What do I need to know about estate planning?
Estate planning requires knowing what your assets are, their value, who should manage them in the case of your incapacity or death, and who they should pass to and when. If you have minor children, consideration should also be given as to who should be responsible for their care upon your death.
In addition to disposition of your assets, estate planning also involves making arrangements to delegate health care decisions if you can no longer make them yourself. If your estate is sizeable then strategies reducing your estate tax liabilities should also be considered.
Your estate includes all property or property interests in your name. This commonly includes bank and brokerage accounts, real estate, furnishings, cars, and jewelry. Some assets, such as brokerage accounts, IRAs and qualified retirement plans have beneficiary designations and may not be included in your estate. The value of these assets, minus any liabilities (including debts and mortgages) is the net value of your estate for estate tax purposes.
Probate is the court-supervised transfer of your assets to those individuals and organizations stated in your will. It also provides for the determination of claims against your assets after your death. If you die with a will, the court will appoint your pre-selected executor to administer your estate. If you die intestate, the court will appoint an administrator for you. The executor or administrator will transfer assets to your beneficiaries subject to debts and expenses.
Probate has advantages and disadvantages. Specific rules and timelines must be followed by the court, including an accounting of your estate. However, attorneys fees are based upon a statutory schedule payable by the estate, and the value of which becomes public.
Alternatives to probate should be discussed with your estate planning professional.