ESTATE PLANNING 101

How and why to take this important step

We all know we need to do it, but the process can be daunting enough that we postpone it for longer than we should. Estate planning (known as the process of formulating a plan for the management of our assets/liabilities in the event of incapacitation or death) is essential to the proper care of our lives, but it’s also an essential step in caring for those who would step in on our behalf. 

Think of all it involves: “assets” are much more than houses and vehicles; they also include land, investments, art, family heirlooms, collectibles, life insurance policies, pensions and more. These are different from liabilities, which include mortgages, credit card debts, car, student or personal loans, medical and utility bills, as well as income, property, estate and inheritance taxes. A carefully structured estate plan gives a clear road map for how all of these elements are to be handled. 

It’s a common misconception that estate planning is only for the wealthy; in reality, it’s important for anyone who owns property or assets. In Virginia, for example, estates under $50,000 are considered “small estates,” but even these can benefit from guidance provided by an experienced attorney. As Investopedia and estate planning attorneys emphasize, creating an estate plan is a thoughtful way to care for your loved ones. 

Begin the process
Start by setting clear goals for your estate plan. Ask yourself, “What do I want my plan to accomplish?” Estate planning is designed to ensure that your assets benefit your loved ones if you are incapacitated or pass away. According to LawDepot’s website, people often pursue estate planning for several reasons: 

• Providing financial support for family
• Determining who will inherit your assets
• Appointing guardians for dependents and pets, and specifying care instructions
• Planning for management of business interests
• Donating to charities
• Documenting preferences for funeral arrangements, senior care and health care
• Outlining wishes in case of medical emergencies or incapacitation

Inventory of your belongings
Once you’ve clarified your goals, make a complete inventory of all your tangible and intangible assets. Tangible assets include things like land, homes, vehicles, jewelry, books, tools, furniture and collectibles. Intangible assets might be investments, bank accounts, retirement plans, life insurance policies or business ownership. If there are items you wish to leave to specific friends or family members, be sure to document those as well. Take photos of your possessions, save copies on a thumb drive stored in a safe deposit box, and then upload them to the cloud. Include instructions for accessing all of these records in your will.

Listing your debts
List all your debts, as these will be settled using your assets. Common debts are credit card balances, auto and student loans, mortgages and lines of credit.

Calculate the value of your assets
Subtract your total debts from the value of all your assets to determine what remains — your residual estate. Though this process can be time-consuming, it is a vital step in estate planning.

Gather important documents
Collecting key documents is often the most complex part of estate planning. If you don’t already have the following items, work on acquiring them:

• Copies of all insurance policies 
• Trust documentation
• Power of Attorney 
• Medical Care Directive 
• List of beneficiaries 
• Name of executor 
• List of charities 
• Investment records 
• Banking records 
• Funeral plan
• List of guardians for minor dependents 

Consulting a professional

After organizing all your documents, contact an attorney specializing in estate law to help you draft your will. Some people consult an attorney earlier in the process for advice, while others wait until their documents are in order. Either way, professional legal guidance is essential. While online templates are available, nothing compares to a will customized by a knowledgeable estate attorney. 

Without proper estate planning, your loved ones could face unnecessary difficulties. An attorney can help you avoid heavy taxes — sometimes as high as 40% — and make sure your assets go to the right heirs smoothly. Estate planning experts agree planning ahead brings peace of mind. 

Learning the costs of estate planning
In Roanoke, Va., estate lawyers generally fall into the $200 to $500 per hour range for hourly fees. Some may offer a flat-rate package for simple plans (like those that include just a will) for anywhere from $300 to $1,200 or more. Those estates involving greater complexity will, of course, incur higher costs. 

If, on the other hand, your estate plan requires only a simple will, Forbes, a trusted source for estate planning information, lists numerous online sites which offer templates for wills that can be printed out and filled in at home. These templates are state-specific and may start at only $99. Be cautioned, though, that using an online template for such a critical document is no substitute for a will drawn up during face-to-face meetings with an estate law specialist, one who can talk with you and create a specific plan that meets your needs. 

This article is for general informational purposes and should not be taken as legal advice. For specific legal matters, consult a licensed attorney.  ✦