Estate Planning

Estate Planning

WHAT IS ESTATE PLANNING?

Estate Planning is a process of determining what is going to occur to your estate during life and after death. The objective is to establish a good estate plan which will adequately provide for the administration of an estate and provide for beneficiaries during life and after death.

Estate Planning is basically a two-step process. First, decisions must be made as to the Plan to be used. Second, the Plan must be implemented. Life planning involves planning to increase and/or protect property (examples include tax planning or creditor protection) as well as planning what would occur in the event of a disability. Planning for disability involves providing for a method to administer property and/or to take care of the person when the individual cannot or should not make the decisions.

Death planning involves providing for beneficiaries and/or protecting property. There are different levels of death planning. The lowest level is where a person dies without a valid Last Will and Testament, and the intestacy statutes are applicable. The higher levels of Estate Plans often utilize Wills, Trusts, Powers of Attorney and other Estate Planning tools such as Marital Agreements or agreements that control ownership of property.

Our society is complex. Therefore, it is necessary for the State to provide a plan in the event a person does not complete an Estate Plan. For example, if one becomes incompetent during life and has not completed the Estate Planning procedures, it may be necessary to have a guardian appointed to manage the person's property and/or care for the person. Also, if a person does not prepare a Will or use other Estate Planning procedures such as the establishment of a Trust, then the intestacy statutes are applicable which may result in a different heir receiving property than the person may have intended.

A person's estate after death consists of what is referred to as "Probate property" and "Non-Probate property." Probate property consists of property that passes under the decedent's Will. Non-Probate property consists of property that passes under a directive other than the Will. For example,if life insurance is paid to a named beneficiary, then the property is normally considered to be Non-Probate property. However, if the estate is named as the beneficiary of the life insurance, then the death benefit would normally be considered a Probate asset. Other assets such as IRA accounts, death benefits from Retirement Plans, Survivorship Accounts and other similar property that has a named beneficiary are other examples of Non-Probate property. Planning should be considered for both the Probate and Non-Probate estate.

WHY DO PEOPLE FAIL TO PREPARE AN ESTATE PLAN?

There are many different answers. Some reasons are as follows:

Confusion - Some people do not know what they should do, so they do nothing. Others search out on their own by reading numerous books or attending various seminars. The various book authors or speakers often have different views or particular areas of interest,which at times are emphasized as being the perfect solution. The end result can be confusion.

Complexity - Estate Planning may be an effort to resolve very difficult problems. The Government rules are numerous and complex. People at times become overwhelmed when facing the complexity of attempting to solve difficult problems.

Ignorance - At times people are unaware of or naive about the critical importance of Estate Planning.

Indifference or Apathy - Some people appear to have an attitude that "I can't take it with me - let someone else worry about it."

Time, Effort and Expense - Preparing an Estate Plan requires time as well as effort. Also, in order to prepare a good Plan it requires payment of current expenses that some clients believe can be postponed or avoided.

Fear - At times people will not sign a Will due to a belief that they will either die quickly and/or must admit mortality.

Privacy - People usually like to maintain privacy about their own affairs. Sometimes there are hidden secrets that they really do not want to reveal.

Distrust - Many people distrust attorneys and other advisors. They may feel the attorney will cheat or take advantage of them. Most people do not feel comfortable when not in a familiar situation.

Lack of Property - People may fail to plan because they feel that the size of their estate is inadequate. This can be a big mistake. A married couple with minor children and a small estate should create an estate by purchasing life insurance. Often individuals with small estates have more serious problems than those with large estates - they cannot afford the problems of a bad Estate Plan.

WHY COMPLETE AN ESTATE PLAN?

Either a person makes the decisions and completes an Estate Plan or the Estate Plan is created by the State. Often Plans created by the State are for the benefit of the public in general and not particularly the individual. From a results standpoint, there are basically three types of Plans, which are:

Bad Plan

OK Plan

Good Plan

No one should want or end up with a Bad Plan. An OK Plan is all right, but it is really not the desired solution. What should be used is a Good Plan that addresses and attempts to solve problems in advance. A Good Plan will not resolve all problems, but will attempt to resolve major problems.

WHAT ESTATE PLAN SHOULD BE USED?

Will a Simple Plan or more comprehensive Plan be appropriate? The individual's desires, the needs of beneficiaries and problems that could affect the estate should be considered in developing the Estate Plan. Some basic information about documents or procedures should help in developing the Estate Plan.

9330 LBJ Freeway, Suite 245

Dallas, TX 75243

Phone: 972-644-0595

* This web site is designed for general information only.

The information presented at this site should neither be construed to be formal legal advice

nor the formation of a lawyer/client relationship.

GIVE US A CALL: 1-800-555-1024

The Law Office of Kelly D. McGehee

Board Certified Estate Planning and Probate Law

Texas Board of Legal Specialization

The Law Office of Kelly D. McGehee

Board Certified Estate Planning and Probate Law