Use Common Sense to Select a Good Strategy for Your Estate Plan

20 Monday Nov 2017

Posted by Robert Dowling in Planning Tips

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Abatement, Assets, Beneficiary, Common Estate, decedent, estate, Estate Income Taxes, Estate Obligations, Estate Plan, Estate Size, Executor, Formal Probate, Insolvent Estates, probate, Probate Avoidance, Probate Avoidance Strategy, Retirement Accounts, Small Estates, Strategy, Trust, Well-Funded Estate, Will

While 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.

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A Coherent Estate Plan Consists of More Than Just a Will

30 Monday Oct 2017

Posted by Robert Dowling in Planning Tips

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Advance Health Care Directive, Burial Arrangements, Common Estates, Durable Power of Attorney for Finances, estate, Estate Plan, Estate Planning, Funeral, Health Care Proxy, Living Trust, Living Will, Medical History, Military Discharge Papers, Safe Deposit Box, Tax Returns, Will

Many people with common estates believe that a coherent estate plan consists of just a will. This perception about estate planning emanates from the idea that estate planning is only about transferring property after death. Unfortunately, if you believe in this misguided perception about estate planning, you will never complete a coherent estate plan.

Before planning your estate, you must understand that estate planning involves taking care of yourself first, then your property. Sadly, at some point in your life, you may become too ill to handle your own affairs. Therefore, you must provide instructions to manage this possibility in your estate plan; otherwise, the state court will intervene. So, to avoid state court interference, a coherent estate plan must consist of more than just a will.

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Small Business Owners: Don’t Leave Your Executors in the Dark

23 Monday Oct 2017

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Attorney, Business Accounts, Business Registration, Common Estates, Common Executors, Corporation, CPA, decedent, estate, Estate Administration, Estate Plan, Executor, Final Taxes, Schedule C, Small Business, Small Business Owners, Sole Proprietor

While constructing their estate plans, small business owners should advise their executors about changes in their business. Although the executors don’t need to know the day-to-day business operations, small business owners should inform their executors of the following:

Any sale of the business.
A change in registration of the business.
The succession plan for the business, if any.

Consequently, if the small business owners overlook their executors, the executors will experience a chaotic estate administration.

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Apathy Towards Estate Planning Can Lead to Adverse Consequences

16 Monday Oct 2017

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Abatement, Ademption, Administrator, Beneficiaries, Beneficiary, Court Appointed Administrator, decedent, estate, Estate Planning, Executor, Guardian, Intestacy, Intestacy Laws, Intestate, Judge, probate, Tax Authorities, valid will, Will

Presently, apathy towards estate planning is commonly brought on by perceptions people have about estate planning. Recently, during conversations about estate planning, the following perceptions surfaced:

Planning for your death is too morbid.

Estate planning is boring.

Estate planning involves a lot of work in which I have no time for.

Unfortunately, these negative perceptions lead to apathy that result in the following consequences concerning estate planning:

Some people will procrastinate for such a long time that estate planning is completely forgotten. As a result, their estate will fall into intestacy when they perish.

People will create a sloppy estate plan just to get through a process they detest. As a result, complications will arise that will confuse the executor and the beneficiaries.

Although there are people who take estate planning seriously, there are plenty of people who are apathetic. Thus, apathy towards estate planning can lead to adverse consequences for the executor and for the beneficiaries of the deceased.

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How Estate Size Will Influence Your Estate Plan

15 Friday Sep 2017

Posted by Robert Dowling in Planning Tips

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Abatement, Abatement Process, Asset Management, Beneficiary, Bequests, Debts, Earned Income After Death, estate, Estate Income Taxes, Estate Obligations, Estate Plan. Common Estate, Estate Planning, Estate Size, Estate Taxes, Expenses, Large Beneficiary Pool, Net Worth, Order of Payment, probate, Probate Avoidance Strategy, Probate Court, Retirement Accounts, Simplified Probate Process, Small Estate, Tax Planning, Tax Professional, Unintended Consequences, Well-Funded Estate, Will

To properly plan your estate, it’s important to understand how your estate size will influence your estate plan. As explained in the article The First Step to Estate Planning: Estimate Your Net Worth, your net worth will determine your estate size. By calculating your net worth, some important questions will come into focus regarding your estate plan:

Are there enough assets to cover your debts and other estate obligations?

If there are enough assets to cover the estate obligations, are the remaining assets enough to cover bequests?

Do I need to plan for estate taxes or estate income taxes?

Do I need to plan for abatement?

Obviously, these are just a few basic questions as life circumstances can make estate planning much more complicated. However, the answers to these questions will influence how you begin to properly plan for your estate.

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How to Avoid Abatement and Ademption

04 Monday Sep 2017

Posted by Robert Dowling in Planning Tips

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Abatement, Ademption, Ademption by Extinction, Beneficiaries, Bequests, Common Estates, Contest The Will, Estate Planning, General Bequests, Heirlooms, probate, Probate Avoidance Strategy, Probate Court, Residuary Beneficiaries, Specific Bequests, testator, Will

Typically, careful estate planning will avoid abatement and ademption. However, people with common estates know little about abatement and ademption and fail to plan properly. As a result, the probate court ends up deciding the distribution of bequests through abatement or ademption.

To avoid abatement and ademption, the testator must prepare a coherent estate plan and keep it updated. If the testator uses the process described in the article The First Step to Estate Planning: Estimate Your Net Worth, then avoiding abatement and ademption is possible.

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Plan a Simple Distribution in Your Will

29 Monday May 2017

Posted by Robert Dowling in Planning Tips

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Beneficiaries, Common Estate, Distribution Instructions, estate, Estate Plan, Estate Planner, Executor, Simple Distribution, Will

If you have a common estate and plan to distribute property through your will, plan a simple distribution. There is no need to force your executor to flow chart the beneficiaries and solve a complex algorithm to distribute property as depicted in the article Why is Calculating a Distribution from a Will Necessary?. In addition, complex distribution instructions increase expenses of the estate by forcing the executor to use outside help. So, to avoid giving your executor needless headaches and inflating expenses of the estate, plan a simple distribution.

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Why is Calculating a Distribution from a Will Necessary?

22 Monday May 2017

Posted by Robert Dowling in Planning Tips

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Attorney, Beneficiaries, Common Estate, Distribution Formula, Distributions, Estate Planning, Executor, Final Accounting, Formal Probate Process, probate, Tax Professional, Will

Typically, calculating a distribution from a will, in a common estate, is a result of poor estate planning. If an executor needs an analysis pad to figure out a distribution involving many beneficiaries, the estate plan has the following flaws:

There are too many beneficiaries in the estate plan.
The estate plan has a complicated distribution formula.

In the article The Estate Income Tax Returns: Execute the Plan, calculating the distribution written in the will forced me, as executor, to use an analysis pad, then an excel spreadsheet. The distribution formula consisted of twenty beneficiaries receiving different amounts of property calculated in percentages and shares. In fact, the complicated distribution formula took me a few drafts to get to a final draft. After completing the final draft on an excel spreadsheet, to make sure the distribution calculation was accurate, I emailed the spreadsheet to my attorney and the tax professional. The professionals reviewed the final draft and approved the distribution. Finally, after the review, I was able to distribute the property to the beneficiaries. In addition, the spreadsheet of the final draft became the template for the next distribution.

Although the distribution worked out well, an executor of a common estate should never have to calculate a complicated distribution. Therefore, calculating a distribution from a will should rarely be necessary.

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List Your Beneficiaries Wisely in Your Estate Plan

20 Monday Mar 2017

Posted by Robert Dowling in Planning Tips

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Annuities, Beneficiaries, decedent, Estate Assets, Estate Expenses, Estate Plan, Estate Property, Executor, Indebted Estate, Inherit, Life Insurance, Primary Beneficiary, probate, Probate Avoidance Strategy, Probate Court, Retirement Plans, Secondary Beneficiary, Will

When developing your estate plan, list your beneficiaries wisely. In some common estates, overlooking the fact that a beneficiary listed on an asset supersedes a beneficiary listed in a will causes problems with beneficiaries and what they inherit. Because assets with a designated beneficiary goes to the beneficiary, the property is not part of the estate. Conversely, if a beneficiary is to receive property through the will, the property must go through probate. Moreover, if the executor sold estate assets to cover expenses, the beneficiary receives a reduced amount or nothing at all. So, to avoid problems with beneficiaries, list your beneficiaries wisely.

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The First Step to Estate Planning: Estimate Your Net Worth

03 Monday Oct 2016

Posted by Robert Dowling in Planning Tips

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Beneficiaries, Calculate Net Worth, estate, Estate Plan, Estimate Your Net Worth, Executor, Inventory of Property, Living Trust, Net Worth, Personal Finance Management Software, Trustee, Will

To create a coherent estate plan, you must first estimate your net worth. How much work you should put into the estimate will depend on the following factors:

If you know your estate is large, use as much precision as possible.

If you know your estate is too small for estate taxes, but own assets that will earn income after your death, use as much precision as possible. (Refer to the article Tips to Minimize the Estate Income Tax to plan accordingly in this scenario.)

If you know your estate is small with few assets that will earn income after death, a ballpark figure will do.

Basically, estimate your net worth as precisely as possible anytime tax planning is a concern in your estate plan. This will allow you to plan for tax avoidance properly and prevent any awkward surprises for your executor.

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The Common Executor

~ A Journey into Estate Administration

Category Archives: Planning Tips

Use Common Sense to Select a Good Strategy for Your Estate Plan

A Coherent Estate Plan Consists of More Than Just a Will

Small Business Owners: Don’t Leave Your Executors in the Dark

Apathy Towards Estate Planning Can Lead to Adverse Consequences

How Estate Size Will Influence Your Estate Plan

How to Avoid Abatement and Ademption

Plan a Simple Distribution in Your Will

Why is Calculating a Distribution from a Will Necessary?

List Your Beneficiaries Wisely in Your Estate Plan

The First Step to Estate Planning: Estimate Your Net Worth