Estate Planning Goals That Everyone Should Focus On

Estate planning is not merely for the wealthy or elderly. It’s how all people can control how their assets will be managed and distributed late in life and after their death, thereby ensuring that their needs and intentions are met and that their loved ones are cared for. Whether you have modest or substantial income and/or property holdings, you can benefit from creating a well-thought-out estate plan. 

The start of estate planning is deciding on personal goals. Here are some common ones that everyone should consider:

• Providing for loved ones — You’ll want to determine who will inherit your assets and in what proportions. Wills and trusts are essential tools. A will allows you to name beneficiaries and outline specific bequests, while a trust can provide more control over when and how your beneficiaries receive their inheritance. For example, a trust can stipulate that funds are distributed at certain ages or milestones, such as college graduation.
• Mitigating or avoiding probate — Probate is the legal process of validating a will and distributing assets under court supervision. It can be time-consuming and expensive, which is why many people aim to avoid it. One way to bypass probate is by setting up a living trust, which holds your assets during your lifetime and transfers them to your beneficiaries after your death without the need for probate. Designating beneficiaries on accounts like retirement plans and taking out insurance policies can also help assets pass outside of probate.
• Minimizing income and estate taxes — Proper planning can reduce the tax burden on your estate and maximize the inheritance left to your loved ones. Strategies to lessen estate taxes include gifting assets during your lifetime, setting up irrevocable trusts and taking advantage of the federal gift and estate tax exemption, which allows a certain amount of your estate to pass tax-free. It’s also important to consider how income taxes may affect your beneficiaries, especially if they inherit retirement accounts. 
• Preserving assets — Part of estate planning is protecting your property from potential risks such as lawsuits, creditors and market fluctuations. You can shield certain assets from creditors by creating asset protection trusts.  A diversified investment strategy can help reduce market risk. Long-term-care insurance can protect your estate from being depleted by medical expenses in the event of a prolonged illness or disability.
• Managing and distributing assets — Putting clear instructions in your will or trust can prevent disputes among heirs and help see that your estate is handled efficiently. Your executor or trustee will be charged with managing and distributing your assets in line with your expressed intentions. 
• Financing retirement — You should estimate your retirement needs and determine that you have sufficient income streams, such as pensions, Social Security and retirement accounts. An estate plan can coordinate the use of these resources to support your lifestyle during retirement while preserving assets for your heirs.
• Preparing for possible incapacity — You should take steps to ensure that financial and healthcare decisions will be made according to your preferences if you become unable to make them yourself. A durable power of attorney allows you to designate someone to manage your finances, while a healthcare directive can outline your medical care preferences. 

Working with a qualified estate planning attorney is essential in ensuring that your plan is comprehensive and tailored to your specific needs. An attorney can help you understand your options, avoid common pitfalls and ensure that your documents are legally sound and up-to-date.

Jeffrey P. Hall, PLLC, an estate planning law firm with offices in Phoenix, Peoria, and Chandler, assists people across Arizona with creating wills, trusts, and other essential documents relating to their future. To schedule your free initial consultation, call me at 480-409-5174 or contact me online.