What estate planning is all about

Throughout our lives, we spend much time worrying about making a living.

Our life is consumed with such questions as, "Will I have enough money for

a new house? Can I afford that new car? Can I take that trip I've always

wanted to take?"

As the years pass and you build up an estate, your focus shifts from

taking care of yourself to ensuring that your loved ones are cared for after

you're gone. That's what estate planning is all about.

Estate planning involves what happens to your property when you die

and arranging for its distribution in such a way as to accomplish your objectives.

With estate planning, you anticipate problems and provide solutions. An

estate plan aims to preserve the maximum amount of wealth possible for the

intended beneficiaries and often retains considerable flexibility for the

individual before death.

Federal and state tax laws pose major concerns for estate planners.

Good estate planning frequently can save on estate taxes. With proper planning,

you may be able to leave a larger portion of your estate to your beneficiaries.

Taxation is only part of the picture. Estate planning can be important

from a business perspective as well, if you have a sideline business. For

example, through estate planning you can determine how your business interest

will be valued at the time of your death, whether it will be disposed of

or, if not, who will fill your position in the business and at what cost.

Estate planning can provide solutions to potential personal and family

problems. How do you provide for a financially inexperienced spouse? An

ill parent? Irresponsible child? Will your assets be used to meet the objectives

you establish — or will someone you don't know or trust control the assets?

Wills and trusts are common ways in which individuals dispose of their

wealth. Sometimes, however, it will be useful to make gifts while you are

alive in order to minimize taxes. The Federal Estate and Gift Tax exempts

certain levels of lifetime gifts that may lead to the inclusion of a program

of planned giving in an estate plan.

Estate planning frequently requires input from a number of advisers.

Your attorney is needed to draft the will, the cornerstone of most estate

plans or trust agreements. Your insurance agent can be important, as can

your banker.

You can start your estate planning process with a certified financial

planner, who will already know the details of your personal financial situation.

The planner can recommend tax strategies that may be appropriate to your

circumstances. In addition, the planner can suggest steps that may protect

your business as well.

—Zall, Bureaucratus columnist and a retired federal employee, is a freelance

writer based in Silver Spring, Md. He specializes in taxes, investing, business

and government workplace issues. He is a certified internal auditor and

a registered investment adviser. He can be reached at [email protected]


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