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Estate Planning
Although estate planning is generally associated with the wealthy, the reality is that it is applicable to anyone who owns assets. Starting the estate planning process can be as easy as writing a simple will. The estate planning process can be very simple for some but it can become a very involved process for those with substantial assets. The important thing to remember about the estate planning process is that the estate plan should be reviewed and updated as time passes and circumstances change. Proper estate planning ensures that your wishes are honored even after you're gone. |
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Estate Taxes & Probate Costs
There are two main components to the estate planning process for most individuals. The first major function of the estate plan is to leave instructions for the transfer of assets after death. The second major function of the estate plan is to minimize estate taxes and probate costs through proper planning. The properly structured estate plan distributes your assets according to your wishes while ensuring that the estate taxes and transfer costs do not substantially lessen the value of the assets being distributed to your heirs and/or designated charities.
There are three levels of costs associated with the probating of an estate. The first level of costs is incurred at the probate court level and the costs include court fees, attorney fees, administrative costs and other professional fees that arise during the probate process. The second level of costs depends on the total value of the estate at death. This represents the federal estate tax for estates that exceed the current year exemption limit. The third level of costs is incurred as a result of the state estate tax in effect in the state the deceased person lived at death, just prior to death or at a previous time. Costs could dramatically increase if the deceased individual owned real estate in two or more states. |
Financial Advisor Services
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Paying Estate Costs
Estate taxes are usually payable within 9 months of death. There are different methods of allocating the funds from the estate to pay the taxes and probate costs. Liquid assets such as bank accounts, CD's and money markets help with the relative ease of liquidation but they provide a lower yield or return to the estate. The estate may borrow the money if the assets being liquidated will take more time than is available. This will increase costs because interest will be paid on the borrowed funds. Assets can be sold by the estate if the timeline meets with the tax filing deadlines. The easiest and most efficient way to plan for estate and probate costs is to use life insurance.
Life insurance provides the instant liquidity needed at death by the estate and helps to provide flexibility with respect to the disposition of other assets because time is not a critical factor. It is not enough to simply purchase life insurance. Life insurance must be purchased as a result of a properly structured estate plan and the properly structured life insurance policy choice. Our job is to use the tools that are available in order to help you meet your financial planning needs and your long-term estate planning goals. |
Estate Planning Links
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Copyright 1991-2007 Continental Five Insurance Group, Inc. All Rights Reserved.
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