It is impossible for an individual without legal and tax background to effectively plan an estate. On the other hand, it is impossible for a professional with legal and tax background to plan an estate without in-depth knowledge of a client's goals, needs, and overall family and financial situation. Too often, expense or lack of communication prevents clients and estate planning professionals from adequately coordinating personal desires with legal and tax considerations. Without this coordination, an estate plan which carries out individual desires and takes advantage of beneficial planning techniques cannot be designed.

The purpose of this booklet is to provide information to enable you to apply your desires to substantive law. It is not possible for anyone book to answer all possible questions about every situation. However, this booklet will discuss the most common issues about management of property if the owner becomes incapacitated, distribution of assets if an owner is deceased, and cost and procedure involved in the transfer of assets to trusts when trusts are utilized. We will describe methods of totally avoiding the requirement of probate, allowing for transfer of assets to beneficiaries with no court involvement. Income, estate, and gift tax issues will be outlined, and methods of minimizing or eliminating tax will be described. Planning opportunities and considerations under current law and as we move toward full repeal of federal estate tax in 2010 will be addressed.

Many people would be unsure or inaccurate in their answer if asked, "What would happen to your assets if you were gone tomorrow?" This should be an easy question to answer. It is certainly an important one. We work all of our lives to accumulate assets, and we should have control over where those assets go after we're no longer here to enjoy them. However, due to various rules of law, determining the current estate plan is not always easy. For example:

Wills do NOT control the distribution of all assets. Many assets are distributed outside of the will, so the plan of distribution in a will does not describe the total plan. Property passing under a will does NOT avoid probate.
 

Making lifetime gifts to children can have serious income tax ramifications for both parents and children, particularly if the gifted property has appreciated in value since the parents acquired it, or if the parents' personal residence is gifted.
 

If you could no longer manage assets due to incompetency, a court proceeding would be required in order to take over management of your solely owned assets even if your spouse was available to manage assets. Accounting records showing every penny earned and every penny spent would be mandated by the court. These protections may be beneficial, but planning allows each individual to customize the rules that they would want to apply in their individual situation.
 

If minor children or grandchildren inherit property and provisions for management of that property are not specified in a will or trust, the child will receive the entire inheritance at the age of majority.
 

Although the Tax Relief Act of 2001 repeals federal estate tax for the year 2010, after that, under current law, "repeal" ends and federal estate tax law reverts to law in place prior to passage of the 2001 Act. Including an analysis of tax planning options is an important part of your estate plan.

Following is an Estate Planning Checklist to help determine whether estate planning may be needed. Please answer each of the following questions YES or NO and write the answer next to the question.

d

 1.

Has it been more than one year since you reviewed your estate plan, including your will, life insurance policies, and any other documents?

d

 2.

If you or your spouse passed away today, are you uncertain about what would happen to your assets?

d

 3.

Does your will leave property to someone other than your spouse?

d

 4.

Do you have minor children or other people who are dependent on you? If you were not here to provide for them, would they be in financial trouble?

d

 5.

If a death occurred and court approval was required to release accounts for working capital, could it disrupt a farm, business, or overall family financial well-being?

d

 6.

If you became incapacitated, would your family have to go through court proceedings to carry on your affairs?

d

 7.

Do you have children by a previous marriage?

d

 8.

Could your business cause liability due to contract or an accident?

d

 9.

Do you own assets in your sole name?

d

 10.

Is anyone other than your present spouse listed as beneficiary on any life insurance policy or account?

d

 11.

Would you like to avoid probate of your estate?

d

 12.

May the total value of you and your spouse's assets exceed $1 million at any time between now and 2011? (Include life insurance, pensions, real estate, and any other assets and consider inflation and growth in calculations.)

d

 13.

Do you plan to gift any property prior to death?

d

 14.

If your current plan of distribution was followed, would assets have to be sold to pay expenses?

d

 15.

Are any members of your family unsure about their economic future in a family business?

d

 16.

Do you own any property which has substantially increased in value since you originally acquired it, or which has been depreciated for income tax purposes?

d

 17.

Would potential nursing home expenses create a hardship for your family?

If you answered any of the above questions YES, you may be in need of estate planning. YES answers indicate potential issues in the areas of tax, cost and delay of probate, or simply lack of a plan which carries out your wishes. Estate planning allows you to apply the law to achieve your goals, to preserve assets for your chosen beneficiaries, and to minimize bureaucracy and administrative expenses.