Estate Planning Basics

You already have an estate plan, even if you have done nothing.

The possible problems with your plan may be:

1. Assets may not pass along according to your wishes;
2. The federal government and the state in which you live may get too much of what you own;
3. Your family and friends may suffer undue inconvenience.

Many people feel that estate planning is an unpleasant and morbid subject. They put it off because they are "too busy," or because they think they don't own enough assets for planning to matter, or because they don't like to think about death.

There is no doubt that estate planning can raise some difficult emotional issues. Unfortunately, if you ignore those issues now, you may cost your family thousands or even million of dollars later, as well as considerable mental anguish. Proper estate planning takes far less time and effort than most people imagine, and it can give you tremendous peace of mind.

Certain documents are key estate planning tools:

• a will
• a living will
• a durable power of attorney

Estate taxes can be a big concern, perhaps because estate tax rates can be as high as 55%. However, with proper planning, you can minimize or eliminate your estate tax bill. If your estate is worth more than the excess of the applicable exemption amount ($675,000 in 2000, increasing to $1,000,000 in 2006), you might be subject to estate tax.

A trust is a legal structure that you can use for a variety of needs, ranging from competent asset management, to avoidance of probate, to flexibility in planning for others. In addition, trusts can provide estate and income tax savings opportunities, particularly as asset values increase.

These things are all part of your estate. But don't forget to consider all the other assets that might belong to you or your estate:

1. the funds in your 401(k) retirement plan
2. the stock certificates in your safe deposit box
3. the life insurance policy that you took out many years ago.

In addition to identifying the assets in your estate, you must also identify and understand the amount or percentage of each asset that you own and the way in which the property is titled. The laws of the state in which you reside when you acquire the property may affect your ownership of an asset.

Before you can think about how you would like to dispose of your property after you die, you must start by identifying it:

• what it is
• where it is
• how much it is worth.

After you get a basic understanding of the different ways property can be transferred and you start to get a sense of how much you own, you can begin to address your estate planning needs. We recommend that you apply a disciplined process to estate planning, rather than simply focusing on one specific aspect or problem.

Estate Basics
Estate Settlement
Estate Planning and Administration
Estate Planning for Family-Owned Business
E-mail

Investment products are not deposits or obligations of, or guaranteed by Lake City Bank or any other bank, are not insured or guaranteed by the FDIC or any governmental agency and are subject to investment risks, including possible loss of principal invested. Past performance is not a guarantee of future results.