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good strategyWhile planning your estate, common sense is necessary to select a good strategy. In common estates, there are many options in selecting a strategy designed to execute your estate plan. Since forming a strategy involves many decisions, you need to use common sense to make good decisions. Otherwise, problems may result for your beneficiaries and your executor. In essence, common sense leading to good decision making is the formula for a sound estate plan.

Selecting a Good Strategy for Your Estate Plan

In common estates, selecting a good strategy for your estate plan requires preparation. The preparation consists of evaluating your estate size, choosing your beneficiaries, and selecting an executor. Although all three aspects are important, evaluating the estate size is the most important aspect. As described in the article How Estate Size Will Influence Your Estate Plan, determining your estate size allows you to apply common sense to realize your best strategy. Therefore, after completing the preparation, strategies similar to those listed below should come into focus:

  1. Probate avoidance. Probate avoidance should be the focus of any well-funded estate. By moving assets off the estate to beneficiaries, avoiding probate and higher estate income taxes becomes possible. Using this strategy involves designating beneficiaries to assets, possibly some form of trust depending on the property, and putting aside assets to cover estate obligations.
  2. Traditional estate plan. A traditional estate plan is best for modest estates. Typically, the will distributes the decedent’s property, which results in some probate. However, designating beneficiaries to retirement accounts and accounts that earn income after death is necessary to avoid costly estate income taxes. Additionally, planning to avoid possible abatement may be necessary.
  3. Formal probate. In small estates or insolvent estates, formal probate offers protection for the estate. Therefore, in the will, spouses and children should be the only beneficiaries. At times, the probate court will allow a small inheritance for estates with limited assets.      

Depending on your estate size and life circumstances, common sense should lead you to the best strategy. For instance, if an estate has $50,000.00 in assets, but $60,000.00 in estate obligations, choosing a probate avoidance strategy would be a disaster. However, when applying common sense, choosing formal probate is the better option.

A Word about Strategies and Estate Planning

In full disclosure, I am not an estate planning expert. The strategies mentioned above are limited to my knowledge acquired from serving as an executor. Depending on your circumstances, you may need a more advanced strategy to execute your estate plan. So, use common sense when deciding whether to use a professional estate planner.

Anyway, a strategy in estate planning helps to fulfill your wishes in settling your estate. Without a good strategy to execute your plan, chaos will result and produce unintended consequences. Therefore, to build a sound estate plan, use common sense while selecting a good strategy. In the end, your beneficiaries and your executor will be very happy.

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Recommended Reading

Plan Your Estate– Plan Your Estate provides examples of estate plans and the strategies used to implement those plans.