Estate Planning

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Estate Planning consists of managing and distributing the estate in a manner consistent with owner’s objectives. Preparing for Incapacity should also be included in every estate plan. If you become ill or injured, decide who will take care of your finances, make decisions about your health care, and how it will be paid for.

The Estate includes the home, other real estate, certificates of deposit, checking and savings accounts, life insurance, retirement accounts, stocks, bonds, etc. In other words, if one were to die today what would be the entire value to be divided?

Estate Planning Objectives consists of the following three goals:

1. Maintain Control
2. Minimize Expense
3. Distribute Quickly

Three major obstacles that prevent the estate planning objectives from being accomplished are:

1. Probate
2. Guardianship
3. Estate and Gift Taxes

Choices in Estate Distribution
There are three main ways that an Estate can be distributed:

1. Probate – An expensive court proceeding that distributes a deceased person’s estate.

2. Operation of Law Assets are transferred automatically to someone without regard to the terms of the will or any contrary desires of the descendent. Joint tenancy, in which the assets are transferred to the surviving spouse, is a common example of Operation of Law.

3. Living Trust – A legal entity created to own, manage, and distribute assets in accordance with an individual’s desire. The administrations of the assets are not interrupted by probate nor a guardianship since the Trust does not die and does not become incompetent.

Obstacles in Estate Planning

Probate – An expensive court proceeding that distributes a deceased person’s estate.

Guardianship – Guardianship is a court proceeding similar to probate. The difference is that Guardianship occurs while the person is still alive however, physically incapacitated or mental incompetency could trigger guardianship as well.


Attention needs to be made to the Federal Estate Tax and the Gift Tax.

1. During Life: No more than $14,000* per donor, per calendar year can be gifted to an individual tax-free.

2. At Death: No more than $5,250,000* per estate can pass to beneficiaries tax-free.

1. An unlimited amount can be transferred from spouse to spouse during life and at death tax-free.

2. An unlimited amount can be transferred to a qualified charity.

1. If over $14,000* is transferred to someone other than a spouse, a gift tax return must be filed. The amount of the excess will reduce, dollar for dollar, the amount of the estate, which can be left tax-free at death.

2. If the estate is in excess of $5,250,000* at death and is not being transferred to the spouse or a charity, the amount over $5,250,000* will be subject to the estate tax.

*Amount subject to change, check with IRS.