Estate Planning 101

As the saying goes, only two things are guaranteed in life – death and taxes. It’s a hard truth, and can be difficult subjects to approach. Although you better get those taxes done folks, because as the other saying goes – you don’t mess with the IRS! But let’s save taxes for another day. Today we’ve got you covered with the basics of an Estate Plan, a key component to any financial plan.

WealthBuilders is happy to help solidify your financial plan, including guidance with estate planning. Feel free to contact us for a free initial conversation!

What is an Estate Plan?

An Estate Plan is preparing for the transfer of one’s wealth and assets after death. Assets, life insurance, pensions, real estate, cars, personal belongings, and debts are all included in an Estate Plan. The objective of estate planning is to:

  • Fulfill your property transfer wishes
  • Minimize Taxes
  • Minimize Costs
  • Provide Needed Liquidity

Who needs an Estate Plan?

Anyone who wants a plan in place to help manage health care decisions, guardianship, distribute assets and to generally keep peace amongst loved ones during tough times.

Key Estate Planning Documents:

Wills – the simplest estate planning tools. They are flexible and appoint executors, guardians, tax savings trusts, and trusts for children. If you use a will only in your estate plan, your estate will go through probate before it can be distributed to heirs. Probate is a judicial process where a judge supervises the settling of an estate and can last four months to a year or longer. This means heirs will not receive anything until the court makes a decision. Brutal, but better than not having anything written!

Living Trusts – legal entities that hold property during a person’s life and provide for a distribution plan after death. ALL assets in the living trust avoid probate. Living trusts are more complex than a will, but they avoid probate in CA which is usually a determining factor in choosing a will or trust.

Durable Powers of Attorney for Finance – allow someone to make decisions and to manage your financial affairs for assets outside of a living trust if you become incompetent or incapacitated.

Advanced Health Care Directives – allow you to name a person to make health care decisions for you and state your wishes for end of life care.

Retirement Plans and Life Insurance Policies – distributed to named beneficiaries and pass outside of your will or trust. It’s important to have your beneficiaries updated (especially if you are divorced or in the process). Also, one of the major benefits of life insurance is 100% of the proceeds are passed to your beneficiaries tax free.

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1 Comment

  1. Thanks for explaining what an estate plan is. My sister and her husband want to find an estate planning attorney. This info should be helpful as they prepare!

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