 Estate planning is the way to arrange property transfers to your legatees and other beneficiaries, that will help to gain your objectives and minimize the associated taxes and costs.
These are the most common objectives of the estate planning:
• Deciding who will be your legatees or beneficiaries, and how much each will receive
• Deciding who will be the executor and control your property
• Supplying respective financial security to all your dependents after your death
• Providing liquid assets for your estate to address its obligations
• Planning a transfer of a closely-held business
• Planning the transfer the maximum possible percentage of your assets
• Providing and administering the desired distribution of assets
• Minimizing taxes and associated costs
The process of establishing and gaining these objectives will consist of these stages:
1. Accumulating data concerning assets, family needs and desires
2. Recognizing individual needs, concerns and problems
3. Recognizing and calculating estate transfer costs
4. Determining your plan
5. Accomplishment of the plan
Your estate can be divided into several different parts:
Gross Estate – It consists of the fair market value of all property (real or personal) in which you have an ownership interest as of the date of death. This includes property that fully belongs to you; property that partially belongs to you; life insurance policy proceeds in which you had ownership; and if you are living in a community property state, one half of the community property.
Probate Estate – It consists of any property transferred at your death by your will or by the "intestate" laws of your state.
Non-Probate Estate – It consists of assets to be transferred at your death by beneficiary or joint ownership arrangements.
Taxable Estate – It is a calculation beginning with your gross estate and including the property in your probate estate; life insurance on your own life; one half of property owned mutually by a husband and wife and all of the value of property owned mutually with other people and deductions that can be subtracted from the gross estate, such as debts, funeral and administrative costs, losses and taxes, endowments to spouses and charities.
Net Estate – It is the amount left after paying off all the costs, claims, debts, taxes and other expenses. This is the amount being actually available for distribution to the legatees.
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