Estate Planning –What to do?

by Abimbola Salami

Estate planning is really important if you want to ensure that your assets or estates are distributed the way you want them to be and to avoid unnecessary problems among those you want to share your assets or estates between. According to Wikipedia estate planning is the process of anticipating and arranging during a person’s life for the management and disposal of the person’s estate during the person’s life and after death while minimizing gift, estate, generation-skipping transfer and income tax. Estate planning entails planning for shortcomings as well as reducing or eliminating uncertainties over the administration of a person’s estate as well as maximizing the value of the estate by reducing expenses which includes taxes.

The main goal of estate planning is to make sure the plans of the owner of the estate concerning his or her estate is accomplished and to make sure the estate is given to those who are supposed to be in charge of the estate and the plans of the owner of the estate can either be simple or complex depending on the wishes of the owner of the complex and guardians are mostly needed for minors i.e. children under the age of eighteen (18) and beneficiaries in incapacity.

Estate planning involves the will, trusts, designation of beneficiaries, appointment of powers, ownership of property, gift, power of attorney, financial power of attorney and the medical power of attorney.

Estate planning is the process of giving clear instructions about how the property or assets or estate would be managed during the life of the owner of the estate (in case the person is no longer fit to manage this asset by himself or herself due to some in capabilities) or after the demise of the owner of the estate. When this is done it protects the family if the owner of the estate, it protects the people he or she cares about as well as the charity organizations the owner of the estate is involves with.

Though estate planning involves writing a will but the process is more than writing a will as they can also be used for more than disposal of assets as it can also help you meet financial goals and objectives with approached that includes tax, business and medical planning. Estate planning takes into consideration the needs and goals of the clients as this is mostly done to ensure that there is fairness in the distribution of the assets, property or estate of the owner of the estate to the designated people he wants the estate to be distributed to and also to maximize the value of the estate through effective planning of tax and other financial tools.

The process of estate planning involves the anticipation of future needs and the needs of the loved ones of the estate owners as every individual need to plan their estate regardless of the worth of their assets, property or estate as their financial security and comfort should be a priority.

Estate planning involves planning how the assets, properties or estate of an individual would be managed and distributed after his or her death and it takes into consideration the management of the property of an individual as well as the financial obligations if the owner may become incapacitated and the most important step of estate planning is the writing of a will and when this is done other processes follow.

Assets that can make up an individual’s estate includes the following;

• Houses
• Cars
• Life assurance
• Pension
• Debt

The most important step for estate planning is writing a will and after this is done the next, the following still has to be done or put in place and they are;

• Reduction of taxes by setting up trust funds in the name of the beneficiaries.
• Getting a guardian for minor beneficiaries or old beneficiaries that lack proper education and knows little or nothing about the process when it comes to getting the estate in their names.
• Putting in place an executor of the estate who will oversee the terms of the will.
• Update of beneficiary plans such as life assurance and so on.
• Establishing charitable organizations and non-profit organizations to reduce the taxable estate.
• Selecting a power of attorney for both financial and medical purposes.

Estate planning involves who would manage your property for you in case you are incapable of doing so while alive or after your demise, the value of your estate as well as the list of all your beneficiaries, the person that would provide personal care and manage your health care decisions while you are alive and incapable of making decisions if there would be situations where your estates would be distributed before your demise or after your demise and how it should be carried out, how you want your funeral to be arranged and where you want to be buried, the list of the beneficiaries to take over the estate when you are gone and how it would be split among them and those who would act as a guardian for the minor after your death.

Every individual needs estate planning regardless of the value of the assets and if you have people to pass it across to you need an estate plan for the financial security and comfort of your loved ones and you need to understand that estate planning is not only related to the distribution of properties and the other things it is related to have been stated above. The estate of an individual includes all assets and every other asset in the name of the owner of the assets whether jointly owned or sole owned and they can include Money in the bank account, money owed to the owner of the assets, real estate investments and other assets, after deducting the debts owed by the owner the fair market value of the assets is calculated and added up to estimate or get the value of the estate. There are some major elements of estate planning are as follows;

• Will which consists of the list of the beneficiaries as well as the executor to handle the distribution of the property as well as the name of guardians to take care of minor who is not yet up to 18.
• Trust is used to manage assets during the lifetime of the owner of the estate and after the death of the owner of the estate.
• Probate which means the judge would his best of judgment for the distribution of the property and this would require legal fees which would reduce the overall value of the estate.
• Probate avoidance.
• Trust provision for beneficiaries.
• Mediation and so on.

Documents needed for estate planning

The following can help with estate planning documents;

• Certified Financial Planners.
• Life Insurance Professionals.
• Bank Trust Officers.
• Pension Consultants.
• Personnel Managers
• Certified Public Accountants.

Estate planning is important because if an estate owner dies without proper planning the estate would go into probate which means the judge would his best of judgment for the distribution of the property and this would require legal fees which would reduce the overall value of the estate so it would be great to do a proper estate planning so as not to let the estate go into probate and then the overall value of the estate.

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Steps to create a good estate plan

The following are the steps needed to create a good estate plan;

• Calculate your net worth.
• You have to know your worth financially and also the need for an estate plan for your family.
• You need to hire the service of a professional estate planner.
• Determine if you need a plan.
• You need to create a plan just in case anything comes up.
• You need to find a trustee.
• You need to assess your need for estate planning.
• You need to update your estate plan.

Steps that need to be undertaken in the process of writing an estate plan

Some steps need to be taken while undertaking an estate plan or while going thorough estate planning and they are;

• You have to prepare a will to know the beneficiaries who would inherit your assets, properties or estate.
• You have to consider the use of a trust.
• You have to make a medical power of attorney in case you are incapable of making health-wise decisions.
• You have to make a financial power of attorney who would make financial decisions for you in case you become incapable of doing so.
• You have to select a guardian for children or minor’s property.
• You have to fill a beneficiary form to make bank accounts and retirement plans payable on death to your beneficiary.
• You have to consider life insurance should in case you owe a lot of tax.
• You have to understand how estate taxes work and plan towards it by opening a trust account.
• You have to cover your funeral expenses and also where you want to be buried.
• You have to protect your business as you need to have a succession plan in case your business is a sole proprietorship.
• You need to secure your documents with the executor that would be in charge of the distribution go the assets, properties or estates and they may need access to some of the documents such as;
• Insurance policies.
• Real estate deeds.
• Certificates for securities such as stocks, bonds and so on.
• Information as regards bank accounts, mutual funds and so on.
• Information on retirement plans.
• Information as regards debts owed.
• Information on funeral prepayments plan and any final instructions that have to be made by the owner of the estate.

Deciding whom to take over your estate is a big and important decision and also vital when it comes to life planning, adequate planning has so many advantages as well as benefits compared to lack of planning.

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Estate planning questionnaire

An estate planning deals with questions in details and the information which should be included in a questionnaire should include the following;

• The information on the family.
• Financial information for non-retirement assets.
• Information as regards the retirement savings account of the estate owner.
• Life insurance information.
• Information as regards your business.
• Information as regards inheritance.
• Information as regards real estate.
• Information concerning the tangible personal property.

Benefits of getting an estate plan done

Estate planning is important or beneficial for the following reasons and they are;

• It helps the estate not to fall into probate which would later require the usage of the Judge’s Best of Judgment and also reduce the overall value of the estate
• An estate plan helps to reduce estate taxes.
• An estate plan helps to set up a solid decision for the distribution of the estate to those left behind to avoid unnecessary drama.
• An estate plan can protect minor beneficiaries as well as adults who are not properly educated to receive their share of the estate, property or assets.
• An estate plan helps to protect your assets, property or estate from creditors and this is also known as asset protection planning as it protects your estate form creditors that have not claimed your property, estate or assets.
• It enables you to choose whom you think would be in the best position to handle a particular property rather than giving it to a person who would misuse it.
• It allows you to reallocate estates while you are still alive.
• It allows you to appoint a conservator whom you would leave instructions in your estate plan for as to how to distribute your assets and to also see that your wishes and instructions are properly followed.
• It enables you to choose your estate representative i.e. a person who would handle your estate after your demise.
• It helps to protect your properties from creditors that are not expected.
• It enables you to set up an attorney to make decisions for you as in the absence of a power of an attorney it is a lengthy and expensive court process for the family before the court can administer a conservatorship on your behalf.
• It restricts the minor or children’s assess to their inheritance because you have been able to appoint a guardian for them as they might misuse the estates if they are not properly monitored.
• proper estate planning would make sure that your estate, properties or assets go to your children or relatives in case your spouse is re-married and it would not be hijacked by the new spouse family.
• It would also enable you to have peace of mind because it gives you the confidence that your assets would be able to sustain your loved ones after your demise.

In conclusion, estate planning is important for every family most especially where you have estates, assets or properties to leave behind for your loved ones and a comprehensive plan has to be put in place for this to be able to work out well. And as an estate owner who has undergone estate planning, you would have the peace of mind that your family do not have to face the burden and undergo the stress of a court and also pay major tax expenses just to inherit your estate and after all these expenses have been incurred it has reduced the overall value of the estates, assets or properties.

If you require more information on estate planning services, please call 08023200801 or 08075765799 or email enquiry@mocaccountants.com. You can also fill the contact form below