Hagemeister, Inc. - Basic Estate Planning

Now that you have implemented a sound strategy for your business, it may be time to focus on protecting your personal property from government confiscation! Not to mention the peace of mind you will feel from planning for your family’s future. Lawyers and accountants call this “estate planning.”

Let's start with some of the basics. Your “estate” is your property. A formal definition of “estate planning” is the art of maximizing your property while alive, then passing the greatest amount of your property to your loved ones with a minimum of expense. “Probate” is a court proceeding that is sometimes required to establish the appropriate distribution of the property of a deceased individual.

Estate planning is loaded with terms that most of us don't have in our daily vocabulary like estate, probate, codicil, beneficiary, testator, and executor. So it can get pretty confusing. But all in all, it is not that complicated once you understand the goals—prepare for the future, avoid probate and more importantly, minimize estate taxes.

Most people don't think about estate taxes, but the federal government sure does. They have set a baseline amount of your estate that is exempt from taxes at your death (which will be $1,000,000 in 2011) and then tax your estate approximately 50% of any amount above that threshold. So, without any estate planning, if your estate is worth $2,000,000 and you die in 2011, the feds are going to expect a check for around $500,000. And if you think your estate is worth nowhere near that amount, you may want to re-evaluate this assumption if you own a house and a life insurance policy.

As for the documents themselves, most estate planning calls for the development of the following legal documents:

Wills (which also provides for guardianship of your minor children).
Basic probate-avoiding living trusts.
Estate tax-reducing living trusts.
Powers of attorney for finances.
Advance healthcare directives.
Final arrangements planning.
Deed and title transfer assistance.
Assignment of personal property.
Transmittal letters for the above documents.

Because estate tax planning is so important, we work very closely on every estate plan with tax and financial planning professionals. And if you already have these professionals on your team, we would be happy to work with them to employ the best possible strategic plan. In any event, we strive to create a plan that maximizes value and minimizes the complications for your successors.

One final comment. If your estate is significant or resolving your financial concerns will be relatively complicated (for example, you have numerous businesses and you want to make the transfer of property to your various beneficiaries on a conditional basis) we will probably refer you to an attorney who sub-specializes in these extremely complex situations.

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