The Need for an Estate Plan

If you have possessions, you have an estate. The disposition of your possessions when you die is called estate settlement. Deciding in advance how this will be done is known as estate planning. It's that simple. Yet for many reasons, the actual planning is far from simple. We fear death, so we put off making plans. We find dozens of reasons for procrastinating, but none of them diminishes the critical importance of estate planning.

Who Needs an Estate Plan?
Many people think estate planning is only for the very rich. However, others say the more modest one's estate, the greater the need to arrange for its careful handling and disposition. There's also a tendency to overlook the extent of what one owns. In addition to securities and other investments, a person's worldly possessions include other assets, such as equity in a home, personal and group life insurance , deferred employee benefits, perhaps the value of a business.

Setting Estate Planning Goals
In setting goals, we start out with a basic assumption: You want to keep taxes and administration costs to a minimum. Beyond that, what's important to you? Let's not overlook your number one concern--you. Good estate planning involves a generous measure of financial management during one's lifetime. Perhaps you are married; if so, you and your spouse may want to decide how your assets will be administered for the maximum advantage of the survivor. If one of you dies, the other may face new and heavy burdens. If you have children (or grandchildren), what are their circumstances and needs? What will happen to any business enterprise in which you have an interest? Are there charitable organizations you favor that could use help from your estate?

The Tools of Estate Planning
A good estate plan makes use of tools that will ensure the job is done right. The tools of estate planning are written documents that precisely indicate your intentions, then provide the powers to accomplish them.

1. A will--This remains the basic element in every estate plan. A will ensures that nothing is overlooked. Every will sees that any assets not otherwise disposed of pass to those intended to receive them.
2. Trusts--These provide a unique arrangement for the management of assets for the benefit of either the person creating the trust or others. Trust provisions may be contained in a will or in a separate agreement.
3. Life insurance policies--These provide for the payment of their face amount on the death of the insured to the beneficiary named. This beneficiary may be an individual, the insured's estate, a trustee under a will or trust agreement, or a charitable institution such as the United Cancer Research Society.
4. Buy-sell agreement--If the owner of a closely held business interest wishes to arrange for its sale to co-owners or others upon death, the person can enter into an agreement with them that sets forth the terms of sale and the method of payment.
5. Deferred employee benefits--A pension, profit-sharing, group insurance, or stock option plan will have written provisions for the disposition of the benefits upon the disability, retirement, or death of the employee.

   How to Begin
   The first step of every estate plan is compiling an inventory of personal data. This includes the current value of all your assets, how they are owned, your liabilities, and names and addresses of intended estate beneficiaries. This is also the time to indicate those charitable institutions that are to receive a bequest in your will. Without a plan, your loved ones are forced to pick up the pieces of a confused financial puzzle when illness strikes or an accident occurs. We urge you to take the first step now to activate your plans for the future of your estate.

   
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