by Carolyn Teasley

Created on: November 13, 2008

Estate Planning Checklist

Estate planning is necessary for anyone with assets, whether big or small. The main goal of estate planning is to set in written legal documents how your assets are to be used should you become disabled or upon your death. To break down the process even further, the five keynote objectives estate planning should address are:

1) Listing of all your assets, owned singularly or jointly. Assets include bank accounts, investments, material possessions (vehicles, jewelry and personal items of value). Life insurance proceeds may also be included.

To have an accurate value of each of your assets, deduct any debt due on the assets listed. The main purpose of this is to be able to determine whether your estate will be charged estate taxes and plan for funding to pay the taxes if necessary. Capital gains taxes must be determined also, if applicable.

2) Make a written and valid will to designate: The executor of your estate who will be supervised by the probate court to settle your estate by paying outstanding debts or taxes and will disburse final assets of your estate as you stated in your will. Assets that are co-owned will not have to go through probate, but will instead pass on to the surviving co-owner.

3) Understanding what probate is and how this court-supervised procedure works to your estate's best advantage. There are both advantages and disadvantages to this process. Because probate court reviews the handling of the estate by the executor, your beneficiaries interests are protected and disputes can be resolved quickly according to probate rules. However, probates are made public, time consuming and in some cases cost more than a living trust.

4) Tax planning must be included if your estate net value is more than $500,000 and must cover income taxes, gift taxes, estate taxes and other specific taxes. Accurate record keeping of all financial transactions are necessary and will help with finding missed annual income tax deductions. Gift tax is calculated for your lifetime and has a limit of $10,000 per year per recipient.

Estate tax is charged on your property and property interest owned at the time of your death minus expenses and adjustments (gross estate). Estate taxes are imposed and must be filed on estates with a net value of $2 million or more for 2008, increasing to $3.5 million in 2009 and will end in 2010. Unless Congress passes an extension, the estate tax exemption will revert back to $1 million in 2011. The exemption rates were part of the Tax Relief Reconciliation Act of 2001. (Encarta.msn.com)

5) Adequate insurance coverage is necessary for accomplishing after death objectives: Survivor living expenses, mortgage pay-off, miscellaneous needs and final and probate expenses. This can be determined by deducting what known capital is available from total capital needed. The difference is a shortfall or excess. If it is a shortfall, pure or traditional insurance will need to be purchased to fill the gap.

To complete your estate planning, these keypoints are the main issues you must accomplish. Enlist the help of an estate planning accountant, if necessary.

References:

http://encarta.msn.com/encyclopedia_761572496/Estate _Tax.html

Shenkman, M. M., Estate Planning Step-By-Step, (1997) Hauppauge, NY: Barron's Education Series, Inc.

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