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Ground Rules for Estate Planning

Updated on March 4, 2015

There is a misconception that estate planning is only for people with millions of dollars in the bank, but if you have dependents, retirement or bank account or own a home or car with equity, you need to have a plan in place. No one wants to think about what will happen once they are no longer here, but it’s necessary to make sure your final request are met and your dependents are prepared.Having a plan makes it easier, timelier and cost effective to your heirs. Below are the ground rules for estate planning.

Plan now

As I stated before, many people think that estate planning is limited to wealth people; however, most people have estate and don’t know it. Anything of value to your beneficiaries should be address in your estate plan. It may be beneficial to ask everyone what (non-monetary) items they want of yours and write of this into your estate plan to eliminate any arguments between your heirs.

Plan for disability

Death is not the only thing that can tremendously affect you ability to protect your family. Disability is just as much a threat. Who will take care of your kids, make medical decisions and handle your finances in the event that you cannot? Make sure you have Durable Power of Attorney and Financial Power of Attorney to cover you and your family.

Make sure you have the five documents below in your plan

1) Will

2) Trust

3) Durable Power of Attorney

4) Financial Power of Attorney

5) Letters to close family and friends

Each of these documents serves a specific purpose. You need all of them if you want to be properly covered. Please see an estate planning profession for details.

Review these documents regularly

You should review these documents at least once a year or every time a major life event happens. Not updated these documents regularly can leave you in a bind if you leave an ex-spouse or friend as the executor or beneficiary. If you add new assets to your portfolio, your family expands or gets smaller or you find new charities that you want to donate to you should update these documents.

Store all the documents in one safe place

In addition to the 5 must have documents, you should store all account #s, deeds and life insurance policies in a secure fire/waterproof drawer. There is nothing worse than having to search through tons of papers to find important documents right after a close family member passes away. Make everything simple and organized so everything goes as smoothly as possible.

Choose your executor wisely

Everyone assumes the family member closes to you should be the executor; however, no one considers the emotional state that this person will be in right after losing someone close to them. It will be very hard for them to handle the responsibility of executor properly when they are in this condition. It is best to choose someone who will not be as emotionally invested that can execute your plan exactly how you would like it.

Tell the executor where they can find the documents

Again, no one wants to look for documents right after a love one passes away as they are already under a lot of stress. Adding more unnecessary hassle to an already traumatic situation is that wrong way to handle this. Make sure executor is aware of where you have stored your documents.

Choose a guardian if you are leaving inheritance to a minor

If you would like to leave money to a minor a guardian will need to be chosen to manage the inheritance until the minors come of age. You should discuss your decision with whomever you decide to choose as the guardian as this person will be held accountable by the courts to manage the money as you wish. Make sure you are clear about when and what you want distributed so that the guardian is clear about how you want the money dispersed.

Consider taxes

Only 2 of 1000 estates owe taxes as the first $5.43 million of estates are exempt from estate tax in 2015. If you take my advice and live to retirement age you will definitely have well over this amount in your estate. That being said, you need to consider taxes when you are planning your estate.

Don’t try to do it yourself-see a professional

There is a lot of do it yourself estate planning software; however, there is no room for error when it comes to estate planning. You must make sure you get right the first time. Making simple mistakes can cost you thousands in probate court or taxes. Seeing a professional will ensure you do not make any of these mistakes. Make sure the person is fully versed on estate taxes and probate so that you can transfer your estate to your heirs as efficiently as possible.


1) Do you have an estate plan? If you have dependents and you do not, get one today.

2) Tell others about this that may not have their estate plan completed.

3) Join me on Friday


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    • profile image

      Correy Smith 

      3 years ago

      I like the tip that mentioned about choosing a guardian when leaving an inheritance to a minor. That sure is something interesting to be learning as part of doing estate planning. With me getting older I think doing an estate planning would be something to have in mind.


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