An estate plan, including a last will and testament, protects your family and finances after you die. Your first step in estate planning is to write a comprehensive will that moves smoothly through the probate process.

Make sure you're aware of current estate taxes that may influence your planning and how insurance factors into your estate plan. Various types of trusts are available; do some research to find out whether setting up a trust is the way to go and consider some special circumstances that may arise and how they can affect your estate planning.

Last will and testament probate process

Probate is the method by which your estate is legally transferred after you die. When estate planning and writing your last will and testament, keep the following tips in mind to help the probate process run smoothly.

Things to Remember About Probate When Writing a Last Will and Testament

If you’re just beginning to plan an estate or write a last will and testament, you should start by figuring out everything that encompasses your estate. It’s important to know before sitting down to write whether you have one piece of fine art or an entire gallery of work by the masters, to know whether you want to leave all your Beanie Babies to one person, or whether you want a say in where each one ends up, to decide to let your beneficiaries decide who gets what or to not.

You might need to do further research in state laws or hire an estate attorney. All of these things might be overwhelming, but you need to start somewhere. To get you started, though, read the rest of this Cheat Sheet and maybe check out Wills and Trusts Kit For Dummies Cheat Sheet .

Be aware of estate-related taxes

Depending on the value of your estate, you may not have to deal with at least some of the federal taxes, but you or your surviving beneficiaries may have a substantial amount of tax-related paperwork to file. When estate planning, use these tips to understand what you’re dealing with from a tax standpoint:

  • Most people don’t have to pay the federal estate tax — the so-called “death tax” —because their estates fall below the federal threshold. But your estate may still be subject to state inheritance or estate taxes.

  • The federal gift tax and the federal estate tax are part of a unified tax system, so you need to pay attention to both of these taxes as you plan your overall estate tax strategy.

  • The little-known Estate Recovery Act can devastate your estate if you need to tap into certain types of government-paid health care. But you can protect your estate if you understand the rules.

Factoring insurance into your estate plan

Trusts can be a great help in your estate planning — they can protect your property, save on estate taxes, and help you avoid probate. Sounds great, right? Well, before seriously considering a trust, you need to understand the basics of trusts and make a well-informed decision about setting up trusts right for you.

  • Some trusts are general-purpose; others focus on specific objectives, such as supporting your favorite charity or helping to pay for your children’s or grandchildren’s education.

  • A revocable living trust may be an ideal tool to protect your estate. But beware — everyone, it seems, is trying to sell you a revocable living trust. Watch out for the hype!

  • A bypass trust or a QTIP trust can help you and your spouse avoid unnecessary federal estate taxes. But you need to decide which type of trust works best in your situation.

  • Some trusts are revocable, meaning that you can change your mind. Other trusts are irrevocable — they can’t be changed once you set them up. Make sure you understand the tradeoffs for your estate planning.

Setting up a trust in your estate plan

Even the most orderly estate plans can fall victim to some unforeseen event. To put together a thorough estate plan, take a look at situations that may occur and find out the necessary information for dealing with them.

  • If you’re in the process of getting a divorce, you have a lot on your mind. But you also need to look at how your divorce will affect your estate planning. Chances are the answer is “a lot!”

  • Part of your estate planning must deal with the possibility of becoming incompetent — unable to take care of yourself. Prepare now, just in case.

  • If you have pets, you need to specify how you want your pets taken care of after you die.

  • Unmarried couples, either opposite-sex or same-sex, need to pay special attention to each person’s estate planning. Otherwise, problems almost always occur when one partner dies before the other.

Estate planning for special situations

Even the most orderly estate plans can fall victim to some unforeseen event. To put together a thorough estate plan, take a look at situations that may occur and find out the necessary information for dealing with them.

  • If you’re in the process of getting a divorce, you have a lot on your mind. But you also need to look at how your divorce will affect your estate planning. Chances are the answer is “a lot!”

  • Part of your estate planning must deal with the possibility of becoming incompetent — unable to take care of yourself. Prepare now, just in case.

  • If you have pets, you need to specify how you want your pets taken care of after you die.

  • Unmarried couples, either opposite-sex or same-sex, need to pay special attention to each person’s estate planning. Otherwise, problems almost always occur when one partner dies before the other.

About This Article

This article is from the book:

About the book authors:

N. Brian Caverly, Esq., is an attorney-at-law emphasizing estate planning and elder law. Jordan S. Simon is Vice President of Asset Management at Venture West, a Tucson-based investment firm.

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