Estate Planning in Five Steps

Estate Planning in Five Steps

P. Derek Ten Broeck Jr. & Kyle Swaim

TB Group LLC

According to Legal Zoom, only 33% of American adults have done their estate planning. This is despite the evidence that 100% of American adults eventually die. You can do estate planning in five steps. Why? I’m glad you asked.

Nobody Listens to Intestate Dead People

If you don’t have an estate plan or a will, your state will take care of distributing your estate. This happened to the famous singer Prince, who died in Minnesota in 2016, leaving an estate of $156 million. There were so many claims and so many legal battles, including on-again, off-again deals with record companies, that it took six years to settle. Two of Prince’s six heirs died waiting for the settlement.

You may not have an estate that inspires over 45 claimants like Prince. But here’s an example from the rules intestate succession in Massachusetts. If you have no children but you have parents, your spouse gets the first $200,000 of your property plus 2/3 of the rest. Your parents get anything that’s left. And if you and your spouse are unmarried… well, there’s no provision for unmarried spouses.

Don’t like your state’s priorities? Too bad. You’re dead. Nobody is listening to you. But they will listen (at least figuratively) if you have an estate plan and a will. Estate planning allows you to prevent legal squabbling among your heirs and to protect them from claimants who might crawl out of the woodwork, not to mention minimize the taxes they have to pay on your legacy.

Estate Planning in Five Steps

Let’s say you want to do the right thing by your loved ones, and you decide to do some estate planning. What’s involved? There are the five broad steps recommended by most professionals.

1. Add up what you’ve got. First list your tangible assets: your house and other real estate, vehicles, boats, artwork, other personal property. Then list your intangible assets: bank accounts, retirement funds, stocks & bonds, insurance policies, ownerships in businesses, and so on. Once you have put a value on your assets, you need to subtract your liabilities: mortgages, credit cards, and any other unpaid debts and bills.
2. Consider your beneficiaries. Many of your intangible assets — insurance, retirement funds, investment funds — have specified beneficiaries. Make sure they are all in order and up to date. Those don’t have to go through the probate process.

3. Plan for your family. In this step, you check to make sure you have enough insurance to take care of your family, and you write a will. Remember, your will — whether you use one of those on-line services or hire a lawyer — has to pass muster in court. One of the clauses in your will should designate a guardian for your children. It’s a good idea to have a backup guardian, too.

4. Prepare supplementary legal documents. You will want to have a medical care directive, which specifies how to make decisions about your medical care if you can’t make them yourself. You will also need a durable power of attorney, which allows somebody to make financial decisions for you if you can’t make them. Finally, you may want to set up a revocable trust, which can transfer some of your assets to loved ones without having to go through probate.

5. Know your taxable estate. If your estate is valued at more than $12,920,000, it may be subject to federal estate tax. And don’t forget your state’s estate tax, which may apply even if your estate is below the federal threshold. There are lots of steps you can take to reduce this tax burden. These steps may be complicated, but that’s why there are professional estate planners.

It’s Up to You

Do you want to be part of the 33% who provide for their loved ones, or do you want to be part of the other 67% who provide extra work for banks and state lawyers? At TB Group, we’re very good at helping you figure out how best to provide for your loved ones. And we’re experts at helping clients complete the five steps. Click here to set up a call or an appointment with us. You will be surprised at how good you can feel with a solid estate plan.



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