Estate Planning First instinct may lead you to believe that estate planning is only for people with

a substantial amount of money, but it is actually beneficial to all people. Estate planning is the collection of preparation tasks that serve to manage an individual's asset base in the event of their incapacitation or death (Investopedia.com). It includes preparation of a will, power of attorney, a living will, health power of attorney, trusts, heirs, and charitable giving. What will happen to your assets and property once you are gone is something everyone should consider. Estate planning allows the distribution of your wealth to be carried out according to your own wishes. Websters Dictionary defines a will as a legal declaration of a persons wishes regarding the disposal of his property or estate after death. A will enables you to communicate your wishes and makes matters easier for the loved ones that you leave behind. It indicates how you want your property and assets to be distributed and also appoints a guardian for minor children. A will also allows you to appoint a person, the executor, to carry out all of these terms. In regards to a will, a question that many people have is who exactly needs a will? The answer is everyone. You do not need to be wealthy to need a will. Whether you have a little money or a great amount of money, a will ensures that the money is going to the desired beneficiaries. Without a will, the court will decide who receives the decedents assets. About.com says that if you care about who gets your property when you die, who gets your money when you die, or who is appointed guardian of your minor children when you die, you need a will. Obviously, answering those questions would include almost everyone as needing a will. Bankrate.com points out that it may even be necessary to have a will even if you have no

assets at all. Suppose you die in a car wreck caused by a drunk driver. Even if you have no assets, your estate might have a wrongful death suit that produces millions of dollars in costs, all of which will be divvied up by the state if there is no will. People with minor children are candidates for a will because it appoints a guardian for their children in the event of their death. Even people with adult children are great candidates; if they have adult children from a previous marriage, a will dictates what assets they will receive, possibly alleviating tension among survivors (Investopedia.com). Business owners also benefit greatly from a will because it provides instructions on how the decedent would like his business to be run after he is gone. Another group of people who profit from a will are those who would like to give charitably at their death. The will is a tool to donate to a charity, fund, or institution at your own discretion because what the family thinks is appropriate to donate may not have been the decedents wishes. If someone dies without a will, they are said to have died intestate. In this event, instead of your assets being distributed according to your wishes, the state will distribute them. Generally, in the state of Louisiana, if you die without a will, your children will inherit your assets equally while your surviving spouse will be granted usufruct. The states application of this intestate formula may pose a problem if, perhaps, your spouse was relying on receiving the bulk of your assets to maintain his or her standard of living. Dying without a will may result in your assets going to places other than what you would have liked. Another common question is what is the process and cost of making a will? A will can be made with or without the help of an attorney. If you have a large, complicated estate, it may be best to use the aid of an attorney. On the other hand, Nolo.com says, If you know what you own, whom you care about, and you take a little time to use self-help resources, you should be

fine. Simply distribute your property and assets in the way that you desire. Two types of wills are accepted in the state of Louisiana: notarial wills and holographic wills. A notarial will is typed, signed by the maker and witnesses, and notarized. A holographic will must be written in the makers own handwriting, signed, and dated. It is feasible to create your own will, and there are even many templates and resources such as Quicken available online. Bankrate.com says, An attorney will usually do a bare-bones simple will for less than $100; a simple will means no trusts and an estate value that falls under a specific exclusion amount. Thus, even the cost of a will using an attorney may be small. Another important aspect of a will is the executor. According to Nolo.com, Essentially, an executor is charged with protecting a deceased person's property until all debts and taxes have been paid, and seeing that what's left is transferred to the people who are entitled to it. The executor has a fiduciary duty to the decedent and should act in the deceaseds best interest. The executor has a number of duties including: pay debts, pay taxes, supervise distribution of decedents property, set up an estate bank account, file the will in probate court, and manage decedents assets until they are distributed to heirs. Holding the title of executor is a tremendous responsibility. One legal document that is not a will but is still important for estate planning is the power of attorney. It gives one person the power to act for another person in regards to financial and property decisions. A power of attorney can be used if you cannot be present to sign a legal document, but it also ensures that someone will look after your financial affairs if you become incapacitated (Investopedia.com). A power of attorney dies with the person who granted it. The option to make a power of attorney durable is also available. According to Rocketlawyer.com, Durable simply means that your power of attorney will be valid even in the

event you become incapacitated or mentally incompetent. It remains in effect until is revoked by the person who granted it or when that person dies. A non-durable power of attorney can be terminated by other events. Another component of a will is a living will. A living will does not concern your assets or property, but instead, it sets forth your wishes for medical care in terms of life support should you be incapacitated (Investopedia.com). A living will ensures that decisions made concerning your health will be made according to your wishes; if you do not have a living will, your family will be faced to make the decision. Rocketlawyer.com advises that a living will is limited to deathbed concerns only, and is used to declare your desire to not have life-prolonging measures be taken if theres no hope of recovery, for example, in the event of brain death or terminal illness. People with a terminal illness that risk incapacitation are in need of a living will. A health power of attorney is another legal document that is essential to estate planning. It is different than the living will because it covers all health care decisions and lasts only as long as you are incapable of making decisions for yourself (Rocketlawyer.com). A health power of attorney is a legal document that allows people who become unable to make their own decisions to exercise their beliefs and wishes regarding medical procedures (Investopedia.com). For instance, if you do not want to be placed on dialysis or chemotherapy, a health power of attorney is the place to indicate such wishes. Having both a living will and a health power of attorney is recommended. Estate taxes are also an important part of estate planning. In the state of Louisiana, estate taxes have been eliminated, but there is still a federal estate tax. Any inherited assets that exceed the 5.25 million dollar federal limit are taxed. Estate taxes apply only to heirs; the unlimited

marital deduction allows any amount of assets to be transferred to a surviving spouse (Investopedia.com). Trusts are another important aspect of estate planning. A simple definition of a trust is an agreement between parties where property is held by one person for the benefit of another person. Trusts can be used in estate planning to avoid probate and minimize estate taxes. It is important to get the help of an experienced attorney when forming a trust (Investopedia.com). The grantor of the trust is the person who establishes the trust and provides the assets to be transferred. The trustee is the person or corporation who manages the assets for the beneficiary, the person or persons who benefit from the trust. The assets or property of the trust is called the corpus. The two classification of trusts are living trusts and testamentary trusts (Investopedia.com). With a living trust, the grantor is alive when property is transferred to the trust. A testamentary trust goes into effect at the death of the grantor and is usually created in the grantors will. A living trust can be revocable or irrevocable (Fidelity.com). Revocable means the grantor retains the ability to change the terms of the trust or even, cancel the trust agreement during his or her lifetime. The assets in the revocable trust are treated as assets owned by the grantor during his lifetime and are usually subject to estate taxes. Because grantors remain in control of revocable trusts, these trusts are not often used in estate planning. An irrevocable living trust removes the grantors right to make changes to the trust. The grantor cannot change the trustee, the beneficiary, nor have any control over the property of the trust. The property in the trust is no longer part of the grantors estate. The irrevocable trust is preferred when considering estate planning because it reduces the amount of the grantors assets subject to estate taxes. Also since the grantors assets are now in the irrevocable trust, the grantor is not subject

to the tax liability, and the assets are protected from legal judgment against the grantor. Trusts are an important consideration during estate planning. Trusts provide many other benefits aside from reducing estate taxes (Fidelity.com). Trusts provide for a control of wealth. A person forming a trust can control the terms to indicate when and to whom the distributions of the trust are made. Trusts can be used to protect a persons legacy. Some trusts can protect a persons estate from the creditors of his or her heirs. Trusts can also be used to protect ones assets when the beneficiary is unable to handle money management due to age or disability. A third benefit of using a trust is the privacy advantage. The terms of a trust are not publicly known, and this benefit appeals to many individuals. Along with minimizing estate taxes, there are many other advantages to forming trusts. There are many different types of trusts used to meet the needs and goals of different individuals. A common type of trust is the marital or A trust. This trust provides benefits to the surviving spouse and is usually subject to the estate taxes for the surviving spouse (Fidelity.com). A second type of trust is the bypass or B trust. The bypass trust is also called the credit shelter trust. This trust is used to bypass the spouses estate to take full advantage of the federal estate tax exemption for each spouse (Wellsfargoadvisor.com). As of 2013, the federal government allows $5.25 million of each spouses estate to be sheltered from estate taxes. The irrevocable life insurance trust is a trust that allows life insurance proceeds to be excluded from the estate of the first spouse to die and to also be excluded from the surviving spouses estate. This trust is funded by the life insurance policy. The trust is the beneficiary of the life insurance policy, and the heirs are the beneficiaries of the trust. Another type of trust is the qualified terminable interest property trust, also called QTIP. The QTIP trust is often used when a family has experienced divorce, remarriage, or stepchildren (Fidelity.com). With a QTIP

trust, the surviving spouse receives income from the trust, and the trust beneficiaries receive the remainder of the trust when the surviving spouse dies. The final two types of trusts are charitable trusts (Investopedia.com). They include the charitable lead trust and the charitable remainder trust. The purpose of the charitable lead trust is to reduce the grantors current tax liability. A portion of the trust income is first donated to charity, and then after a period of time the remainder of the trust is distributed to the trust beneficiaries. A charitable remainder trust helps an individual to sell appreciated asset such as stocks and real estate without incurring capital gains tax. The assets are gifted to a trust, and the trustee sells the assets. The income generated is not subject to capital gains in the trust. The grantor receives a payment periodically. Upon the grantors death, the charity is paid the remainder of the trust. These are some of the more common types of trusts used by individuals for wealth management and estate planning. An important word to know when considering estate planning is the term heir. An heir refers to family members who inherit from an individual who has died without a will. The state of Louisiana has unique forced heirship laws. These are laws put in place to prevent an individual from disinheriting his or her children. The forced heirship laws in Louisiana state that an heir is a child under the age of 24 or a child who is permanently incapacitated (Mylouisianasuccession.com). A forced heir is entitled to the forced portion of an individuals estate. The percentage of the forced portion that the heir receives depends upon the amount of the estate and the number of heirs. There are three ways to restrict forced heirship (Mylouisianasuceccession.com). The first type of restriction is by giving the surviving spouse usufruct, which refers to the surviving spouses right to use the forced portion of the estate even if he or she does not own it. The second way to restrict forced heirship is through a legitime trust. A legitime trust is an important tool for individuals with disabled children. This trust is

arranged to allow the heir to receive his inheritance and his government disability benefits. A survivorship requirement is the third method used in Louisiana to restrict forced heirship. This requirement states that the heir must survive the owner of the estate by up to six months. This applies only if the heir has no heirs or descendants of his own. Louisiana is the only state with forced heirship laws, but what would happen if an individual has no heirs. If someone has no heirs and no will, the property of the individual goes to the state (Uslegal.com). The estate will be auctioned and the amount collected will be put into a government fund. Clearly, if an individual wishes to control the dispersal of his or her estate, a will is imperative. The final aspect of estate planning to consider is charitable giving. Charitable giving allows someone to minimize estate taxes while supporting important causes. Two of the trusts mentioned previously are useful when contributing to charities. The charitable lead trust and the charitable remainder trust are both used in estate planning to reduce estate taxes. An individual can use the annual gift tax exemption to reduce his or her estate without tax consequences. The annual gift tax exclusion for 2013 is $14,000 (Forbes.com). A person can give $14,000 to as many individuals as he or she wishes without incurring gift taxes. A gift tax is a federal tax on the transfer of ownership of property when the property is a gift, and the donor does not receive payment. The donor usually pays the gift taxes. Gifting a 529 college savings plan to a child or grandchild is another way to reduce taxes. Paying for medical or education expenses directly to the provider provides a tax free gift opportunity, as well (Wellsfargoadvisors.com). Using a donor advised fund is another means of charitable giving. A donor advised fund is an organization that allows tax deductible donations to be made to a charity of ones choice (Troweprice.com). Donor advised funds are usually easier to establish and less costly than

private foundations. Many resources and opportunities are available to reduce estate taxes through charitable giving. When most people think of estate planning, they think of the wealthy as being the only individuals who need to be concerned with the topic. These people could not be more wrong. Everyone needs to consider some form of estate planning. At minimum, everyone needs to have a will. The other aspects of estate planning, including powers of attorney, trusts, heirs, and charitable giving, are also important items to think about to ensure wealth is distributed as one wishes. Estate planning is essential for everyone no matter his or her financial position.

Works Cited "Credit Shelter Trusts." Credit Shelter Trust. N.p., n.d. Web. 1 Dec. 2013. <https://www.wellsfargoadvisors.com/financial-services/estate-planning/trusts/creditshelter-trusts.htm>. "Durable Power of Attorney." Rocket Lawyer. N.p., n.d. Web. 26 Nov. 2013. <http://www.rocketlawyer.com/form/durable-power-of-attorney.rl>. "Estate Tax." Investopedia. N.p., n.d. Web. 26 Nov. 2013. <http://www.investopedia.com/terms/e/estatetax.asp>. "Forced Heirs and Heirship Under Louisiana Law." Louisiana Succession. N.p., n.d. Web. 1 Dec. 2013. <http://www.mylouisianasuccession.com/forced-heirship/>. "Giving To Charity." T. Rowe Price. N.p., n.d. Web. 1 Dec. 2013. <http://individual.troweprice.com/public/Retail/Planning-&-Research/EstatePlanning/Giving-to-Charity>. "Healthcare Power Of Attorney - HCPA." Investopedia. N.p., n.d. Web. 26 Nov. 2013. <http://www.investopedia.com/terms/h/hcpa.asp>. "Heirless Estate Law & Legal Definition." Heirless Estate Law & Legal Definition. N.p., n.d. Web. 1 Dec. 2013. <http://definitions.uslegal.com/h/heirless-estate/>. Jacobs, Deborah. "The 2013 Limits On Tax-Free Gifts: What You Need To Know." Forbes. Forbes Magazine, 1 Nov. 2013. Web. 1 Dec. 2013. <http://www.forbes.com/sites/deborahljacobs/2013/11/01/the-2013-limits-on-tax-freegifts-what-you-need-to-know/>. "Living Will." Investopedia. N.p., n.d. Web. 26 Nov. 2013. <http://www.investopedia.com/terms/l/livingwill.asp>. "Living Will vs. Durable Healthcare Power of Attorney." Rocket Lawyer. N.p., n.d. Web. 26 Nov. 2013. <http://www.rocketlawyer.com/article/the-difference-between-a-living-willand-durable-power-of-attorney-for-health-care.rl>. Merkel, Steven. "Advanced Estate Planning: Using Trusts." Investopedia. N.p., n.d. Web. 1 Dec. 2013. <http://www.investopedia.com/university/estate-planning-guide/estateplanning5.asp>. Pareto, Cathy. "Estate Planning: Charitable Trusts." Investopedia. N.p., n.d. Web. 1 Dec. 2013. <http://www.investopedia.com/university/estate-planning/estate-planning8.asp>.

Pareto, Cathy. "Estate Planning: Introduction To Trusts." Investopedia. N.p., n.d. Web. 1 Dec. 2013. <http://www.investopedia.com/university/estate-planning/estate-planning6.asp>. "Power Of Attorney." Investopedia. N.p., n.d. Web. 26 Nov. 2013. <http://www.investopedia.com/terms/p/powerofattorney.asp>. "Should you have a will?." Should You Have A Will?. N.p., n.d. Web. 26 Nov. 2013. <http://www.bankrate.com/finance/personal-finance/should-you-have-a-will.aspx>. "Trusts." - Using a Trust to Meet Your Estate Planning Goals. N.p., n.d. Web. 1 Dec. 2013. <https://www.wellsfargoadvisors.com/financial-services/estate-planning/trusts.htm>. "What Does an Executor Do?." Nolo.com. N.p., n.d. Web. 26 Nov. 2013. <http://www.nolo.com/legal-encyclopedia/what-does-executor-do-30236.html>. "What Is a Trust?." What is a Trust?. N.p., n.d. Web. 1 Dec. 2013. <https://www.fidelity.com/estate-planning-inheritance/estate-planning/trusts>. "What Is A Will And Why Do I Need One?." Investopedia. N.p., n.d. Web. 26 Nov. 2013. <http://www.investopedia.com/articles/pf/08/what-is-a-will.asp>. "Will." Merriam-Webster. Merriam-Webster, n.d. Web. 26 Nov. 2013. <http://www.merriamwebster.com/dictionary/will>. "Who Needs a Will? 5 Reasons It Might Be You." Everyday Law. N.p., n.d. Web. 26 Nov. 2013. <http://blog.rocketlawyer.com/who-needs-a-will-5-reasons-it-might-be-you-95565>. "Why You Need a Will." About.com Financial Planning. N.p., n.d. Web. 26 Nov. 2013. <http://financialplan.about.com/cs/doityourself/a/WhyYouNeedWill.htm>.