ESTATE PLANNING 101

How and why to take this important step

We all know we need to do it, but the process can be daunting enough that we postpone it for longer than we should. Estate planning (known as the process of formulating a plan for the management of our assets/liabilities in the event of incapacitation or death) is essential to the proper care of our lives, but it’s also an essential step in caring for those who would step in on our behalf. 

Think of all it involves: “assets” are much more than houses and vehicles; they also include land, investments, art, family heirlooms, collectibles, life insurance policies, pensions and more. These are different from liabilities, which include mortgages, credit card debts, car, student or personal loans, medical and utility bills, as well as income, property, estate and inheritance taxes. A carefully structured estate plan gives a clear road map for how all of these elements are to be handled. 

And contrary to what some believe, devising an estate plan is not an activity only for the wealthy. Indeed, estate plans are for everyone who owns property of any sort. Sara Pope of Sara Pope Law advises her clients that, according to Virginia state law, estates under $50,000 are considered “small estates,” and even these could benefit from being handled by an attorney who specializes in estate planning. Investopedia, an online source for answers to all kinds of financial questions, encourages researchers to consider estate planning as a gift to surviving friends and relatives, an idea that Pope heartily endorses, also. 

Begin the process
The first step is to identify your goals by asking, “What do I want my estate plan to accomplish?” Rich Gilman of Day Law Group says that developing an estate plan simply makes good sense and certainly makes life much easier for those left behind. Gilman advises that a well-crafted plan allows an individual to spell out how his possessions should be used to benefit his heirs in the event of his own incapacitation or death. According to LawDepot’s website, some common estate planning goals include the following: 

• Ensuring financial support for your family 
• Selecting the beneficiaries of your estate 
• Naming guardians for dependents and pets and outlining a plan for their support 
• Dictating a plan for the management of any business 
• Leaving assets to a charity 
• Requesting specific funeral arrangements, senior care or health care preferencesn Specifying your preferences in case of a medical emergency or incapacitation 
• Inventory your belongings 

Once you have identified your goals, take the next step, which is listing both your tangible and intangible assets. Tangible assets include material things such as land, houses, vehicles, personal valuables, including jewelry, books, tools, household furnishings and collectibles. Move on to intangible items such as investments, checking and savings accounts, retirement plans, life insurance policies and businesses owned. Note anything you wish to leave to a particular friend or relative. Once you have all this clearly listed, do a walk-through of your home and take pictures of your assets. Copy your lists and photos onto a thumb drive to keep in a safe deposit box and then upload a copy to the cloud. Remember to include instructions for accessing all of these in your will. 

Listing your debts
Debts of all sorts need to be listed, as well. These will eventually be cleared by your assets. Some of the most common debts include credit card balances, vehicle and student loans, mortgages and any lines of credit. 

Calculate the value of your assets
By subtracting your total debt (liabilities) from the full value of your assets, you will have an accurate view of your residual estate, which is what you have left to distribute amongst your loved ones. While this step may seem daunting and will, in fact, take quite a while, this is an essential part of estate planning. 

Gather important documents
This step is possibly the most time-consuming and complex at the start but don’t let that deter you. Pope says that if you don’t already possess all the important documents listed below, this is the time when you need to acquire them. 

• Copies of all insurance policies 
• Copy of any trusts 
• Power of Attorney document 
• Medical Care Directive 
• List of beneficiaries 
• Name of executor 
• List of charities 
• Investment records 
• Banking records 
• Copy of funeral plan 
• List of guardians for minor dependents 

Enlist the services of a professional
Once you have gathered all the above documents, it’s time to contact an area attorney who specializes in estate law to help you draw up your will. Some individuals prefer, though, to locate an attorney even earlier in the estate planning process who will lead them through the steps in acquiring these critical documents. 

Regardless of the stage at which you contact an attorney, it is a wise move. While you can locate many templates for wills online, there is no substitute for meeting with a professional who can tailor a will to your exact circumstances and is knowledgeable about estate law. Failing to engage in estate planning, and especially to draw up a will as part of that process, can result in an undue burden on your loved ones. An attorney can help you avoid the sometimes 40% taxes on your estate and provide for the smooth dispensing of your assets to your appointed heirs. Gilman argues that developing an estate plan with a carefully drafted will yields peace of mind. 

Know the costs of estate planning
In Central Virginia, estate lawyers generally fall into the $200 to $500 per hour range for hourly fees. Some may offer a flat-rate package for simple plans (like those that include just a will) for anywhere from $300 to $1,200 or more. Those estates involving greater complexity will, of course, incur higher costs. 

If, on the other hand, your estate plan requires only a simple will, Forbes, a trusted source for estate planning information, lists numerous online sites which offer templates for wills that can be printed out and filled in at home. These templates are state-specific and may start at only $99. Be cautioned, though, that using an online template for such a critical document is no substitute for a will drawn up during face-to-face meetings with an estate law specialist. 

This article is intended for general informational purposes only and shall not constitute legal advice. Consult with a licensed attorney for your legal needs. ✦