Estate Planning

Why everyone should have an Estate Plan?

There is a saying “It requires a great deal of boldness and a great deal of caution to make a great fortune; and when you have got it, it requires 10 times as much planning and skill to keep it!”

You’ve worked hard your entire life to accumulate wealth – home, cash, investments and other personal properties - so as to provide financial security to your loved ones. Doesn’t it occur to you to safeguard these assets when you are no longer around? While it’s unpleasant to consider the possibility of your own demise, it is far more comforting to know that your loved ones have been provided and taken care of. No one can force you to make an estate plan. You may do nothing, if you wish. However, not making an estate plan is, in fact, making one. Why? Without a plan, the law will decide on what to do with your estate – Who gets what and in what proportions. This may or may not be the way you would prefer your estate to be disposed of.

No one knows when our time is up..! You might be having a blissful time in Heaven but what happens to your loved ones? Have you provided enough money to take good care of them? What about your monetary contribution to your favorite charity or religious organization? Will you say, “I wish I had done something” or rather “I’m glad that I did”?

What is your Estate?

In the context of Will and probate, the term “Estate” refers to all real and personal property as well as debts and obligations which a deceased person leaves behind at his or her death.

The purpose of an Estate Plan is to protect, preserve and manage your assets in a way that allows you to maintain financial security and retain economic freedom for self, family and other beneficiaries during your lifetime and thereafter.

Effective Estate Planning allows you to achieve a number of crucial objectives -

  • Ensure that you have enough money and assets to pass on to your loved ones according to your wishes.
  • Provide for guardian to care for your minor children or dependants if you are unable to.
  • Eliminate potential conflicts among heirs over the distribution of your assets.
  • Provide for sufficient liquidity to cover taxes, debts and other expenses at death without the need to force-sell assets.
  • Provide for Planned Giving to your favorite charity or religious organization.
  • Organize all important documents affecting your Estate Plan in a location known to your family members.
  • Avoid the need for two sureties to “guarantee” the proper administration of your estate in the case of dying without a Will.
  • Minimize the problems and expenses of probate i.e. legal process used to value your estate and transfer assets to your heirs.
  • Manage money for an heir who is too young or financially incompetent.

What is Estate Planning?

So how do you get started with Estate Planning?

A brief description of the steps you need to take in order to establish and maintain an effective Estate Plan -

Step 1: Fact finding

In order to help you design a proper Estate Plan, we will need to gather information regarding your financial situation and to identify your Estate Planning objectives. This step is crucial as it is the foundation of your Estate Plan. The end result will be meaningful only when information is complete.

Following are some of the questions needed to be addressed -

  • Will your family have other sources of income when you pass on?
  • What is the value of your home, real property, personal assets and investments?
  • How is the ownership of your assets or property held?
  • Do you own any insurance policies? If so, what are their cash value and coverage?
  • What are the expenses, debts or taxes that your estate needs to pay?
  • To whom do you want your assets distributed and in what proportions?
  • Who you wish to appoint as executor to manage your affairs or distribute your assets upon your death?
  • Who you wish to appoint as guardian to take care of your minor children?
  • Would you want to provide for the maintenance of your spouse, children and other dependants?
  • Do you want to provide for charitable bequests to your favorite charity or religious organization?
  • Have you put in place a Will, Trust or other succession planning agreements to ensure smooth distribution of your personal and business assets?

Step 2: Analysis & Development of Estate Plan

This step focuses on problems or shortfalls that stand in the way of your Estate Planning objectives and recommend ways to overcome them.

We will need to consider if you have sufficient liquidity to pay any debts, estate administration costs as well as cash to be given to heirs and other beneficiaries. The analysis will consider the suitability of your assets and the ability for these assets to provide for living expenses of the surviving family members. Are there any assets that will pass outside the probate by reason of law or under terms of contract?

We will also review any business arrangements you may have, and determine if a buy-sell agreement is necessary to provide fair compensation to the surviving owners, spouse, or beneficiaries. It is here that we look at whether a Will or Trust will help you to achieve your estate plan objectives.

Step 3: Implementation of Estate Plan

After a comprehensive Estate Plan is developed, you will decide whether or not to implement the Plan. This step may include making present gifts or purchasing additional life insurance, annuities or other financial products. Services of other professionals, namely lawyer, accountant or Trust officer may be required to prepare new Trust, deed, contract, Will and Estate Planning Organizer.

Step 4: Periodic review & update

It is vital that you review and update your Estate Plan every year or whenever there is a major change in your situation or tax laws. For example, change in property value or ownership; change in your needs and objectives; beneficiaries got married, divorced, passed away etc.

Will Writing

Trust Planning

Planned Giving

Illustrations