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Note: Nothing in this publication is intended or written to be used, and cannot be used by any person for the purpose of avoiding tax penalties regarding any transactions or matters addressed herein. You should always seek advice from independent tax advisors regarding the same. [See IRS Circular 230.]

Volume Seven Number Eleven November 2009

The Three P's of Proper Estate Planning

There P's of Proper Estate Planning If you were incapacitated or died today, what would happen to your loved ones and your property? Who would assume responsibility to make sure everything is okay? How would anyone know your plans for the care of your loved ones and your property?
Even if you have answered these fundamental questions through proper estate planning, it is important to review your answers periodically, because they may change over time. To help ensure that your planning and reviews are thorough, remember to cover the Three P’s of proper estate planning: People, Property and Plans.

Your People: Estate Planning for the People in Your Life

From the time we are born until we die, our life experience is enriched by the relationships we develop with other people. Truly, none of us is an island. Who are the important people in your life right now? Depending on your unique circumstances, your list may include your spouse, children, grandchildren (even great-grandchildren), parents, siblings, nephews, nieces and/or friends. Beyond these, your important people also may include religious and non-religious charities. Don’t forget any pets, whether they have feathers, fins or fur.

Your Property: Planning for the Distribution of Assets and Real Estate

In addition to collecting relationships with other people during our lifetimes, we tend to collect relationships with property along the way. In this context, property encompasses more than just real property (i.e., real estate), including all of your assets regardless of form. What property have you accumulated? Have you inventoried and valued your things, or will you send your loved ones on a very unpleasant and lengthy treasure hunt?

Your Plans: Appointing Successor Trustees in Your Estate Plan

     The foundation of every comprehensive estate plan is the selection and appointment of your successor decision-makers to make your personal, health care and financial decisions in the event of your incapacity. Likely such successors would continue to manage your property following your death as well.
     Whom have you appointed as your successor decision-makers? Do they have the time and expertise to serve? Would it be wise to appoint professional assistance to help them with the details? Perhaps a professional successor decision-maker, such as a trust company or a certified public accountant, is more appropriate given your unique circumstances.
     Issues surrounding the division and distribution of property can shipwreck family relationships upon the death of the property owner. Do you have sentimental, one-of-a-kind items? A recent study found that most family fall-outs result over the failure to make legal arrangements for the distribution of such items.
     In conclusion, time spent on your Three P’s will be time well spent. Poor (or non-existent) inheritance planning can cause the loss of a family business, blended family brawls, affluenza among idle heirs (along with their divorces, lawsuits and bankruptcies) and unnecessary dissipation of your life’s work due to avoidable estate taxes.

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