Estate Planning 101 for the Beginner
Estate planning can be a daunting process the first time around for many people. Ideally, your estate plan should incorporate a wide range of goals and objectives into one comprehensive plan. That plan may utilize numerous estate planning tools and strategies, all of which can seem overwhelming. To help you feel more at ease with getting started on your estate plan, Indianapolis estate planning attorneys at Frank & Kraft offer some estate planning basics for the beginner.
- Define your goals. Take some time to consider what you need to accomplish and what you want to include in your estate plan. People typically focus on the distribution of their estate assets when they think about estate planning. While this is certainly one aspect of an estate plan, a comprehensive estate plan can accomplish much more than that. For example, you might include probate avoidance, protecting the inheritance of a minor child, and Medicaid planning among your estate planning goals.
- Choose your fiduciaries with care. One of the most common – and most damaging – mistakes people make when creating an estate plan is failing to take the time necessary to choose the right person for fiduciary roles within the plan. Appointing the right person to a fiduciary role will contribute to the success of your overall estate plan. Appointing the wrong person could contribute to the failure of your plan.
- Consider using a trust to distribute assets. Assets held in a trust are non-probate assets and can be distributed immediately if the trust terms dictate. Most assets, including your home, can be held in a trust. Using a trust as your primary method for the distribution of your estate assets can dramatically reduce the size and value of your probate estate.
- It’s o.k. to also benefit from gifts you make. Although making gifts is an altruistic endeavor, there is no reason why you shouldn’t also reap the tax benefits from the gift. Check with your estate planning attorney and tax advisor to see if you can combine your gifts with any tax breaks or other estate planning incentives.
- Do not use any DIY documents. These are frequently riddled with errors and omissions that invite litigation. Instead, work with an experienced estate planning attorney during the creation of your estate planning documents.
- Choose the right estate planning attorney. Take your time choosing the right attorney for you. Ask friends and family members for a recommendation or check with your state/local bar association to find an attorney who specializes in estate planning.
- Include funeral and burial planning in your estate plan. As part of the plan, create a funeral trust which allows you to make it clear who will be in charge of your funeral by appointing a Trustee. In addition, you can use the terms of the trust to express your wishes regarding your own funeral to limit the opportunity for disputes.
- Create a Letter of Instructions. This is a document that allows you to explain decisions you made within your estate plan or address issues not covered elsewhere in your plan. Nothing in a Letter of Instruction is legally binding; however, explaining controversial decisions can help prevent disputes.
- Remember that your legacy may be the most important gift. By incorporating legacy planning tools and strategies into your estate plan you can pass down more than just assets to your beneficiaries. You can also continue to pass down your beliefs, ideals, faith, and philosophies that are an integral part of who you are and who you hope members of future generations will one day become.
- Remember to review and revise your plan. Among the most common mistakes people make when it comes to estate planning is failing to review and revise the plan they create. An out-of-date estate plan can be every bit as problematic as the complete absence of a plan. To ensure that your plan covers all your current needs, make sure to review the plan every few years as well as when a life event, such as divorce, calls for a revision.
Contact Indianapolis Estate Planning Attorneys
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns about getting started on your estate plan, contact an experienced Indianapolis estate planning attorney at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
Paul Kraft is Co-Founder and the senior Principal of Frank & Kraft, one of the leading law firms in Indiana in the area of estate planning as well as business and tax planning.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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