Fall 2005
Vol. 7, No.
4
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Fall 2005 |
Estate
planning: Preparing for your family’s well-being
Estate
planning is a topic often avoided by individuals because it deals with attitudes
and feelings about death, property ownership, business arrangements, marriage
and family relationships that they or other family members may not be ready to
think about.
People who have experienced the death of a family member
agree it is worth investing some time and money to avoid the confusion, delay,
expense and quarreling that sometimes occurs in families when an individual dies
without an estate plan.
Most people, when they stop and think about it, would like to
have a say about what happens to property they have worked so hard to
accumulate. An estate plan is a tool that provides some aspect of control. If
you don’t bother to make a plan, state and federal laws will determine what
happens to your real and personal property upon your death.
What would happen if your estate had to be settled tomorrow?
Would your spouse be able to maintain a satisfactory level of living? Would an
adequate education for your children be assured? Who would receive your property
if, after your death, your spouse remarried—your children, the second spouse, a
business partner? You can determine the answers to these questions and others by
enacting your own estate plan.
Your plan needs to be tailored to your resources and to your
family’s needs. Unfortunately, many families cannot come to grips with these
challenges because they are unaware of the cost of not planning. They are afraid
of what they think is a complex subject, or are wary of outsiders who seek to
help them develop a plan. Whether you realize it or not, you are unconsciously
developing part of your estate plan every time you acquire property, decide how
property or accounts will be titled, name beneficiaries, or purchase insurance.
The estate planning process involves six basic steps: 1)
Initiate the discussion; 2) Take stock of the present; 3) Develop objectives; 4)
Choose professional advisers and discuss objectives; 5) Consider alternatives
and implement the plan; and 6) Review and modify.
As you begin forming an estate plan, establish your objectives in creating the
plan. What do you want to accomplish? Objectives vary from family to family
because of differences in assets and liabilities, aptitudes and ages of
survivors, special needs children, number of children, and values that are
important to the person making the estate plan.
Some common estate planning objectives include: provide
security for surviving spouse; provide security for both spouses after
retirement; provide security for an incapacitated or special needs family
member; assure continuity of farm or other business; provide educational
opportunities for children or grandchildren; name guardians, conservators, or
trustees for minor children; provide means for paying expenses of funeral,
estate settlement, taxes and other debts; transfer specific property to specific
people; provide for charitable bequests to favorite charities or organizations;
and arrange for healthcare power of attorney and healthcare directive in case of
incapacity.
Even if you have made estate plan arrangements, you need to review these plans
periodically. For example, changes in federal law (Health Insurance Portability
and Accountability Act of 1996, or HIPAA) now require a privacy waiver in the
healthcare power of attorney to allow the attorney in fact access to medical
records of the incapacitated person that may be needed to make medical
decisions.
If your power of attorney for healthcare was created more
than two years ago, you may need a privacy waiver addendum to your healthcare
power of attorney. (See www.mobar.org for the form.) Many professional advisers
suggest a review of your estate plan every three to five years or whenever there
is a major change in your situation or in related state or federal laws.
(Watch for more estate planning information by Suzanne Zemelman Gellman soon at
http://extension.missouri.edu/stcharles).
Sources:
Estate Planning in Montana: Getting Started. (August 1995, reviewed June 2005).
Marsha A. Goetting, PhD, CFP®, CFCS, Extension Family Economics
Specialist and Professor, Montana State University-Bozeman.
http://www.montana.edu/wwwpb/pubs/mt9508.html
Estate Planning Considerations for Ohio Families. (November 2003). Jim Polson,
CPA (inactive), District Specialist, Farm Management, Ohio State University
Extension, and others.
http://ohioline.osu.edu/estate/
Suzanne Zemelman Gellman, MS, JD
Financial Education Specialist
ZemelmanS@missouri.edu
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Editor: Roxanne T. Miller MillerRT@missouri.edu |
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