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What is Estate Planning?
Estate planning is one of the most important steps any person can take to make sure that their final property and health care wishes are honored, and that loved ones are provided for in their absence. Though often overlooked or put off in favor of more immediate concerns, a comprehensive estate plan can resolve a number of legal questions that arise whenever anyone dies: What is the state of their financial affairs? What real and personal property do they own? Who gets what? Does a personal guardian need to be appointed to care for minor children? How much tax will need to be paid in order to transfer property ownership? What funeral arrangements are appropriate?


What is an "Estate"?
Your "estate" consists of all property owned by you at the time of your death, including:

Real estate
Bank accounts
Stocks and other securities,
Life insurance policies,
Personal property such as automobiles, jewelry, and artwork.

How Can an Estate Plan Help?
Regardless of your age, or the size and complexity of your estate, an estate plan can accomplish the following:

Identify the family members and other loved ones that you wish to receive your property after your death.
Ensure that your property will be transferred to those you have identified, as quickly and with as few legal hurdles as possible.
Minimize the amount of taxes that will need to be paid in order for your property to pass to others after your death.
Avoid the time and costs associated with the probate process by utilizing estate planning devices like living trusts and "payable on death" bank accounts.
Dictate the kinds of life-prolonging medical care you wish to receive should you be unable to make your wishes known when the time comes.
Set forth the kind of funeral arrangements you would like, and how related expenses are to be paid.

Understanding the estate plan options that are right for you can be a complex undertaking. The resources in FindLaw's Estate Planning Center can help you identify your estate planning needs, recognize potential solutions, and locate an experienced Estate Planning attorney to help you at every step of the estate planning process.
Attribution to ABA Guide to Wills and Estates American Bar Association
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10 Things Estate Planning Can Do for You
The first step in planning your estate is identifying your major objectives. Here are some typical objectives, preliminary suggestions on meeting them, and the chapters in this book that discuss these options in more detail.

1. Provide for your immediate family. Couples want to provide enough money for the surviving spouse. They often choose to provide this income through life insurance, particularly for spouses who don't work outside of the home. Couples with children want to assure their education and upbringing. If you have children under 18, both you and your spouse should have a will nominating personal guardians for the children, in case you both should die before they grow up. Otherwise, a court will decide without your input where your kids will live and who will make important decisions about their money, education, and way of life. (See chapter 6.)

2. Provide for other relatives who need help and guidance. Do you have family members whose lives might become more difficult without you, such as an elderly parent or disabled child, or a grandchild whose education you want to assure? You could establish a special trust fund for family members who need support that you won't be there to provide. (See chapter 4.)

3. Get your property to beneficiaries quickly. You want your beneficiaries to receive promptly the property you've left them. Options include avoiding or greatly easing probate through insurance paid directly to beneficiaries, joint tenancy, a living trust or other means (chapters 2 and 5); using simplified or expedited probate available in all states, though sometimes only for very small estates or if all beneficiaries agree (see chapter 11); and taking advantage of laws in certain states that provide partial payments to beneficiaries while a will is in probate (chapter 11).

4. Plan for incapacity. During estate planning, most people these days also plan for possible mental or physical incapacity. This planning is especially important for single people. Living wills and durable health-care powers of attorney enable you to decide in advance about life support and pick someone to make decisions for you about medical treatment (see chapter 12). Florida and a number of other states now permit you to designate a personal guardian. In addition, disability insurance can protect you and your family if you should become disabled and unable to work.

5. Minimize expenses. Everyone wants to keep the cost of transferring property to beneficiaries as low as possible, which leaves more money for the beneficiaries. Good estate planning can reduce these expenses significantly (see final sections of this chapter and chapters 2, 3, 4, and 5).

6. Choose executors/trustees for your estate. Choosing competent executors/trustees and giving them the necessary authority will save money, reduce the burden on your survivors, and simplify administration of your estate. It also will reduce a court's involvement and, in many states, avoid paying for a bond. See chapters 3 and 10.

7. Ease the strain on your family. Many people take a burden from their grieving survivors and plan their funeral arrangements when planning their estate (see chapter 11). Or you may simply want to limit the expense of your burial or designate its place. You also can provide for your body to be cremated or given to medical science after you die.

8. Help a favorite cause. Your estate plan can help support religious, educational, and other charitable causes, either during your lifetime or upon your death, and at the same time take advantage of tax laws designed to encourage private philanthropy (see chapter 8).

9. Reduce taxes on your estate. Every dollar your estate has to pay in estate or inheritance taxes is a dollar that your beneficiaries won't get. A good estate plan can give the maximum allowed by law to your beneficiaries and the minimum to the government. This becomes especially important as your estate approaches the magic number of $1 million, the level at which the federal estate tax kicks in under current law. Chapter 8 briefly discusses this topic.

10. Make sure your business goes on smoothly. If you have a small business, the operation might be thrown into chaos upon your death. You can provide for an orderly succession and continuation of its affairs by spelling out what will happen to your interest in the business. See chapter 7.
Attribution to ABA Guide to Wills and Estates American Bar Association
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Understanding Intestacy: If You Die Without an Estate Plan
When a person dies without having a valid will in place, his or her property passes by what is called "intestate succession" to heirs according to state law. In other words, if you don't have a will, the state will make one for you. All fifty states have laws (or "statutes") of this kind on the books.

The purpose of intestate succession statutes is to distribute the decedent's wealth in a manner that closely represents how the average person would have designed his or her estate plan, had that person had a will. However, this default can differ dramatically from what the person really would have wanted. Even where it is known what the person intended, no exceptions are made where no valid will exists. Nor are there any exceptions made based on need or special circumstances.

1990 UNIFORM PROBATE CODE

The 1990 Uniform Probate Code (the Code) serves as the starting point for many states' laws. Nevertheless, the laws of different states can vary greatly from each other and from the Code itself. However, the Code represents the best reference for a general discussion.

Under the Code, close relatives take property instead of distant relatives. The classes of relatives whose members receive property under the Code include the decedent's surviving spouse, descendents (children, grandchildren, etc.), parents, descendents of decedent's parents (siblings, nieces and nephews), grandparents, and descendents of grandparents (aunts and uncles and cousins). Adopted descendents are treated the same as biological descendents. If none of the above-named classes of relatives include any persons qualified to take the estate, the property "escheats" (goes by default) to the state.

Share Of Surviving Spouse

Under the Code, a surviving spouse is either entitled to the entire estate (after expenses and taxes of the decedent) or a substantial part of it. For example:

The surviving spouse is entitled to the entire net estate if the decedent is also survived by children who are all children of the decedent and the surviving spouse.

The surviving spouse is also entitled to the entire net estate if the decedent is not survived by descendents and parents.

If parents survive but no descendents survive, a surviving spouse takes the first $200,000 of the net estate plus three-fourths of anything exceeding that amount.

If the decedent is survived by descendents who are also the descendents of the surviving spouse, and by descendents who are not descendents of the surviving spouse, the surviving spouse takes the first $150,00 of the net estate plus one-half of anything exceeding that amount.

If the decedent is not survived by any descendents who are also descendent of the surviving spouse but is survived by descendents who are not descendents of the surviving spouse, the surviving spouse takes the first $100,000 of the net estate plus one-half of anything exceeding that amount.

Share of Descendents

Under the Code, if no spouse survives but descendents of the decedent survive, the descendents take the entire net estate by "right of representation."

Share of Parents

Under the Code, if a decedent is not survived by a spouse or descendents, the entire net estate passes to the decedent's parents equally or, if only one survives, to the survivor.

Share of Other Relatives

Under the Code, if a decedent is not survived by a spouse, descendents, or parents, the entire net estate passes to the decedent's parent's descendents (siblings of the decedent). If there are no siblings or descendents of siblings, the net estate goes to the decedent's grandparents or their descendents.

Net Estate

The "Net Estate" is the amount left for distribution to heirs after all debts, family protections, taxes, and administrative expenses have been paid. "Family protections" include homestead allowances, family allowances, and exempt property allowances.
Attribution to ABA Guide to Wills and Estates American Bar Association

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Estate Planning Information
In planning your estate, it's helpful to have as much of the following information on hand as possible.

The names, addresses, and birth dates of your spouse, children, and other relatives whom you might want to include in your will. List any disabilities or other special needs they may have.

The names, addresses, and phone numbers of possible guardians (if you have young children) and executors or trustees.

The amount and sources of your income, including interest, dividends, and other household income, such as your spouse's salary or income your children bring home, if they live with you.

The amounts and sources of all your debts, including mortgages, installment loans, leases, and business debts.

The amounts and sources of any retirement benefits, including IRAs, pensions, Keogh accounts, government benefits, and profit sharing plans.

The amounts, sources, and account numbers of other financial assets, including bank accounts, annuities, outstanding loans, etc.

A list of life insurance policies, including the account balances, issuer, owner, beneficiaries, and any amounts borrowed against the policies.

A list (with approximate values) of valuable property you own, including real estate, jewelry, furniture, jointly owned property (name the co-owner), collections, heirlooms and other assets. This list could be cross-referenced with the names of the people you might want to leave each item to.

Any documents that might affect your estate plan, including prenuptial agreements, marriage certificates, divorce decrees, recent tax returns, existing wills and trusts, property deeds, and so on.
Attribution to ABA Guide to Wills and Estates American Bar Association

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Estate Planning Checklist
The initial estate planning questionnaire is presented in a narrative form. The detailed explanations and the space provided for answers are designed to garner more complete and helpful information than would be afforded by merely filling in blanks. Click here to view form

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Estate Planning & Probate Dictionary
Following is an explanation of commonly used words and phrases related to estate planning and probate.

AB Trust - A trust designed to make sure the personal estate tax exemption of each spouse (currently $1.5 million) is used to the fullest extent possible, while allowing the surviving spouse to have use of the assets of the deceased spouse during the remainder of the surviving spouse's lifetime.

Administrator - A court-appointed person who manages the estate of a deceased person who has died without a will.

Attorney-in-Fact - An individual designated in a power of attorney to act as the agent of the person who executed the document.

Basic Will - A will that distributes everything to your spouse, if living, otherwise to your children when they reach the age of majority (18 years old).

Beneficiary - A person who receives funds, property, or other benefits from a will, contract, or insurance policy.

Durable Power of Attorney for Health Care - A written document in which an individual designates another person to make health care and health-related decisions in the event that the individual becomes incapacitated.

Durable Power of Attorney for Property - A written document in which an individual designates another person to make his or her property and property-related decisions in the event that the individual becomes incapacitated and is unable to do so.

Estate - An individual's property and assets -- including real estate, bank accounts, life insurance policies, stocks, and personal property such as automobiles and jewelry.

Estate Tax - A tax that is imposed at a person's death, on the transfers of some types of property from their estate to heirs and beneficiaries.

Executor - A person named in a will who is authorized to manage the estate of the deceased person. The executor will collect the property, pay off any debts, and distribute property and assets according to the terms of the will.

Fiduciary - A person or institution that is legally responsible for the management, investment, and distribution of funds; i.e. the trustee identified in a trust.

Grantor - A person who transfers assets to another, usually into a trust.

Guardian - An individual with the legal authority to care for another, usually a minor child.

Incapacity - A person's inability to act on his or her own behalf, i.e. the "sound mind" requirement for drafting a valid will. A court makes a finding of incapacity.

Inter vivos trust - A trust that is created during a person's lifetime, which holds property for the benefit of another.

Intestate - A term used when a person dies without a will.

Joint Tenancy With Right of Survivorship - A title that is often placed on co-owned property. At the death of one owner, the other owner will be legally entitled to sole possession of the property, regardless of what provisions are made in a will. A husband and wife often use this form of ownership.

Living Trust - A revocable trust established during a grantor's lifetime that is used for the placement of some or all of the grantor's property. In a situation involving a married couple, a basic living trust does not effectively use the personal estate tax exemption of either spouse (the amount of a deceased person's estate that may pass to his or her heirs without estate taxes, currently $1.5 million). Because of this deficiency of a basic living trust, an AB Trust (discussed above) is often recommended instead to married couples with substantial assets.

Living Will - A binding legal document that sets forth a person's wishes regarding the use of life-sustaining treatment in the event that he or she becomes terminally ill or permanently unconscious.

Marital Deduction - A federal tax deduction that allows one spouse to pass his or her estate to the other spouse without having to pay estate or gift taxes.

No Will - A decedent dies without a valid will, so that his or her estate passes to heirs based on the laws of descent and distribution of his or her state.

Pour-Over Will - A will that distributes everything to a trust.

Power of Appointment - A legal right given to a person in order to allow him or her to decide how to distribute a deceased person's property. A "general" power of appointment places no restrictions on the named person, while a "limited" or "special" power of appointment places restrictions on who may receive distributions.

Power of Attorney - A written document that gives one person the legal authority to act on behalf of another person.

Probate - A process whereby a court reviews a will to make sure that it is authentic, and allows others to make legal challenges to the will.

QTIP Trust - A trust designed to permit a spouse to transfer assets to his/her trust while still maintaining control over the ultimate disposition of those assets at the spouse's death. QTIP Trusts are particularly popular in situations where a person is married for a second time but has children from a first marriage for whom he/she wants to reserve assets.

State Death or Inheritance Taxes - Taxes that may be imposed by the state where a deceased person lived, or where his or her property is located after death.

Trust - A written document providing that property be held by one (the "trustee") for the benefit of another (the "beneficiary"). A trust may be created during the grantor's lifetime or after his or her death.

Trustee - A person named in a trust document who will manage property owned by the trust, and distribute the trust income or property according to the terms of the trust document. A trustee may be an individual or a business.

Will - A document that directs how property shall be distributed upon a deceased persons death.

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