Estate Planning

Estate Planning:
What to Know

Estate planning is the process by which a person anticipates the dispersal and arrangement of his or her estate after death. The value of estate planning is that it prevents disputes when a probate is issued and it can also help reduce expenses and associated taxes, maximizing the value of an estate. The client’s needs will help determine the ultimate goals of their estate planning and it can be simple or complex as they would like. If beneficiaries are minors or otherwise incapacitated, guardians are often designated.


If a country’s legal system was developed from British Common Law, the probate system is usually used for the distribution of property after death. The United States is one such country. The process of probate is as follows:

1. If the deceased has a will, it is entered into the court
2. The court then determines if a will is valid, based on evidence from the estate’s representative
3. The court appoints a representative to close out the estate
4. Any creditors are notified in case they want to file claims against the estate
5. If there are sufficient funds, the creditor’s claims are paid
6. All of the remaining funds are distributed to beneficiaries as indicated by the will
7. The judge closes the estate


Many legal devices guide estate planning, including power of attorney (specifically the durable medical or financial power of attorney), powers of appointment, wills, trusts, beneficiary designation, property ownership and more.

Estate planning attorneys often advise clients to create living wills and to mention specific funeral arrangements. Some plans may include instructions on deferring taxes or closing up business.


Estate plans are greatly influenced by gift, estate and income tax laws. In the United States, financial assets left to a spouse or charity are immune from federal estate tax. However, anything left to anyone else is subject to taxation if the total estate value exceeds $5,430,000.

Probate Avoidance

The traditional probate process is both time consuming and expensive, so often modern estate planners encourage clients to develop probate avoidance strategies, including joint ownership of assets and naming death beneficiaries, creating lifetime gifts, purchasing life insurance, or Revocable Living Trusts.

Trust Provisions for Beneficiaries

The distribution of funds to children or mentally disabled individuals can be guided by a trust. For example, a spendthrift trust can limit unnecessary spending by a child, or a special needs trust can provide for disabled beneficiaries.


Mediation is an alternative to settling disputes with full litigation. In this arrangement, family members and beneficiaries meet to discuss plans and asset transferal. Blended families have the potential for conflict during asset distribution. Using mediation to create an estate plan can help avoid later disagreements and confusion.

Designating an IRA Beneficiary

If there is no beneficiary statement in the United States, the default custodian agreement may apply to the estate, resulting in higher fees and estate taxes.

Identity: A beneficiary that is specific and identifiable must be designated.

Contingent Beneficiary: If the primary beneficiary is deceased prior to the death of the estate holder, the continent beneficiary becomes the primary beneficiary. However, if there is no contingent beneficiary, the custodial agreement applies.

Death: After the death of the IRA owner, the primary beneficiary is able to name is or her own beneficiaries, with no obligation to retain the original contingent beneficiary.

Multiple Accounts: The owner of the IRA can split it into several smaller IRAs with different beneficiaries.