Estate planning

If you don’t have a will, you’re not alone. Many Americans do not have a valid will, and if they do have one, odds are that many of the provisions became extremely vague 30 minutes after you left the attorney’s office.

Regardless of which camp you’re in, there are some basic things to consider before drafting or revising your will.


* The value of your estate

Your total gross estate is the value of all investment assets owned in your name, including retirement plans, equity in your home, personal property, life insurance, real estate and business interests.


* Level of estate planning

If your estate is valued at less than $1.5 million, currently there will be no estate tax due and the administration should be relatively simply. If you are married and have an estate valued between $1.5 million and $3 million, most of your estate can be exempt from estate taxes with properly drafted wills and the appropriate use of trusts in your wills.

For those with estates valued greater than $3 million, more complex estate planning may be required. Consider strategies such as life insurance trusts, family limited partnerships and charitable remainder trusts, just to name a few.


* Ownership issues

The ownership of assets is critical in planning for one’s estate. Most couples own the majority of their assets jointly, with rights of survivorship.

When you combine this with beneficiary designations on life insurance and retirement plans, much of your estate may circumvent your will and many assets may not qualify for the estate tax exemption.

Conversely, it is not uncommon for one spouse to own a disproportional amount of the couple’s total assets. This can also cause problems. It is important for estate planning to determine how your assets should be owned.


* Trusts

The use of trusts in estate planning can be important for minimizing estate taxes. Reasons for using trusts include the inability of heirs to manage assets on their own; your desire to leave assets to a particular person for that person’s lifetime, then pass to a secondary beneficiary; and the fact that trusts can be particularly useful in the case of second marriages, especially if children are involved.


* Trustees and executors

These are two important but entirely separate jobs that may need to be performed for one’s estate.

The executor’s duties involve the administration of the estate, valuing estate assets, probating the estate and filing tax returns. In addition, the executor must fulfill all the requirements of the will in terms of making distributions to heirs or trusts. This is a detailed and time-consuming job and considerable thought should be given as to whom should serve as your executor.

The job of the trustee does not start until the estate has been settled and any trusts under your will have been funded. The trustee manages all trust assets and fulfills the requirements of the trust, which usually involves distributing income, overseeing preparation of tax returns and, eventually, distributing principal if required.


* Personal property

One of the most overlooked aspects of estate planning is the distribution of personal effects. Although these may not have much value, sometimes they have tremendous sentimental and family value. Therefore, the lack of direction in your will to make distributions of personal effects may cause ill feeling and disagreements among your most loved family members.

One method of dealing with this is to leave a signed, handwritten list of who gets what. Your will can reference this list and ask your executor to honor your wishes.


These are just some of the items to consider prior to having your wills drafted or revised. Keep in mind that your wills are just one piece of your estate plan.

Make sure all of your documents are consistent with the overall financial and estate objectives of you and your family. Michael L Hines, CFP, is president and founder of Consolidated Planning Corp., an Atlanta-based registered investment advisory firm specializing in financial planning and investment management for individuals and businesses. Hines has been counseling individuals, business owners and corporate executives regarding their financials for more than 30 years. Securities offered exclusively through Raymond James and Associates. Reach him at (404) 892-1995 or [email protected]