Estate Planning Basics

Have you considered your estate plan recently? It's an easy thing to put off! Death and taxes are two things most people would rather not think about. But considering your estate is a very important thing for every person, and especially for a business owner.

What follows are a few things to think about as you consider your estate design:

  1. Make a Will. In a Last Will & Testament, you decide who you want to inherit your property -- including real property, intellectual property, and personal property. You determine who will be in charge of ordering your estate after your death, and you also can name a guardian to care for your children that are minors should something happen to you and your spouse. We typically recommend re-examining your Will once every 5 years or so, or after a main event in your life.
  2. Make an Advance Healthcare Directive. Under Georgia law, signing an AHD gives direction to a healthcare agent to make healthcare decisions for you in the event you are unable to make such decisions yourself.
  3. Make a financial Power of Attorney. Such a document grants a trusted person the authority to make decisions over your property (including financial accounts) when you are unable to make such decisions due to incapacitation. 
  4. Consider "Payable on Death" Accounts. Also known as "Beneficiary Designated" accounts, these allow you to name a beneficiary for certain bank accounts, retirement plans, and such vehicles. Upon your death, the money automatically goes to the beneficiary and does not move into your estate for probate. This transfer does not remove the value of that account from your estate (for estate tax purposes), however, and should be done with consideration from your trusted advisors.
  5. Life Insurance. Life insurance often plays a major role in estate planning, particularly if there are outstanding debts which need to be handled at death. Also, in the life of business owners, business succession planning can be aided by strategic purchasing of certain types of life insurance (particularly permanent insurance, if the cash flow is right).
  6. Consider the Tax Man. In 2015, the IRS will impose an estate tax at your death only if your taxable estate is worth over $5.43 million. (This exemption amount rises each year to adjust for inflation.) Married couples can utilize the "credit" of the other spouse, and so most families will not experience an estate tax burden. Remember, however, that the IRS considers all of your assets (including life insurance that you own and control, your business value, etc.) as part of the equation when considering the estate tax, and this tax can be a heavy burden when due. Careful planning and a good understanding can help minimize this tax. If you own a business, plan ahead for your successor. You may wish to consider a buy/sell agreement, business powers of attorney, or other business succession planning for your business.
  7. Make final arrangements. Have a plan in place for your funeral arrangements, your memorial service, letters to friends and family, etc. Also, make sure you have kept your important documents in a very safe place for your executor to access. They will need access to your will, trust documents, deeds, account information, life insurance, debts, funeral information, retirement accounts, certificates, business documents, and other important information to carry out your wishes.

Considering these issues will go a long way in helping your family and friends in the event of your passing.