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Estate Planning 101

Ten Bullet Points for the Busy Person

by Peter Klenk, Esq.

  1. Size Doesn’t Matter: No matter how much or how little you may own, an Estate Plan makes sure your family is cared for and your plans are carried out at your death.
  2. Estate Plan Elements: The basic documents everyone needs are a Will, Power of Attorney and a Medical Power of Attorney. If you have minor children, then a trust, either in the Will or outside the Will, is essential. Other documents may include an IRA Trust (if you are leaving an IRA to a minor child), a Revocable Trust (if avoiding probate is to your advantage), a Life Insurance Trust (if removing your life insurance from your estate is advantageous) and a Temporary Guardianship Appointment (if you have minor children, this gives power to a guardian to act if you are incapacitated).
  3. Asset Review: Different assets require different plans. An Estate Plan should reflect your assets. Most people want assets to remain within the family. Planning to maintain assets within the family differs if the asset is an IRA, 401k or 403b, (IRA Trusts to avoid income tax problems), real estate, or cash. Location also matters, as real estate in Boca Raton, Florida is taxed very differently from real estate in Burlington County, New Jersey.
  4. A Will saves Money. Dying without a Will requires an “intestate estate” be opened, which is more costly than if you have a Will. If you have minor children, it is irresponsible not to have a Will naming a guardian and a trustee to care for your child’s physical and financial well-being.
  5. Children = Trust: If you are leaving any assets at all to your children, a Trust is an excellent idea. If it uses the correct techniques, a Trust can protect the assets from divorce, legal entanglements and helps make sure your assets are used for your family…not your children’s futures spouses and friends.
  6. Communication is key: Most people feel uncomfortable talking about their estate plan with their heirs. It is difficult, but sharing information about how your Estate Plan is crafted, whom you put in charge, and why you have divided assets as you did can reduce generations of hurt feelings and perhaps years of litigation.
  7. Practice Makes Perfect: Review your Estate Plan regularly and after any change to your residence or family make up. Estate law and estate and inheritance tax rules change constantly. The rules of Pennsylvania are different from those in New Jersey, so if you move you may have substantially different laws with which to deal. Setting up a trust protects the assets you leave your children from divorce, but should a child get divorced, it is wise to review your plan to make sure further protections are not warranted.
  8. Don’t Give it All to your Spouse! Leaving all your assets outright to your spouse misses a huge opportunity! Instead, give your spouse the option to voluntarily have assets held in trust. Flexibility is key when you are dealing with an unknown future, and if you spouse decides to shelter part or all of the assets, these assets will be safe from creditors, divorce, bankruptcy and other legal problems. Why not be safe?
  9. The Perfect Gift: People are often told to give money to their children to reduce taxes…but it is better to give money in trust for your children than to give it outright. If drafted correctly, your child can be in charge of the money you give to trust, but the money will not be lost should your child be in a divorce, law suit or bankrupt. Should your child die before you the money stays in the family rather than passing to your child’s spouse or friends.
  10. Charity Begins at the IRA: Why give money at your death through your Will (after tax dollars) when you have an IRA (pre tax dollars)? An Estate Plan should examine where your gifts come from and consider not only ways to reduce Estate and Inheritance Taxes, but also ways to reduce Income and Capital Gains taxes.

You may find more information about Will Estate Planning in by clicking here. Our firm focuses exclusively in the area of estate planning and probate, and the litigation surrounding estate planning and probate, so if you need assistance with an estate plan or have questions about estate planning, please call one of our estate planning attorneys for a free consultation. Our estate planning attorneys have extensive experience in New Jersey, Pennsylvania, New York, and Florida, so please feel free to contact us.