Estate Planning - 5 Steps


Estate planning should be an essential part of every investor's financial plan. No matter how large or how small your estate may be, there will always be important factors to take into consideration. Our main job when helping you design an estate plan is to properly organize the resources of your estate so that you may adequately provide for the present and future needs of the surviving family. In the next few paragraphs, we will help you understand the 5 steps to effective estate planning.

Step #1: Gather the Facts

In order for a financial planner to help you design the proper estate plan for your family, he/she will need to put together a financial inventory containing all of the most pertinent facts. This inventory may include such things as: age, relationship, health, education, and occupation of each family member. The plan will also outline the facts regarding property owned by each person, as well as, complete details regarding the intent of distribution of the assets, which includes beneficiaries to be named in the wills and trusts, as well as, beneficiaries to be named in life insurance policies and retirement plans. In addition, the estate owner's financial objectives should be clearly stated in the plan.

Step #2: Analyze the Facts

After all the facts have been gathered, it is then the financial planner's responsibility to analyze how effective the plan would work in the event of one of the estate owner's death. We will need to consider how much cash will be needed to pay any debts, estate administration costs, estate taxes, and the cash to be given to heirs.

The analysis should also reveal the suitability of the estate owner's assets, and the ability for those assets to provide the surviving family members with an income consistent with their needs. We will also need to look at any business arrangements the owner may have, and determine if a buy-sell agreement is necessary to provide fair compensation to the surviving owners, spouse, or beneficiaries.

Step #3: Formulate and Select the Estate Plan

The next step will be to design and select the proper estate planning techniques to match the estate owner's intentions. We will need to analyze exactly how the estate owner's assets will pass to the estate, how assets will pass outside the probate estate by reason of law, and how assets will pass outside the probate estate under the terms of a contract.

We will also need to look at the value of using a will or trust. It will also be a good idea to look at when we should advise the owner to hold on to certain assets until death, and see if there is an effective method of giving away these assets outright during life.

Step #4: Implement the Estate Plan

After a comprehensive estate plan is developed, it will be the estate owner's decision on whether or not they would like to implement the plan. This step may include making present gifts or purchasing additional life insurance or annuities. It may also require preparing, with the assistance of an attorney, new trusts, deeds, contracts, or a will.

Step #5: Perform Periodic Reviews of the Plan

The final step of the estate planning process will be reviewing the plan periodically. There will most likely be several changes and amendments necessary to carry the plan through to the end.

At O'Neil Financial, we will work with you and your family every step of the way to make sure your estate is delivered to your beneficiaries exactly the way you intended.

If you would like O'Neil Financial to take a look at your current estate plan, as well as share some of our thoughts on the latest estate planning techniques, then click here for a free consultation.