ESTATE PLANNING FREQUENTLY ASKED QUESTIONS | Bailey ...

WHAT IS ESTATE PLANNING?

Estate planning takes many forms.? One of the biggest misconceptions is that only those with a taxable estate must plan their estate.? Estate planning includes wills, Powers of Attorney, Advanced Healthcare Directives, Nomination of a Guardian for Minor Children, and stating your last wishes.? It can include more complicated matters such as Trusts, Bequests to charity, Life? Insurance Trusts, and Passing on the family business.? Estate planning can be for the purpose of managing your affairs after death, or to minimize taxes upon your death.

WHAT IS A TAXABLE ESTATE?

A taxable estate, is an estate that owns assets that exceed the exemption amount.? The exemption amount is currently $5.12 million however, it is set to return to $1 million on January 1, 2013.

WHAT IS INCLUDED IN MY ESTATE?

Basically, everything you own is included in your estate.? That includes personal property, real property (home), bank accounts, investment accounts, and in some cases life insurance proceeds.? Also included are items held in trust which you have a degree of control (there are exceptions to this however, depending on the type of trust and amount of control or ownership interest you posses).

WHAT IF I DONT HAVE AN ESTATE PLAN?

If a person dies without a will, then your estate have to go through probate.? Probate is a court supervised distribution of your assets.? The assets go where the law says that they should go.? Probate can be costly and time consuming.? Further, it can lead to bitter fights over items or assets.

WHAT SHOULD I HAVE IN MY ESTATE PLAN?

First, every individual should at least have a will.? A will directs where you want your possessions to go if you die.? Perhaps you want to leave a family heirloom to a certain individual or you want to leave some money to a charity.? A will dictates where your property should go.? It can also be a place where you layout your last wishes such as burial instructions, etc.? A will can also be used to designate the guardian of a minor child.? Anyone who has a minor child must designate a guardian.? The loss of a parent is an extremely traumatic event for a child, and any confusion or dispute about who will take custody of the child only serves to increase the trauma.

Second, every individual should have a Power of Attorney for healthcare decisions.?? This is sometimes called an Advanced Healthcare Directive.? This explains your wishes such as, when to stop providing treatment, who makes healthcare decisions for you in the event you are incapacitated, as well as any anatomical gifts you would like to make after your passing (organ donation, etc.).

Third, a Power of Attorney for financial decisions is required by most people.? This allows another individual to access your bank accounts, file taxes, make payments on your behalf if you become incapacitated.? This can be crucial because other people may count on you for income (such as children) and if no one can access the money while you are incapacitated, a difficult situation may become even worse.

HOW DO A CHOSE A GUARDIAN FOR MY CHILD?

There are no easy answers to this question.? Many factors must be considered:

??????????? The age child and of the guardian:? If the child is young, you have to consider if the guardian will be able to care for the child until they reach the age of majority.? For example, it may not make sense to have a 2 year old child go the live with grandparents who are elderly because they may not be able to care for the child as it gets older.

??????????? Stability of the guardian:? You must consider if the guardian is financially able to care for the child. Some people chose to leave money for the guardian for while they care for the child however, many other factors must considered.?? Is the guardian in a stable relationship?? Did the guardian recently get married?? Get divorced?? Does the guardian move frequently?

??????????? The emotional connection between the guardian and the child:? The loss of a parent or parents is extremely traumatic for a child.? Choosing someone who the child is familiar with and has an ongoing relationship with is important.

Because all of these factors can change over time, it is important to constantly review your estate plan.

Source: http://williamrbailey.com/2012/08/estate-planning-frequently-asked-questions

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