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Estate planning is the process of planning for the accumulation, conservation, and distribution of estate assets; this process should help you accomplish your personal and family goals. Every estate is planned, either through an individual plans for his or her estate, or by default through rules established by the state and local governments. The purpose of estate planning is to ensure that you—and not others, such as the government or lawyers—choose who will inherit your wealth. Through proper estate planning, you can take care of those you love even after you die.

There are five main goals of estate planning: (1) Live life fully: Living your life fully means providing not only for yourself (and your spouse and family, if you are married), but providing for others according to your values. (2) Pass on your property to others according to your desires: In order to pass on your property according to your desires, you must provide for both administration (someone to do the actual work and paperwork) and disposition (the decision of who gets what) of the assets. (3) Provide for guardianship of children who are still minors: For most parents, the issue of guardianship is one of the most crucial decisions of the estate-planning process. Who will raise your children should you die? (4) Avoid probate if desired, or use probate strategically: Probate is the legal process by which an asset’s title is transferred. (5) Decrease or eliminate taxes: Through proper estate planning, you can decrease or eliminate the taxes that must be paid on your estate.

There are four steps in the estate planning process: (1) determine how much your estate is worth, (2) choose your heirs and decide on the assets they will receive, (3) determine the cash needs of the estate and calculate your estate taxes, and (4) select and implement estate-planning techniques to maximize goals and minimize taxes. Estate planning is the process of using your assets wisely in order to achieve your personal goals even after you die. If you prepare well before you die, there is a greater chance that you will be able to achieve your goals even after you die. There are four key taxes on estates: estate taxes, gift taxes, unlimited marital deductions, and generation-skipping taxes.

When you create a trust, you enter into a legal contract that allows you to do many things. Trusts give you professional management of your assets and trusts provide for confidentiality. They may allow you to reduce your personal assets by transferring ownership to the trust, thus helping you avoid estate taxes. They may also allow you to avoid probate. Other benefits of trusts include that they may allow you to more clearly specify your desires regarding your assets, since trusts are much more difficult to challenge than wills. They may allow you to specify specific assets that should to go to specific children (particularly children from a previous marriage). Finally, trusts can be used to provide for children with special needs or to hold money until a child reaches maturity.

A will is a legal document that indicates the way the state should distribute your assets upon your death. The legal term for someone who dies without a will is “intestate.” When someone dies without a will, the state determines, based on specific state laws, which assets will go to which individuals, regardless of the intentions of the deceased. Having a will ensures that that state law will not dictate the distribution of your assets, the custody of your children, or the care for those under your responsibility with special needs. A will also allows you to avoid having a court-appointed administrator and the associated costs.


Now that you have completed this section, ask yourself the following questions:

  1. Can you set estate-planning goals?
  2. Do you understand the estate-planning process?
  3. Do you know how trusts can be used to your advantage in the estate-planning process?
  4. Do you realize the importance of wills and probate planning?


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