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By Patrick L. Smith –
Planning your estate can be an intimidating and uninviting process. No one enjoys discussing life’s worst case scenarios, but financial responsibility is a laudable virtue during all moments of life. Smith frequently gives free seminars to organizations and in local churches to help people better understands the estate planning process and why it is never too early to begin thinking about financial planning.
While putting off uncomfortable discussions may seem like the easy thing to do now, waiting until the last minute to discuss your financial plans for when you pass on can place an unnecessary burden on your family and loved ones. Why put more pressure on those that you love to care for your estate once you’ve gone?
A STARTING POINT
The first step for any new client desiring to come up with an estate plan is to write up a one page summary of all their assets. Whether it’s bank accounts, money market accounts, or real estate, this all needs to be summarized in a simple document so that the estate planning process can begin. This step is something that anyone can begin doing on their own. Next you need to begin to think about who you will place in charge of your estate once you’ve passed on. Seriously consider who you feel most comfortable with as executor or trustee of your estate. This role is very important because the executor or trustee is in charge of protecting your assets throughout the taxation process and ensuring that the remainder of your assets is delivered to those who are entitled to it.
PLANNING YOUR ESTATE
Once you’ve put some thought into the basics, it’s time to come up with a specific estate plan. There are two major options in estate planning: wills or living trusts. It’s important to understand the advantages and disadvantages of both so you can make a better decision for your personal estate plan.
A will is a written legal document that outlines exactly how you would like your assets to be distributed at the time of your death. You can amend any part of your will or change it completely at any point in your lifetime. While there are ways that a will can be overruled, the finality of such a document helps to ensure that there is no question of your original intentions.
A living trust is a way for your assets, including property, to be managed during your life, after your death, and even if you become incapacitated. While you can continue to be a trustee of your own estate during your life, a living trust usually names a new trustee in the case of incapacitation or death. By setting up a living trust you can avoid costly probate proceedings that may invade your family’s privacy. But since it requires active management, a living trust is only functional if it is properly funded.
PLANNED GIVING
There are many ways to give to your favorite charitable organizations. Some of the most common ways are the following:
• Will: The will is probably the easiest way to provide for the charity of your choice. If your will doesn’t already provide for your favorite charity, you may make a codicil (an amending document to the original will) or execute a completely new will. The most common ways are to give a percentage of your estate, give a fixed dollar amount, or remember others and leave the residue of your estate to the charity.
• Life Insurance: This is a popular way to include a charity in your estate plan. It is very easy to change the beneficiaries on policies to your favorite charity. Also, buying new policies and naming your charity as a beneficiary is a frequently used method of leaving money to charitable causes.
• Annuity Trust: The charitable remainder annuity trust is a way to make a gift which allows you to retain income from your trust for life.
PATRICK L. SMITH,
Attorney At Law
(352) 241-8760
www.ATTYPIP.com
