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April 25, 2013 / Lisa Detanna

Lisa Detanna – Developing a Successful Estate Plan

EstatePlanning – Lisa Detanna

INTRODUCTION

Estate planning means ensuring that your assets will be applied to the
objectives you choose, both now and in the future. It means much more
than simply drawing up a will. It means establishing an integrated plan
designed to safeguard your estate, future generations and those you
love. It also means knowing your assets will be properly managed and
your legacy preserved.
An effective estate plan should be comprehensive, so it’s important to
consider your overall financial objectives and develop your plan with
expert assistance. These experts, at a minimum, would consist of an
estate planning attorney and a financial advisor and may also involve
others such as your CPA or an appraiser. Most important, don’t put
estate planning off. It is never too early to start a plan that is designed
to preserve, protect and transfer wealth to those organizations you
care about most.
The following pages provide more insight into estate planning strategies
and how to help ensure that you achieve and maintain a successful plan.

KEY TAKEAWAYS

A successful estate plan
should be comprehensive. It
should be developed with the
expert assistance of an estate
planning attorney, your financial
advisor and other advisors,
like a CPA or an appraiser.

A complete estate plan
encompasses a revocable living
trust, a will, a durable power of
attorney for both financial affairs
and medical decisions and a living
will for end-of-life decisions.

You have worked long and hard
to build your estate. Don’t let a
few blunders keep your wishes
from being carried out and leave
your wealth unprotected.

Review estate plans regularly – at
least once a year – and identify any
changes that will impact your plan,
including family, personal interests,
wealth and changes in tax law.

CREATING AND MAINTAINING A SUCCESSFUL ESTATE PLAN

You have worked long and hard to build your estate. To ensure that your wishes will be carried
out, your wealth protected and your legacy preserved, there are five key elements to a successful
estate plan, including:

1. TAKE THE FIRST STEP

While estate planning can be an uncomfortable topic, not having a plan in place can leave your
family and your legacy in an even more difficult situation. Surprisingly, many intelligent, wealthy
and otherwise well-advised individuals put estate planning off or simply ignore it to their detriment.
It is never too early to begin planning. Estate planning may be a difficult subject, but the
fact is, there are plenty of potential life events – untimely death, accident, dementia or injury –
that could leave your loved ones confused and worried about what to do because there was no
plan in place.
Without your own plan, you may not realize it, but the government has an estate plan already
prepared for you. The process is called intestate succession. In addition to it being expensive,
public and cumbersome, this process may ignore important needs, such as designating a proper
guardian for your minor children.

2. UPDATE PLAN REGULARLY

Like any financial plan, an estate plan is based on the best available information within the time
frame the plan was developed. But once an estate plan is created, the work is not over. Life is like
a motion picture with thousands of frames changing every second – sometimes subtly, sometimes
dramatically. Your estate plan is only reflective of a single frame or a single point in time.
Review estate plans regularly – at least once a year – and identify any changes that will impact
your plan, including family, personal interests, wealth and changes in tax law.
These are all important factors that should be taken into consideration when making adjustments
to your estate plan.
Some other life changes that may have profound effects may not be so obvious. Personal wealth
will change over a lifetime. Has your income grown or contracted? Your wealth accumulation
may affect your choices about your legacy. How much do you want to leave to your children
versus giving to a charity that has become important to you? How has the rising cost of education
affected your plan? When you evaluate your estate plan, consider how your wealth is
concentrated. Is it primarily held in a significant asset like a vacation home or a particular stock?
Do you want to transfer the home because it has been in the family for three generations or sell
it now and pass on only the value of the home to a beneficiary?
Changes in law and tax structures quickly can put an estate plan out of date as well. As it
stands, if Congress does not act by the end of the year (2012), beginning in 2013, several estate
tax advantages will end. In addition to a decrease in the lifetime gift exemption from $5,120,000
to $1,000,000 for individuals ($10,240,000 to $2,000,000 for married couples), the top tax rate
applied to estate values will rise from 35% to 55%. On a state level, various death tax laws have
recently changed as states seek new revenue sources. And it’s not unusual for state trust, property
and asset protection and probate to change frequently, thus requiring ongoing review with
the assistance of a tax planning attorney.
One of the first principles of economics is that everything is connected to other things in unseen
ways. And every action has a consequence. These are the reasons to review your estate plan on
a regular basis. You may not recognize a change, but your expert advisors might.
With respect to family, have any of the following occurred in the last year?
You had more children
Grandchildren were born
You divorced or married
A loved-one fell ill and developed special needs?

3. COMPLETE THE PLAN

Often, individuals think of estate planning as simply
signing a will. It’s not that simple, particularly in today’s
more complex tax and legal environment. Here are some
essential items needed to complete a comprehensive
estate plan:

  • A revocable living trust
  • A will
  • A durable power of attorney for financial affairs
  • A durable power of attorney for medical decisions
  • A living will for end-of-life decisions

A revocable living trust, or living trust, is an agreement that
provides various benefits, including the efficient management
of one’s financial affairs in the event of incapacity of
the living grantor. Upon the grantor’s death, a living trust can
be used to transfer assets to loved ones or favorite charities
efficiently and outside of the probate process.
Creating a durable power of attorney for both your financial
and medical affairs is extremely important. In the
event of incapacitation, the durable power of attorney
allows your “attorney in fact” to transact business on your
behalf or make medical decisions when you cannot. One
of the most important parts of creating a durable power of
attorney is choosing an attorney in fact. In choosing the
attorney in fact, make sure it is someone you trust to carry
out your wishes, someone who will not take advantage
of you when you are incapacitated, and someone who is
willing to serve as your agent.
A living will is a tool that allows you to make end-of-life
decisions for yourself in the event you are ever unable to
express your wishes. A living willing contains your instructions
to your physician and other healthcare providers as
to the circumstances under which you want life-sustaining
treatment provided, withheld or withdrawn.

4. APPOINT APPROPRIATE FIDUCIARIES

The person or trust company who acts for you when you can’t perform under your will (a personal
representative or executor) or trust (a trustee) is called a fiduciary. Often estate planners
believe that the fiduciary responsibility should be given to a specific individual as an honor or to
the oldest child out of respect. Acting as a fiduciary is a difficult job and a heavy responsibility.
Thoughtfully selecting your fiduciary is critical to an effective estate plan.
Ideally, the wisest choice for a fiduciary is one that has the right talent, the right temperament
and enough time to invest in the role.

5. COMMUNICATE THE PLAN

Once your estate plan is created, you can breathe a sigh of relief for tackling a tough
topic. But creating the plan is not enough. Next, it’s important to communicate critical
plan information to those you have charged with carrying out your plan – your fiduciaries.
Your selected fiduciary should know they have been named and have the documents
or have a way to gain access to those documents. Your selected fiduciary should
know the names and contact information for your estate planning attorney, financial
advisor, CPA and other key players in your estate plan including physicians. Last, be
sure the selected fiduciary knows where to find the contact information for the loved
ones or charitable organizations you include in your estate plan.

CONCLUSION

You have worked long and hard to build your estate. Ensure that your wishes will
be carried out, your wealth protected and your legacy preserved, by addressing the
five key elements of a successful estate plan. And the sooner you address them the
better. With a proper estate plan, you can ensure that your assets will be applied to
the objectives you choose, both now and in the future.
An estate plan done with careful attention to detail, the collaborative expertise of
professionals and regular review can provide a great deal of comfort to you, and to
those you love.

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