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Estate Planning Checklist

In this article
  • Your goal: minimize taxes and preserve assets
  • Start by evaluating your needs
  • Review our estate planning checklist
  • Develop your plan with a qualified legal advisor

Because you've worked hard to create a secure and comfortable lifestyle for your family and loved ones, you'll want to ensure that you have a sound financial plan that includes trust and estate planning. With some forethought, you may be able to minimize gift and estate taxes and preserve more of your assets for those you care about.

Step One: Needs Evaluation

Two key components of your initial needs evaluation are an estate analysis and a settlement cost analysis. The estate analysis includes an in-depth review of your present estate settlement arrangements. This estate analysis will also disclose potential problems in your present plan and provide facts upon which to base decisions concerning alterations in your estate plan.

For example, you may believe that your current arrangements are all taken care of in a will that leaves everything to your spouse. However, if you've named anyone else as a beneficiary on other documents -- life insurance policies, retirement or pension plans, joint property deeds -- those instructions will likely overrule anything set forth in a will. You want to ensure that all your instructions work harmoniously to follow your exact wishes. In addition, you may want to consider leaving a portion of your assets to someone other than your spouse. The reason? While your spouse will receive your estate free of estate taxes if he/she is a U.S. citizen, anything he or she receives above the applicable exclusion amount ($5.12 million in 2013) will be subject to estate taxes upon his or her death.

An estate settlement cost analysis summarizes the potential costs of various estate distribution arrangements. In estimating these costs, the analysis tests the effectiveness of any proposed estate plan arrangement by varying the estate arrangement, the inflation, and date of distribution assumptions, as well as specific personal and charitable bequests.

The issues around estate planning are complex. Though a simple will may adequately serve the estate-planning needs of some people, you should meet with a qualified legal advisor to be sure you are developing a plan that works best for you. One good way to prepare for such a meeting would be to consider the questions in the following checklist.

Estate Planning Checklist

Part 1 - Communicating Your Wishes

Yes No Do you have a will?
Yes No Are you comfortable with the executor(s) and trustee(s) you have selected?
Yes No Have you executed a living will or health care proxy in the event of catastrophic illness or disability?
Yes No Have you considered a living trust to avoid probate?
Yes No If you have a living trust, have you titled your assets in the name of the trust?


Part 2 - Protecting Your Family

Yes No Does your will name a guardian for your children if both you and your spouse are deceased?
Yes No If you want to limit your spouse's flexibility regarding the inheritance, have you considered creating a Q-TIP trust in your will?
Yes No Are you sure you have the right amount and type of life insurance for survivor income, loan repayment, capital needs, and estate-settlement expenses?
Yes No Have you considered an irrevocable life insurance trust to exclude the insurance proceeds from being taxed as part of your estate?
Yes No Have you considered creating trusts for family gift giving?


Part 3 - Helping To Reduce Your Estate And Income Taxes

Yes No If you are married, are you taking full advantage of the marital deduction?
Yes No Do you and your spouse each individually own enough assets for each of you to qualify for the applicable exclusion amount? (The estate tax exclusion amount is $5.12 million in 2013.)
Yes No Are both your estate plan and your spouse's plan designed to take advantage of each of your applicable exclusion amounts?
Yes No Are you making gifts to family members that take advantage of the annual gift tax exclusion, currently $14,000?
Yes No Have you gifted assets with a strong probability of future appreciation in order to maximize future estate tax savings?
Yes No Have you considered charitable trusts that could provide you with both estate and income tax benefits?


Part 4 - Protecting Your Business

Yes No If you own a business, do you have a management succession plan?
Yes No Do you have a buy/sell agreement for your family business interests?
Yes No Have you considered a gift program that involves your family-owned business, especially in light of "estate freeze" rules? (These rules were enacted by Congress to prevent people from artificially freezing their estate values for tax purposes.)


Points To Remember

  1. A plan helps you minimize estate and income taxes, administrative expenses, executor's commissions and attorney's fees.
  2. Your plan can help you determine what steps you need to take to help provide an adequate income to your survivors.
  3. An estate plan helps you preserve the assets you have worked hard to accumulate.

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© 2013 S&P Capital IQ Financial Communications. All rights reserved.

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