What Is An Estate Plan?

It happens weekly.  I sit down with a  new client and the first thing he or she says is "I don't need an estate plan, I just need a will."  How wrong they are!  Anyone over 18 needs an estate plan.  People wrongly associated "estate plan" with the likes of the Kennedys or Rockefellers.  Granted, your documents may not look like a Kennedy's estate plan, but you still need one.  What is an estate plan?  I always say it is three things, planning for: illness, death and taxes.

Planning for illness involves creating powers of attorney for health care as well as finance that state who is in charge of decision making if you are not able.  Some states, including Wisconsin, are NOT next-of-kin states.  That means there is no automatic assumption that your spouse, parent, adult child, etc. can make those decisions for you.

Planning for death involves creating documents that state what should happen to your "stuff" upon your death.  A will distributes your probate property, nominates a guardian for minor children, and nominates a personal representative.  Earlier this month I posted extensively on each of these topics.  Planning for death may also include creating and or funding a trust, which is a form of non-probate property.  Finally, death planning should include a review of beneficiary forms on assets such as life insurance and retirement accounts -- do they say what you think they say?

Planning for taxes is an item most people can skip over.  However, one should do a quick review to see if he or she is in danger of triggering the federal estate tax upon death.  Also, determine if your state has its own state estate tax.

And there you have it, an estate plan for the middle class.  Remember, a blog is not legal advice.  Please consult with an attorney licensed in your state for advice specific to your situation.