Wednesday, April 14, 2010

What is Estate Planning?

Almost all of our Kansas City area clients ask us, what is Estate Planning?

BridgeBuilder’s definition of estate planning is as follows:
 

“I want to control my property while I am alive, take care of me and my loved ones if I become disabled, and give what I have, to whom I want, the way I want, and when I want.  Furthermore, if I can, I want to save every last tax dollar, professional fee, and court cost legally possible.”

Breaking down this definition, we find that estate planning involves the following areas of concern:

1. Lifetime control over financial and health care decisions
2. Planning for the cost-effective and expedient transfer of wealth at death
3. Family maintenance and protection planning
4. Business succession planning
5. Charitable planning
6. Gift and estate tax planning
7. Legacy planning
8. Elder law issues

I will break down the first two areas of concern today and BridgeBuilder will break down the remaining areas of concern in upcoming blawg posts.
 

Lifetime Control over Financial and Health Care Decisions

While you are alive and able, you are able to handle all of life’s critical decisions.   On a daily basis, you handle your own financial, legal, and property-related matters.  And, less frequently, you are called upon to make important medical and health care decisions.

But what if your ability to handle critical decision making was lost due to disability or incapacity?  Without proper planning in place, a “control vacuum” would appear.  There would be no single individual vested with power or legal authority to act on your behalf. 
 

When this situation arises, the only recourse available is to seek a court ordered guardianship or conservatorship.  But invoking the court’s jurisdiction is often costly, time consuming, unpredictable, cumbersome, and even embarrassing.  More importantly, the court’s involvement is completely unnecessary.

Proper estate planning operates to fill this “control vacuum” without court intervention.  It enables you to hand-pick trusted individuals and empower them to act on your behalf.  Moreover, it binds the appointed individuals to follow a specific set of instructions designed to meet your stated goals and objectives.

Generally, the areas of “lifetime control” addressed by estate planning can be broken down into three fairly distinct areas: (1) control over financial, legal and property matters; (2) control over personal health care and medical matters; and (3) control over the care and nurturing of minor children and other dependents. 

Planning for the Cost-Effective and Expedient Transfer of Wealth at Death

Dying can be costly and time consuming, particularly if there is no plan in place.  Creditors, financial institutions, and other interested parties must be notified; funeral and burial arrangements must be made and carried out; debts must be addressed; taxes must be paid; tangible and intangible assets must be protected and eventually transferred to beneficiaries; and the decedent’s overall wishes must be carried out.  There is a lot to do, and this is just the short list, which does not even include the most important- the grieving process.

Proper estate planning identifies all of the “hurdles” that may arise post-death, and minimized their effect, which allows you to focus on the grieving process.  For example, if it is determined that substantially all of your assets would be subject to lengthy and costly probate proceedings at death, we may utilize various “trusts” and other planning techniques to eliminate the need for the probate court at death.  In addition, we will devise a plan empowering your trusted family members to seamlessly retain control of and continue the operation of your assets- like businesses, farming operations, family vacation property, etc.

Understanding just what needs to be done for a particular client requires experience and knowledge of the various tools and techniques available.  Equally important is a complete understanding of you, your family and your goals and objectives.  We at BridgeBuilder understand that each client is different and no one technique works for all clients.
Until next time, please keep the questions and comments coming.  If there is an area of concern you have, please let us know or contact us as we would be happy to help.

Jason Salinardi
BridgeBuilder- Plans for Life