What is estate planning?

As stated in prior blogs, the University has provided internet users with an estate planning course.  The course can be found at  http://www.wyomingextension.org/publications/bulletins-estateplanning.asp    I am now taking that course one week at a time.  This week I reviewed the lesson about what is included in estate planning.  It is found at this link http://www.wyomingextension.org/agpubs/pubs/B1250-1.pdf  These are the topics that are included:

1. Who will make my financial decisions when I can’t make them?

2. Who will make my health-care decisions when I can’t make them?

3. What will happen to my property after I die?

4. What will happen to my remains?

5. What is the legal procedure for transferring my estate to my heirs?

6. Who will care for my minor children?

Among other important questions are:

1.  What are the Wyoming requirements for valid wills?

2. How do you revoke a will?

3.  What other tools are available?

In using this course always remember that the course is based on Wyoming law.  An example of this is the author's attitude toward probate.  He commented, "through the difficulty and expense of probate" and the "cumbersome probate process."  This in large part is due to the fact that in Wyoming the attorney and the Personal Representative each get a percentage of the estate as their compensation.  In Colorado the attorney and the personal representative only earn their normal hourly rate,  Because the Colorado probate system is so simple, many people do not hire an attorney.   The  results is that in Colorado many estates are probated for a thousand dollars or less, even when attorneys are employed.  Even with the very economical Colorado probate, many Colorado attorneys favor trusts simply because the fees for creating a trust often exceed three thousand dollars (obviously they will all deny that making more money is their motivation for recommending a trust, but "trust" me on this).   Most Coloradoans find that the most cost effective tool is the will.  If cost is not the main concern then a trust or some other vehicle may be the best option.

My other observation regarding this article is the author did not clearly explain "beneficiary designations."  50 years ago almost all wealth passed through probate, trusts, etc.  More recently large amounts of wealth have been passed through contractual relationships such as insurance policies, retirement accounts, and payable on death agreements with banks and other institutions.  Since these are creatures of contracts this wealth is governed by those contracts.  The critical portions of those contracts are usually referred to as "beneficiary designations."  Any time that you are doing estate planning you should determine what those assets that are governed by contract and then examine the beneficiary designations to make sure that they are accurate.  You must always remember that your will or trust does not control those items in any way unless your estate or trust is designated as a beneficiary.  That may not be a wise choice for many reasons.  Consult  your tax professional and your attorney to devise the best strategy.

Otherwise, I thought that the information provided in this lesson is a very useful overview of estate planning.

Posted on January 11, 2014 .