Gurney's Inn
April 19, 2006

$ & Sense

"Developing Your Estate Plan"

You've spent years growing your wealth and building your estate, so it is just good sense to plan to protect your assets and pass them on to your beneficiaries according to your wishes. When you're ready to sit down and develop an estate plan, keep these tips in mind.

Write A Will

If you do not have a will when you die, the law of your state may then determine what happens to your estate, your assets, and any minor children. In addition, even if you have a will, the estate administration process, usually governed by probate court, can be slow, sometimes expensive, and open to the public.

Fund A Living Trust

Follow through if you set up a living trust. Until you transfer ownership of property or assets to it, the trust is not worth any more to you or your beneficiaries than the paper it's printed on. Unfortunately, many revocable living trusts are set up but are never funded.

Re-title "JTWROS" Property

Joint-Tenancy-With-Right of Survivorship titling of assets may reduce flexibility in estate planning. Although probate is avoided at the first joint owner's death, estate-tax saving opportunities may be limited.

Use Spouses' Estate Exemption

Leaving all property and assets to a spouse may avoid estate taxes at the death of the first spouse, but it wastes the estate tax credit of the "first-to-die." A credit shelter trust can allow each spouse's estate exemption amount to be utilized, thus sheltering more assets from estate tax liabilities.

Re-title Life Insurance Policies

Most life insurance policies are owned by the insured, causing the policy's face amount to be included in that person's estate at his or her death. Policy owners may consider giving policies directly to the beneficiary or transferring the policies to an irrevocable life insurance trust. Either strategy could help reduce estate taxes.

Choose An Appropriate Executor

Naming an inexperienced family member as executor could complicate the demanding task of settling your estate. This is especially true because the time following a death is often emotionally difficult. You might want to look into the benefits of naming a trust company or other corporate fiduciary as your executor.

Organize Your Paperwork And Files

If you do not provide your executors and beneficiaries with all the paperwork or files pertaining to your property, assets, and wishes, improper distribution and management of your estate may result.

Update Your Estate Plan

Updating your estate plan from time to time is important so that it is implemented exactly according to your wishes. You will want to update your estate plan when there are changes in your family (births, marriages, divorces, deaths, etc.), when the value of your estate significantly increases or decreases, when tax laws change, if you move to another state or if your business or career changes.

Be sure to consult your tax and legal advisors before making any tax-related or legally related decisions. And during the estate planning process, don't forget to involve your financial advisor in investment-related issues.

For More Information

If you'd like to learn more about Developing an Estate Plan, please call: Michael Pellman, Retirement Planning Specialist, Morgan Stanley, Riverhead, NY, (631) 284-5213

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