By: Lisa M. Lehan, J.D., of Koley Jessen P.C., L.L.O.
What exactly is an estate plan? Webster defines “estate” as all of the things that a person owns and “plan” as something that a person intends to do. Put these definitions together and your estate plan sets forth your intentional decisions about the ultimate disposition of your property.
The process of establishing your estate plan involves three primary components: (1) the execution of certain legal documents, (2) the coordination of proper asset titling and (3) the implementation of proper beneficiary designations. Typically, the following documents are prepared and executed as part of each person’s basic estate plan: a Last Will and Testament, a Trust Agreement, a Financial Power of Attorney, and an Advance Directive.
Together, the Will and Trust Agreement control the disposition of your assets. The Will also appoints guardians for minor children. The Financial Power of Attorney and Advance Directive grant an agent the authority to make financial and health care-related decisions for you if you are incapacitated. Once you execute the legal documents, it is equally as important to title your assets and complete your beneficiary designations in a way that does not override the provisions in your Will and Trust Agreement.
Assets may be titled in a variety of ways, including your individual name, the name of your trust, or jointly with another person as tenants in common or joint tenants with rights of survivorship. In order to fully carry out your intentions regarding the disposition of your assets following death, it is critical that the titling of your assets be coordinated with your estate plan documents. Titling arrangements can also have significant income and estate tax consequences and, if properly structured, help you avoid probate.
As with titling arrangements, beneficiary designations on assets such as life insurance and retirement accounts control who receives the asset upon your death and will override the provisions of your Will and Trust Agreement. Beneficiary designations can also have significant tax consequences and must be carefully considered as part of the process of developing your estate plan.
To achieve your goals, your estate plan must be comprehensive and should be coordinated between several advisors, including your lawyer, your accountant, and your financial advisor. You have a lot to consider, but as with most things in life, having a plan feels good.
About the author: I am a member of the Estate and Business Succession Planning and Tax Practice Groups at Koley Jessen, PC LLO, located in One Pacific Place, Suite 800, 1125 South 103 Street Omaha, NE 68124. You may contact me directly at 402.343.3881.
PLEASE NOTE LIMITATIONS: Please see Important Disclosure Information and the limitations of any ranking/recognitions, at www.fostergrp.com/info-disclosure/. A copy of our current written disclosure statement as set forth on Part 2A of Form ADV is available at www.adviserinfo.sec.gov.