have chosen. Furthermore, without a will, some states dictate that at your death, some of your property goes to your children and not to your spouse. If minor children inherit directly, the surviving parent will need court permission to manage the money for them. You may also want to consult with an attorney about establishing a trust to manage your children’s assets in the event that both you and your spouse die at the same time.
Certainly, you will also need life insurance. Your surviving spouse may not be able to support the family on his or her own and may need to replace your earnings to maintain the family.

If you’re in your 40s, you’re probably feeling comfortable. You’ve accumulated some wealth and you’re thinking about retirement. Here’s where estate planning overlaps with retirement planning. It’s just as important to plan to care for yourself during your retirement as it is to plan to provide for your beneficiaries after your death. You should keep in mind that even though Social Security may be around when you retire, those benefits alone may not provide enough income for your retirement years. Consider saving some of your accumulated wealth using other retirement and deferred vehicles, such as an individual retirement account (IRA).

Depending on the size of your estate when you die, you may need to be more concerned than ever about federal estate taxes. The law passed in 2010 contains many significant changes to the federal gift and estate tax laws. These changes are complicated and you should contact your estate planning attorney to re-examine your plan.

If you are elderly or ill, you’ll want to write a will or update your existing one, consider a revocable living trust and make sure you have a durable power of attorney and a health-care directive. Talk with your family about your wishes and make sure that they have copies of your important papers or know where to locate them.