Good Estate Planning is an essential part of long term planning for your business, healthcare, and disposition of wealth.  Estate planning has many components and not all of them may apply to you but they should all be part of the conversation between yourself and your estate planning professional.  It is also critical to be thorough with your estate planning so that your wishes are truly carried out when you are gone.

Estate Planning item 1: A Will or Trust

A will is a public document that directs who will receive your money and belongings when you die.  A will can also be used to appoint an executor to carry out your wishes and a guardian for your minor children if needed.  Your executor should be someone you trust and someone who will have your best interests at heart even when you’re gone.   If you have a will, when you die it will go to probate.  Probate can be expensive and it can tie up property and funds for some time.  Probate can generally take 3 months to a year depending on the court schedule and how long it takes to verify your will, settle debts, sell any property as needed, etc.

A trust is a private document that does not go through the probate process. Forbes.com http://www.forbes.com/sites/fross/2014/02/18/wills-vs-trusts-whats-best-for-retirees/#477252e27cb2 defines a trust as, “a pool of assets (including investments, cash, property, etc.) held for the benefit of a third party – the beneficiary. A trustee is appointed to oversee management of the trust. “A trust is similar to a will in that you can use it to direct who receives your cash and assets. It also allows you to appoint an executor to help carry out your wishes as the trust directs. Trusts can be more expensive than wills and can be more complicated; however a trust allows the terms to be kept private and can keep court participation to a minimum.

Estate Planning item 2:  Medical Directives

Good estate planning can make sure your designated decision maker is empowered to follow your health care wishes. A thorough estate plan will include a health care power of attorney and any additional paperwork required by your state. For instance, the state of Arizona has the Arizona Advance National Registry. Forms for this registry can be found at: http://www.azsos.gov/services/advance-directives . This site allows you to download the necessary forms and gives directions on how to file with the state. It also gives you guidance as to which forms the state will accept. Medical directives deal with health issues if you are not able to make or communicate your wishes. Should you become incapacitated or gravely injured it is important to have this estate planning item in place. You should assign a health care power of attorney that will be responsible for making sure your wishes and directives are followed.

Estate Planning Item 3: Beneficiary Designations:

An important piece of estate planning should include beneficiary designations.  Every account you have, bank account, saving account, 401k, IRA, etc should have a beneficiary and if possible a contingent beneficiary.  You will need to work with your estate planning professional to best set up your account beneficiaries.  In some instances, if you have a trust, you will want to list the trust as the beneficiary.  If you don’t have a beneficiary listed the distribution of your funds may be decided for you by state or federal law.  Establishing beneficiaries helps you decide who receives your assets and accounts after your death.

Estate planning Item 4: Business succession

If you are a business owner good estate planning is particularly important. You want to know that your wishes concerning your business are carried out. Do you have a succession plan? Are you leaving the business to a family member or friend? Do you want the business to be sold and the profits distributed among loved ones? Do you want to make sure someone is excluded from inheriting your business? These are all questions that should be asked and answered. As a business owner you see both the intrinsic and extrinsic value in what you have built. If you want it to carry on after you are gone, what does that look like? Tax considerations and costs of probate should be factored in to any plan. A skilled estate planner can help you create a long-term strategy and plan to help your business continue long after you are gone.

Estate planning item 5: Life Insurance

If you are the primary breadwinner in your family or you have small children or a business that depend on you, life insurance may be part of your estate plan. There are many different types of life insurance available such as term, variable, and permanent. Each type of insurance will have different plans and premium costs associated with it. If you decide to make life insurance part of your estate plan, be sure to work with an expert to get the policy that best fits your needs and situation.

Estate planning Item 6: Decide what you want and create a plan

You need to ask yourself the tough questions and put the answers to those questions down on paper. Without good estate planning you leave your estate and loved ones at the mercy of state and federal laws and the court system. First take the time to discern what your wishes are for your health, your finances, and your business. After you have decided what your goals for these items are, work with an experienced estate planning attorney to help you structure your estate plan to achieve those goals. No one can predict when they might die or have an incapacitating accident. You should have a plan in place to address the unexpected.

Good estate planning allows you to create a contingency plan for your wealth, your healthcare, and your heirs.  It gives you the ability to plan for your legacy and the tools to implement your plan long after you are gone.

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