Estate planning goals and strategies: Find what works for you.
This is Part 3 in a three-part blog series that highlights key aspects of the estate planning process.
After you’ve the learned the basics of estate planning and begun to take inventory of your financial priorities, set goals and strategies that are personal and clear. They can be based on your family circumstances and other factors that may affect your estate or motivated by specific feelings, hopes and desires.
Estate planning goals and objectives that you might consider include:
- Provide financial security for your family
- Ensure that your property is preserved and passed on to your beneficiaries
- Avoid disputes among family members, business owners or with third parties (such as the IRS)
- Provide for your children’s or grandchildren’s education
- Provide for your favorite charity
- Maintain control over or ensure the competent management of your property in case of incapacity
- Minimize estate taxes and other costs
- Avoid probate
- Provide adequate liquidity for the settlement of your estate
- Transfer ownership of your business to your beneficiaries
What are estate planning strategies?
An estate planning strategy is any method that facilitates the distribution of your assets and the settlement of your estate according to your wishes. There are different estate planning strategies available to you based on your goals and objectives.
1. Intestate succession.
Intestate succession is a strategy by default and is a means of transferring your property to your heirs if you have failed to make other plans such as a will or trust. State law controls how and to whom your property is distributed, who administers your estate and who takes care of your minor children. Without directions, your opinions and feelings are not considered. Indeed, one of your primary goals in planning your estate may be to avoid intestate succession.
2. Last will and testament.
A will is a legal document that lets you state how you want your property distributed after you die, who shall administer your estate and who will care for your minor children. This is probably the most important tool available to you. Anyone with property or minor children should have a will.
3. Will substitutes.
A will substitute – for example, Totten trust and payable on death bank accounts – allows you to designate a beneficiary of certain property that will automatically pass to that beneficiary after you die and avoids passing through probate.
A trust is a separate legal entity that holds your assets that are then used for the benefit of one or more people (e.g., you, your spouse, or your children). There are different types of trusts, each serving a different purpose, and include marital trusts and charitable trusts. You will need an attorney to create a trust.
5. Joint ownership.
Joint ownership is holding property in concert with one or more persons or entities. There are different types of joint ownership, such as tenancy in common and community property, each with different legal definitions, requirements and consequences.
6. Life insurance.
Life insurance is a contract under which proceeds are paid to a designated beneficiary at your death. Life insurance plays a part in most estate plans.
A gift is a transfer of property, not a bona fide sale, that you make during your life to family, friends or charity. Making gifts can be personally gratifying as well as an effective estate planning tool.
8. Tax exclusions, deductions and credits.
There are several important estate planning tools you can use that are offered by the federal government. These include the annual gift tax exclusion, the applicable exclusion amount, the unlimited marital deduction, split gifts, and the charitable deduction.
Let’s design your estate plan.
Our team of Private Bankers are here to help you with estate planning basics, clarify your financial priorities and set goals and objectives to design an estate plan that carries out your vision for distributing your wealth. Connect with us today.