Introduction to Estate Planning: A Course for Consumers Chapter 4

Chapter 4: The Components of Every Estate Plan

In Chapter 3 of Introduction to Estate Planning: A Course for Consumers, we discussed identifying estate planning goals and objectives. The client's (your) goals are analyzed by the estate planning attorney and client to set the direction of the client's estate plan.

Here in Chapter 4 we review the basic components of every estate plan. These components are considered in every client's plan in some form. As you read the components, ask whether these have been considered in your existing plan and how you know that. Making sure these are all covered in critical in having a current estate plan.

To preview future chapters, in Chapter 5, we will cover the specific steps to follow to identify and locate a qualified estate planning specialist to work with, so stay tuned.Also, in future chapters we will cover estate planning details and specific strategies.

1. The Testamentary Component:

The testamentary component addresses where property or assets go and how they are handled upon the death of the client. There are numerous ways to address this component using wills and/or trusts which we will cover in future chapters.

2. The Disability Component:

This component addresses who will make decisions (both financial and health care) for the client after the client's incapacity. In this component there is also focus on the client's specific wishes about care at the end of life.

3. The Titling Component:

The titling component focuses on how the client's property and assets are titled and how beneficiary designations are structured. This is critical because the estate plan can be defeated if property is improperly titled or if beneficiary designations have money going contrary to the estate plan.

4. The Probate Component:

This component analyzes the probate impact to the client, family and property of various estate planning and titling options. For example, if the client owns a vacation home in a different state, failing to address that could result in a two state probate process.

5. The Tax Component:

The tax component focuses on the income, gift and estate tax impact of the estate plan and titling options the client is considering. For example, as we will see in future chapters, since the estate tax exemption is $5,340,000 for 2014, clients have greater freedom to plan their estates without worrying about the federal estate tax. However, since Congress frequently changes these exemptions, this component requires a continuing look by every client.

Since every client situation is unique, how these five components are addressed will vary between clients. Still, every client will review all five of these components in the design and implementation of their estate plan.

In Chapter 5 of Introduction to Estate Planning: A Course for Consumers, we will focus on how to choose a qualified estate planning specialist. Picking the right estate planning attorney is another fundamental building block of each client's estate plan.

As always, thank you for your questions and comments which are welcome.

IRS Releases 2014 Estate Tax, Gift Tax, GST Tax Exemptions as Adjusted for Inflation

Our estate, gift and generation skipping tax exemptions are changing again! This time they are going up per the new tax law and are scheduled to increase each year.

For 2014 the exemptions will be $5,340,000. Here is an excellent article that discusses these increases and merits your reading.

IRS Releases 2014 Estate, Gift and GST Tax Exemptions Adjusted for Inflation

Let me know your thoughts and if you have any questions about how this will impact your estate planning. I look forward to your questions and comments.

Bernie Greenberg

Pressure Testing Your Estate Plan: How To Make Sure Your Plan Works

Pressure Testing Your Estate Plan: The Three Steps that Work

Your estate plan is something that you design now before it's needed, it will operate sometime in the future. So if the plan won't be used until the future, how can you make sure the plan will work? If you do what I call "pressure testing" your estate plan, you will go along way to making sure the plan will work and minimize disputes.

Here are the steps for pressure testing your estate plan:

1. Work with a specialist and estate planning expert.

It may seem like a simple thing, but nothing will torpedo your estate plan than having a DYI, fill-in-the-blank form or working with someone who does not focus exclusively on estate planning. As I have written before, if you have a problem with your kidneys, you don't go to the foot doctor.

2. Imagine future scenarios with your estate planning attorney.

In the design of all estate plans, we have our clients brain storm with us and imagine future scenarios. As we do this, we test each part of the estate plan and how it work under that imagined scenario. Does this work if that happens, how does client feel about it, how can they imagine how that provision will impact family or those involved? This is how to pressure test the design of each portion of the estate plan.



3. Review your plan periodically and re-test.

As time goes by, provisions that made sense years earlier in your plan may not make sense in the future. Things change, laws change, people change. These changes are always occurring and if ignored can also defeat your estate plan. The way to deal with changes is to review your plan periodically and re-test the provisions given all the changes. This is what we do with every client at every estate plan review meeting.

So there they are, the three steps to pressure your estate plan. Do you follow these steps? If not, it's time for an estate plan review if you have an estate plan. If you don't have a plan, these steps will guide you to creating a more effective estate plan.

Please let me know if you have questions about pressure testing your plan. Feel free to join in our conversation and leave a comment here or send me your thoughts via email, I look forward to hearing from you.

Bernie Greenberg

If you are seeking an estate planning attorney in Castle Rock, Douglas County, or for the South Denver Metro Area, contact Kokish & Goldmanis, P.C.