Subscribe to our podcast via iTunes


Estate Planning

What is it?

Estate planning is the process in which you formally communicate your wishes and goals for the distribution of your property at your death. If you die without leaving such instructions the state in which you live will determine the distribution of your assets in your place. Also, depending on the size of your estate, you may inadvertently give more to the federal government than you need to in the form of estate tax.

When is it used?

Virtually everyone that owns property needs to have an estate plan. This will help ensure that your estate is processed efficiently, timely, and with minimal cost. There are basically four ways in which your property can be distributed at your death:

  1. Intestate: This is what it is called when you die without a valid will. In this case state law will determine the distribution of assets for you. The drawbacks for this method of transfer are:
    1. State law rather than your instructions determine who receives your assets.
    2. Your estate will be forced to go through the probate process which can be expensive & time consuming. This can be particularly problematic for the decedent’s family and could make an already difficult time more difficult.
    3. Probate is a matter of public record. This may not be desirable for the decedent or the decedent’s family.

  2. Will substitutes: These are typically called “Transfer on Death (TOD) or Payable on Death (POD)” accounts. Most banks and financial institutions offer these types of accounts and are similar in effect of listing a beneficiary on an IRA or retirement account. While these are better than an intestate transfer there are some major drawbacks:
    1. Only the assets titled as “TOD” or “POD” can be transferred in this manor.
    2. For assets not titled as “TOD” or “POD” and left Intestate, the rules mentioned above for intestate transfers will apply.

  3. Will: With a valid will you avoid having the state determine who will receive your assets after your death. Instead, you will designate exactly who and in what proportion your assets will be distributed. A will also designates who shall administer your estate and who will care for your minor children. These are the primary benefits of a will. There are however a few drawbacks to consider:
    1. A will does not prevent probate. It does make the probate process more orderly and less time consuming, and as a result less expensive than dying intestate.
    2. Probate is a matter of public record; this may not be desirable for the decedent or the decedent’s family.
    3. Does not ensure that each person’s federal exclusion amount is utilized, thus more estate tax may be paid than is necessary. Very specific language must be used to accomplish this through a will which leads to this being frequently overlooked.
    4. A will can be more easily contested by the family of the decedent. This is primarily an issue when the family has not come to terms with the decedents wishes.

  4. Trusts: The primary benefits of incorporating trusts in an estate plan are as follows:
    1. Trusts may be used to minimize federal estate taxes.
    2. Assets placed in trust avoid probate, thus minimizing administrative fees
    3. Keeps the distribution of your estate private, not public.
    4. Trusts are difficult to contest, ensuring your assets go to your intended beneficiaries.
    5. Irrevocable Life Insurance Trusts can be used to provide liquidity for estate settlement needs and even estate taxes.

Our recommendation:

We suggest developing your personal estate plan with a qualified estate planning attorney. A qualified estate planning attorney will ensure that the most pertinent laws and regulations are considered when building your estate plan. Your estate planning attorney will be able to incorporate language that accounts for possible changes in federal and state estate taxes, durable powers of attorney, advanced medical directives, and more.


By completing your estate plan, you will help ensure that you control the disposition of your assets, are able to provide for your loved ones, and minimize estate taxes. Without a valid estate plan you put these important objectives at risk.

Where to find it:

Asking a trusted friend or relative who share similar values is a good place to start. Also, your local bar association will be able to provide you with contact information on qualified estate planning attorneys in your area.

Successful Investing Radio © 2008