Although your estate plan may initially include nothing more than a Last Will and Testament, over time you will incorporate a wide range of additional estate planning tools and strategies into you plan as you add additional goals and objectives to your plan. The personal nature of estate planning dictates that you will need to consult with your estate planning attorney to determine which techniques should be added to your plan; however, it is always a good idea to gain a better understanding of the techniques that are most commonly used. If you have specific questions or concerns regarding your estate plan, please feel free to contact the German Law to schedule a consultation.
1. Choosing your Executor carefully.
People often make the mistake of simply appointing a spouse, friend, or family member as the Executor in their Last Will and Testament without giving the matter sufficient thought. Your Executor oversees the probate of your estate. The right person will help probate run smoothly and efficiently. Someone who lacks the experience and knowledge to handle the duties and responsibilities of the Executor can cost your estate both time and money so choose wisely.
2. Appointing a Guardian in your Last Will and Testament.
You may not know this, but your Will is the only opportunity you have to tell a judge who you want to be the Guardian for your minor children if one is ever needed.
3. Using a revocable living trust for incapacity planning.
A revocable living trust works as an incapacity planning tool by allowing you to appoint yourself as the Trustee of the trust and someone you trust as the successor Trustee. Major assets are then transferred into the trust and you manage them as long as you are able to do so as the Trustee. If you become incapacitated, your successor Trustee takes over automatically, ensuring that the person you chose now controls your assets.
4. Always having a power of attorney on hand as a parent of minor children.
Whenever a caregiver has your children, he or she should always have a limited power of attorney in effect in case something happens that requires the caregiver to give consent to medical treatment immediately. With a power of attorney, you decide what authority you grant to the Agent and for how long that authority will last.
5. Staggering an inheritance using a trust.
If your adult children are still relatively young, or you are concerned about a spendthrift beneficiary, use a trust to stagger the inheritance you leave behind. You create the terms so you can decide how much is disbursed and when those disbursements occur. If your beneficiaries are not accustomed to having a large sum of money, it is never a good idea to make a large lump sum gift. Staggering the gift you leave behind protects your gift as well as your beneficiary.
6. Making use of life insurance when you are young.
Most people do not have a sizeable estate to leave behind until they are well into their adult years. If you want to provide for a spouse and/or children in the meantime, make use of life insurance. Term insurance provides a high benefit for a relatively small premium. If you want to include an investment option as well, you may wish to consider whole life insurance.
7. Using a Letter of Instruction to explain decisions.
If you made controversial, or confusing, decisions in your estate plan you may wish to use a Letter of Instruction to explain those decisions. Although not legally binding, it can be made an official part of your estate plan.
8. Titling property jointly to avoid probate.
In most states, titling property jointly with rights of survivorship means that your interest in the property will pass automatically when you die to your co-owner without the need to go through probate. You may also make use of “payable on death (POD)” or “transfer on death (TOD)” financial accounts that allow you to name a designated beneficiary for the account. Upon your death, the assets held in the account automatically transfer to the beneficiary. The difference between a POD/TOD account and joint title is that with a POD/TOD account the beneficiary has no ownership interest in the account while you are alive.
9. Executing an advance directive to ensure your wishes are honored.
If you have strong beliefs about end of life treatment and/or about who you wish to make healthcare related decisions for you in the event you cannot make them, execute an advance directive to ensure that those wishes and opinions are honored. Most states offer at least two types of advance directive and each requires very specific language.
10. Making lifetime gifts to minimize taxes.
If you have a moderate to large estate, or hope to have one in the future, make use of lifetime gifting options that can help minimize the tax impact on your estate when you die. For example, using the annual exclusion you can gift up to $14,000 in assets to as many beneficiaries as you wish each year tax-free. Gifts made using the annual exclusion do not count toward your lifetime exemption limit for federal gift and estate tax purposes.
If you have additional question or concerns regarding estate planning, contact the experienced North Dakota estate planning attorneys at German Law by calling 701-738-0060 to schedule an appointment.