Wednesday, July 21, 2004

Estate Planning 101

Here are some basic estate planning concepts and terminology that people should know. I find many people who get these concepts confused. These are of course only for Delaware estate planning and should be untilized and discussed with your Delaware Estate Planning Attorney.

Myths: There are many myths associated with estate law. One of the most common myths is that if a person dies without a will (intestate) then all of his property goes to the state. The law provides that if a person dies intestate, his property goes to his next of kin in certain shares. A person's property would only go to the state if we could find no blood relative whatsoever, after an exhaustive search.

Simple Will: A will makes directions as to how a person's property is to be handled and disbursed upon his or her death. It can be as simple or complex as the individual wishes.

An attorney can help you come up with the appropriate plan for you and your family. In making your goals, you should consider, among other things, the following:

* Your control of your assets during your life.

* A business exit strategy if you have an ownership interest in a business.

* Providing instructions for your care and the management of your assets for you and your family if you become incompetent.

* Protecting the assets that you leave to your spouse and children from creditors and unscrupulous persons.

* A plan of distribution that will leave your assets to whom you want, when you want, and with whatever controls you want.

* Avoiding probate

* Saving the greatest amount of taxes and post death administrative costs possible--not only in your own estate, but also in the estates of your spouse and your descendants.

Some things to think about before your meeting with a Delaware lawyer for a will are:

* Who would you like to be in charge of processing your estate? (an executor)

* Who should take that person's place, if necessary? (an alternate executor)?

* By whom do you want your property to be inherited? (a beneficiary)

* What different arrangements would you like made if your beneficiary dies before or at the same time that you die? (an alternative beneficiary)

* If you have minor children, whom would you choose to be their guardian?

Instead of taking a transaction oriented perspective, you should view estate planning as an ongoing process that evolves as your needs, your goals, and your family changes, as the laws change, and as new estate planning tools and techniques are developed. It is a process of continually evolving strategies. Proper planning requires professional thoroughness, which respects you and your family's overall goals.

Advanced estate planning uses estate planning tools that are beyond the basic will, durable power of attorney, and living will. The following are examples of some of these tools.

A complex will is a will that includes a trust within it or otherwise uses very complicated terms. (Complicated from an attorney's perspective.)

A testamentary trust is a trust that is created by a will and takes effect when the maker dies. The text of a testamentary trust is embedded within the complex will.

A living will is not a will at all. It is an "Advance Healthcare Directive". It is a legal document explaining one's wishes about medical treatment if one becomes terminally ill or in a coma.

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