ISSUE 143: Special Section

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What Is Your Estate and How Do You Create a Plan?

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There is a tongue-in cheek expression that says your Estate is what’s above the ground when you are put under the ground. Being that estate planning can be traced as far back as the fourth Egyptian Dynasty it is obviously not a new trend; it is something that has always been on our minds.

Estate planning is the preparation for the distribution and management of a person’s estate after death; through the use of wills, trusts, insurance policies, tax liabilities and other arrangements. Your estate is made up of everything you own, including: cash, stock, bonds, retirement’s accounts, personal effects, life insurance, business and real estate. As you can see, one does not have to be a Rockefeller to have a substantial estate and estate tax. Although the federal estate tax has been repealed for 2010, add restructuring in 2011 with a $5,000,000 extension rate and a 35% tax rate, for 2011 and 2012. Currently, this is only a two year Hiatus until the much feared return of the prior law in 2013 with a $1,000,000 exclusion and maximum 55% tax rate. Also, we can’t forget that Kentucky is one of the seven states that have an inheritance tax; which is a tax upon the privilege of an heir to receive assets from an estate and trust. In other words, an inheritance tax is based upon who receives the deceased person’s property and how much they receive.

An estate plan is much more than who gets what when you are finished with it, but is also the incorporation of asset protection and tax reduction strategies as well.

There are a few estate planning tools we should all take advantage of:

Wills—A Will is a written document in which you identify what you would like done with your assets upon your death. It is also the best place to name guardians for children under the age of 18.

Living Trust—A Living Trust or an Inter Vivos Trust is a contract that holds to and controls your assets. One difference between a Will and Living Trust is when they take effect. A Will only takes effect when you die, a Living Trust takes effect when you execute it and transfer assets into it. A Living Trust will allow you to avoid the probate process which can be expensive, time consuming and very public.

Durable Power of Attorney—A Durable Power of Attorney allows you to designate someone to work on your behalf in regards to your financial affairs; whether it be immediately or upon an incapacitation or unavailability. This can include, but not be limited to, paying bills, collecting AR’s, filing taxes, dealing with lawsuits and litigations or investments.

Health Care Proxy—Also called a Durable Power of Attorney for Health Care, a Health Care Proxy is a document that identifies the person you would like to make medical decisions on your behalf, if you become unable to make them yourself. This should include a HIPAA release form that will allow medical professionals to discuss your medical condition with your personal representative.

Life Insurance—Life Insurance planning is an essential component of the estate planning process. The goal of Life Insurance in the Estate Plan depends on many factors specific to the estate owner. Generally, Life Insurance goals can be divided into two categories: Estate Enhancement and Estate Liquidity.

Living Will—A Living Will is an instrument, signed with the formalities necessary for a will, by which a person states the intention to refuse medical treatment and releases healthcare providers from all liability if the person becomes terminally ill and unable to communicate such refusal.

Business Succession Plan—Succession planning is the process of identifying and developing people with potential to fill key leadership or ownership positions at the instance of retirement or death. Business Succession planning seeks to manage all issues that can arise, in order to allow for a smooth transition between current and future owners.

As the legal complexities surrounding the transfer of property at death becomes further complicated by federal and state taxes, more people are becoming concerned about protecting their property from tax erosion. In essences Estate Planning today is the art of accumulating, conserving and possibly transferring portions of one’s property during their lifetime and disposing of property at death in a manner that minimizes taxes, probate costs and other related expenses, while remaining consistent with one’s lifetime goals.

The content in this article gives a very brief description of general Estate Planning. To meet an individual’s needs, a plan must be carefully tailored by an experienced team of advisors. If you know where to turn, I encourage you to get your current plan reviewed or create a new plan. Remember the words of Winston Churchill: “Failure to plan is planning to fail.”

Estate planning is the preparation for the distribution and management of a person’s estate after death.

Securities Offered Through Securities America Company.*Member FINRA/SIPC-Calvin R. Rasey·Registered Representative Advisory Services offered through Securities America Advisor’s, INC.·A registered Investment Advisor·Calvin R. Rasey·Investment Advisor Representative

Securities American & its representatives do not provide tax or legal advice·Tax-law is subject to frequent change; therefore it is important to coordinate with your tax advisor for the latest IRS rulings and specific tax advice, prior to undertaking and investment plan. Physicians Financial Services II, LLC and Securities America Companies are NOT UNDER Common Ownership