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ESTATE PLANNING BASICS

Estate Transfer & Heir Planning

One of the big benefits of pre-death estate planning is the ability to name your heirs, specify the share of your estate they will receive, and dictate the manner and timing at which the heirs get their share. Generally speaking this part of estate planning may be done with either a will or a trust. But as mentioned above it takes a trust to avoid probate, protect the estate from legal problems and con artists, and to minimize death taxes.

Some of the heir planning issues to consider are as follows:

  1. Whether the heirs are to receive equal or unequal shares. There are several factors that can cause the estate owners to vary the share sizes they leave to each heir. (W, T, B*)
  2. At what age should the heirs get their share, or should their share be paid in two or three installments at different age milestones, paid out for life, etc. (T*)
  3. Whether or not to leave specific property to certain heirs, such as the family home to one child and certain other property to another child. (W, T, B, JT*)
  4. Whether or not to clearly omit or disinherit any heirs. (W, T*)
  5. How to deal with situations where a married couple each have different children from former marriages, but they want to create one comprehensive estate plan. This may require dealing with issues such as one spouse having more children, or one spouse having a larger estate. (T*)
  6. Dealing with cases where estate owners get married after they have built their own separate estate, which they may want their new spouse to benefit from, but then they want the remainder of the estate to go to their heirs and not to their spouse's heirs. (T*)
  7. What to do in a case where a child has reckless spending habits or substance abuse problems, and the parents fear that child will quickly misuse the inheritance. (T*)
  8. How to deal with mentally or physically disabled heirs. (T*)
  9. Assuring that the heirs will use their share to pay for a college education, and do so in a prudent manner. (T*)
  10. What happens if an heir predeceases the estate owner. (W, T, B, JT*)
  11. How to deal with specific gifts to special heirs, such as grandchildren, nieces and nephews, charities, etc. (W, T, B, JT*)

* W=Will, T=Trust, B=Beneficiary Arrangements, JT=Joint Tenancy Arrangements. These codes indicate what estate transfer methods can possibly be used to accomplish this goal. Trusts are the only method which cover all situations listed, and which will work as desired in all cases. NOTE: Beneficiary and joint tenancy arrangements will not necessarily work, or work well enough, in your individual case. Be sure to see the above specific topics on these issues.

INTRODUCTION

WHY DO ESTATE PLANNING?

PROBLEMS

TAXES

ESTATE TRANSFER & HEIR PLANNING

TRUSTS vs. WILLS, WHICH IS BEST FOR YOU?