by Emil Ala

Created on: September 17, 2007   Last Updated: January 07, 2008

Be prepared for all occasions is a good motto to live and die by. Estate planning ensures that your chosen people benefit in the way that you intend when you die. These are the people that you love and cherish. Start estate planning as soon as you have a desire to pass on your possessions and property to others. The estate planning process helps minimize administrative expenses, executor's commissions, attorney's fees and estate taxes as well as income taxes.

There are usually four areas to consider in estate planning, communicating your wishes, reducing government charges, protecting your loved ones, and protecting your business (if you have one).

1. Communicating your wishes: Have an up to date will and other documents.
The best way to communicate your wishes is to have an up to date will, with an executor who you can trust to carry out your wishes. Failure to have a will, makes the government the decision-maker of your estate, which may cause asset distribution and decisions that are not in line with your thinking. They will need to follow closely the appropriate laws of the state for distributions of wealth.

In preparing a will, start by listing your assets and liabilities and then listing who you would like to have them. Include anything you want in the will, leaving nothing important to chance.

Another document that assists in estate planning is a power of attorney or living will that will allow the nominated person to make decisions about your health and wealth in the event of a catastrophic illness or severe disability. This is particularly important when there are businesses to run or decisions that need to be made regularly about your affairs. Seek professional advice when preparing all of these documents.

2. Reducing government charges: Maximize the inheritance to your beneficiaries.
There are three basic areas for reducing government charges. They are probate charges, income taxes, and estate taxes that can be reduced by special deductions.

The reduction of government charges begins with understanding how probate works in your state. In many places, the creation of a living trust will avoid probate. A living trust is established when someone transfers (the grantor) title of the asset to a trustee (the trustee). The grantor and the trustee can be the same person and beneficiaries of the trust can be named. The beneficiaries do not get anything until the person dies. A living trust allows title of property to pass almost secretly to the beneficiaries, whereas

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