LIVING WILLS FOR ESTATE PLANNING

The Living Trust Kit
A Special Report by:
J.J. Childers, Attorney at Law

(Page 2)

Step Two: Take Inventory of Your Assets

Once you have clarified your estate planning objectives, you need to take inventory of your assets and debts. It is important to find out exactly what you own and to try to place a dollar value on those assets. Most people simply fail to take this step and therefore fail to realize that their estate was at a point where they needed some serious planning. If your estate will have to pay estate taxes, you can start planning today to reduce and even eliminate those taxes in many instances. Below is a sampling of some of the items you must take into consideration.

To value your estate from both a net worth and living trust planning standpoint, you must inventory your assets and calculate your liabilities first. Let's first take a look at assets.

Assets

The first calculation is to identify and value your assets. You should list each item and describe it, indicating whether you own the property outright or the percentage of your ownership if not. After this, list the actual value of the portion you own.

Begin with listing your liquid assets. This will include the following:

Cash
Savings
Checking Accounts
Money Market Accounts
CDs
Precious Metals

Next, you need to list your other personal property which will be less liquid such as:

Stocks
Mutual Funds
Bonds
Other Securities
Retirement Plans
Automobiles
Jewelry
Furs
Art works
Antiques
Tools
Collectibles
Life Insurance

Once you have listed these items, move on to your real estate holding including your own home(s), condominiums, mobile homes, land, etc. After this, list any business personal property including partnership interests, copyrights, patents, trademarks, stock options, etc. When you have listed everything that you can think of, add the value of all of these items up and you will have the total amount of your assets. Now it's time to take a look at your liabilities.

Liabilities

Upon coming to a reasonable determination of your assets, you must now consider your liabilities. Begin by listing all of your liabilities by name and by also noting the amount you owe. The list will include items such as:

Personal Loans (credit cards, bank)
Mortgage Loan(s)
Taxes Due (current or past)
Life Insurance Loans
Other Personal Debts
When you have identified all of your liabilities, add all of these numbers up to arrive at your total liabilities. Subtract your liabilities from your assets to arrive at your net worth. Once you have determined the value of your estate, it's time to calculate the amount of taxes you may owe if any. The current amount to consider is $675,000. If your estate is over this amount you will owe taxes. Remember however, that whether you owe taxes or not, the paramount reason for establishing your living trust is to avoid probate. While it may not be a problem for you, it will certainly be a pain in the neck for your family for a long time after your death. Believe me, that's not how you want to be remembered.

Step Three: Select Your Professional Planner

It is vitally important that you seek assistance with the implementation of your estate plan. This is not an area where you should try to scrimp. You need to consider that you will be sharing personal information with this person so you may not want to use anyone who might disclose this information to others. A disinterested party is often your best choice. Additionally, there are a number of questions that need to be answered throughout the process. One thing to look for is whether the professional you choose can answer your questions and whether or not they have material that will answer your questions available to you and included in your trust documentation.

Step Four: Have Documentation Drafted

Regardless of whom you choose to establish your living trust, there is certain information which you will need to provide. This information will greatly assist your professional in structuring a plan which has been custom-tailored to fit your needs rather than trying to squeeze you into a one-size-fits-all plan. Below is a list of questions for you to answer in order to make your estate planning process work as smoothly as possible. Take the time to answer these as soon as you get a chance. It may not seem like a big deal to put this off but I can assure you that it will be a big deal to your family if you fail to put things in order. With that thought in mind, start now by answering the following questions.

What is your full name?
What is your marital status and history?
What is your spouse's full name?
Do you have any children?
What are the full names and ages of your children?
Do any of your children have special needs or disabilities? If so, describe.
What estate planning do you currently have in place?
Are you interested in avoiding the time and expense of probate?
Are you interested in federal estate tax planning?
Do you own a farm or a business?
Are you and your spouse U.S. citizens?
Have you entered into any agreements with your spouse (prenuptial, etc.)?
Do you own a long-term care insurance policy?
Do you hold everything jointly with your spouse, or is some property separate?
What is your approximate net worth?
What is the value of the death benefits on life insurance?
In order of preference, identify at least two persons who you would want to handle your financial affairs in the event you become incapacitated.
In order of preference, identify at least two persons who you would want to make medical decisions for you if you could not participate in making those decisions yourself.
In order of preference, identify at least two persons who you would want to distribute your assets and handle your estate after you pass away.
If you have minor children or an incompetent child, you will need to appoint a guardian. The guardian is responsible for the day-to-day care of the child. In order of preference, identify at least two persons who you would want to handle this responsibility for you.
Once you have answered the above questions, you will be much better situated to implement your estate plan. I suggest that you print these questions out and physically answer them. Even better, type your answers into your computer so that you can easily amend the information and have it readily accessible for your professional planner. The time it takes to do this can be some of the most important time you ever spend for taking care of your family.

Step Five: Implement Your Plan

All that's left now is to actually implement your plan. This is the part where most people mess up when it comes to the living trust. Once you have had the documentation drafted, it's time to transfer assets into the trust and operate it as a separate entity. While many people will do this initially, they fail to update things on a regular basis. This is something that you can certainly do yourself but the question is, will you? Over 50% of those who establish a plan fail to take the time to do the necessary follow-up themselves. This is not a problem if they leave that work up to their planner. However, people start off with good intentions yet never follow through on them. Don't let this happen to you. Follow up with the professional planner you choose and make sure that your plan stays intact. It is a crucial step which absolutely must be adhered to.

Page 1