WHAT IS ESTATE PLANNING

Estate planning is a process. It involves people - your family, other individuals and in many cases charitable organizations of your choice. It also involves your assets and all the various forms of ownership and title that those assets may take. As you plan your estate, you will consider:

How your assets will be managed for your benefit if you are unable to do so
When certain assets will be transferred to others, either during your lifetime, at your death, or sometime after your death
To whom those assets will pass

Estate planning also addresses your welfare and needs, planning for your own personal care and health care if you are no longer able to care for yourself. Like many people, you may at first think that estate planning is simply the writing of a will. But it encompasses much more. As you will see, estate planning may involve financial, tax, medical and business planning. A will is one part of that planning process, but other documents are needed to fully address your estate planning needs. The purpose of this material is to summarize the estate planning process and how it can address and meet your goals and objectives.

As you consider it further, you will realize that estate planning is a dynamic process. Just as people, assets and laws change, it may well be necessary to adjust your estate plan every so often to reflect those changes.

WHAT QUESTIONS ARE INVOLVED IN ESTATE PLANNING?

In starting to consider your estate plan, you need to ask yourself the following questions:

What are you assets and what is their approximate value?
Whom do you want to receive those assets - and when?
Who should manage those assets if you cannot, either during your lifetime or after your death?
Who should have the responsibility for the care of your minor children, if any, if you become incapacitated or die?
If you cannot take care of myself, who should make decisions on you behalf concerning care and welfare?

WHO NEEDS ESTATE PLANNING?

Whatever the size of your estate, you should designate the person who, in the event of your incapacity, will have the responsibility for the management of your assets and your care, including the authority to make health care decisions on your behalf. How that is accomplished is discussed below in this material. If your estate is small in value, you may focus simply upon who is to receive your assets after your death and who should be in charge of its management and distribution. If your estate is larger, we will discuss with you not only who is to receive your assets and when, but also various ways to preserve your assets for your beneficiaries and to reduce or postpone the amount of estate tax which otherwise might be payable on your death.

If one does no planning, then Pennsylvania law provides for the court appointment of persons to take responsibility for your personal care and assets. Pennsylvania also provides for the distribution of assets in your name to your heirs pursuant to a set of rules to be followed if you die without a will; this is known as "intestate succession." If you die without a will and if you have any relatives (whether through your own family or that of your spouse), regardless of how remote, they will be your heirs. Nonetheless, they may not be the people you would want to inherit from you; therefore, a living trust or a will is the preferable approach.

WHAT IS INCLUDED IN MY ESTATE?

Your estate consists of all property or interests in property which you own. The simplest examples are those assets which are in your name alone, such as a bank account, real estate, stocks and bonds, furniture, furnishings and jewelry.

You may also hold property in many forms of title other than in your name alone. Joint tenancy is a common form of ownership which takes assets away from control by will or living trust. Beneficiary designations on securities accounts and bank accounts are alternatives which must be carefully considered as well. Finally, assets which have beneficiary designations, such as life insurance, IRAs, qualified retirements plans and some annuities are very important parts of your estate which require careful coordination with your other assets in developing your estate plan.

The value of your estate is equal to the "fair market value" of each asset that you own, minus your debts, including a mortgage on your home or a loan on your car. The value of your estate is important in determining whether, and to what extent, your estate will be subject to estate taxes upon your death. Planning for the resources needed to meet that obligation at your death is another important part of the estate planning process.