Estate Management

For educational and informational purposes only, This is not a recommendation to buy, sell or invest. Please consult your advisor and tax consultant.

Effective estate management empowers individuals by allowing them to manage affairs during their lifetime and governor the dispersal of capital after death. An effective estate strategy can lay forth healthcare and financial requests to be carried out in the event that the estate owner is unable to do so.

The purpose of estate management is to preserve the assets you’ve built during your lifetime. It keeps your family and heirs in mind while guaranteeing that your assets are dispersed how and when you want them to be. Additionally, estate management takes into account the amount of estate taxes that may be due after death. The two central estate management principles are:

  • Maintaining financial and personal affairs during life
  • Distribution of wealth after death

When implemented correctly, estate management enables you to choose how your healthcare is handled in the event that you lose the ability to communicate these wishes. It can also ensure your possessions go to the specific individuals of your choice, without legal interference that can ultimately hinder the estate and even cause family divides. Effective estate management means avoiding unnecessary legal costs while providing for loved ones who may not otherwise be protected. Planning in advance means that you determine the outcome.

How Estate Taxes Work

Since 1916, federal estate tax in the United States has been used to create tax revenue from the transfer of wealth between deceased family members to their descendants and heirs. The tax is calculated as a percentage of the whole worth of the estate’s assets minus any deductions.


One of the most important documents you may need to have as part of an estate plan is a will. The purpose of a will is to detail how and where you want your assets distributed after death. Yet, over half of the American population doesn’t have one. Without a will, should an individual die unrepresented and without a documented will, it becomes the state’s job to choose how the individual’s assets will be dispersed.

The Importance of a Will

Even if a trust is present, a will handles any assets outside of the trust after your death.

Think of a will as the foundation of your estate:

  • It gives you the power to name an executor to direct the progression of distributing your estate.
  • It ensures that you may choose the guardian of your minor children.
  • It allows you to decide how your assets are to be distributed.


Even though they are important documents, wills aren’t perfect. So, it’s vital to know of their weaknesses.

One of the most important things to know is that wills can be contested.

Here’s how it works: Probate court will send out notice of the will to those who may have grounds to contest.

If an individual decides to contest it, this could mean an extensive fight in probate court. Additionally, a contest isn’t just limited to beneficiaries; depending on the state of residency, a spouse, ex-spouse or child may be able to contest the will if they believe your wishes do not comply with probate laws. Wills are fundamentally directions for probate court. Because of this, if contested, probate is nearly a guarantee. The probate process can be expensive and drawn out. In excess, it can take years to come to a resolution.

It is also important to note that probate is public record, which means if the only estate management instrument you utilize is a will, anyone can find out how much you left and to whom.

In addition to a will, let’s take a look at some other documents that can help you reach your estate management goals.

Advanced Directives

Simply put, advanced directives deal with three important pieces of estate management:

  • Power Of Attorney (POA) – This is a document that permits you to assign an individual or organization to handle your affairs if you become unable to manage them yourself.
  • Durable Power Of Attorney – A durable power of attorney is a distinctive type of authorization that permits the POA to continue handling your affairs even if you are ill or incapable of communication.
  • Living Will – A living will is a document that states your wishes in respects to medical treatment under conditions in which you are no longer able to communicate knowledgeable consent.

Why Advanced Directives Are Important

A living will offers detailed instructions about desired medical care if you become incapacitated. There are no additional legal proceedings necessary because it is effective immediately upon inability.

A power of attorney permits someone to handle both legal and monetary decisions on your behalf should you become incapacitated. Like a living will it can take effect upon incapacitation. You may also choose to specify any other activated events upon which the POA may be placed into effect. Similar to a living will, a power of attorney does not require additional legal proceedings. Keep in mind, different states can have diverse laws in regards to a POA, so it is advised to know your state’s specific laws.

A durable power of attorney, which addresses specific healthcare needs, allows you to choose who handles your health while you are incapacitated. Just like a living will or POA, no additional legal proceedings are required.

The important question to ask in regards to Advanced Directives is, does your family know your wishes if you were to become incapacitated?

With today’s advances in medical science and longer average life expectancy, advance directives are becoming even more important with benefits that should be taken into consideration when attempting to effectively manage an estate.

Financial Documents to Consider

Just as there are essential forms regarding healthcare, there are critical monetary documents to consider in estate management such as:

  • Joint Ownership – This is a means of holding a title to a property. What makes it beneficial is that should of the partners in the ownership die, the living partner can take over ownership without the assets going through probate and is effective as soon as the joint ownership is recorded.
  • Living Trust – A living trust is enacted while you are still living. It takes effect when the trust documents are signed and assets are transferred into the trust.

Understanding a Trust

Trusts are a powerful estate management instruments—they are a legal entity that can own assets. When arranged correctly, trusts can avoid excessive expenses and potential delays because of their ability to circumvent the need for probate. Additionally, trusts maintain privacy and are not a matter of public record.

Trust Benefits

Here are some reasons to consider a trust for estate management:

It can provide administration of your assets and the distribution to your family and heirs.
Trusts offer a degree of control over how assets are dispersed to beneficiaries.
Unlike a will, a trust is more difficult to contest.

How Does A Trust Work?

After a Trust is established, ownership of your selected assets is transferred to the Trust. Since you are the one who grants the property, you become the grantor.

You can then choose a trustee to manage the trust—you may name yourself or another individual/organization as a trustee.

You choose who you want to inherit the trust upon your death and you may change and/or revoke your choice at any time.

The individual you named in the trust, known as a successor trustee, who takes over after your death, is then responsible for transferring the trust assets to people you wish to disperse the assets to.

There are numerous kinds of trusts to fit specific estate needs. Thus, it is essential to work with a professional who can help you navigate the various options to protect your property and loved ones when you are no longer able to make monetary decisions. In conjunction with a trust, one more powerful tool to consider in estate management is Life Insurance.

Understanding Life Insurance

Life insurance can provide cash to pay for your estate’s expenditures and can be set up separate from the estate. In fact, it is even possible to gift life insurance policies.

Here’s how it works: an individual will establish a trust; fund it, then purchase a life insurance policy on the trust owner. This will remove the policy from the person’s estate. Once this person passes, the estate is succeeded by their heirs and the life insurance policy will contribute to any estate taxes that follow the individual’s death.

Life insurance is affected by price and availability, included but not limited to: age, health, and the amount of insurance purchase. Extra charges and tax implications may be incurred should the policy be surrendered early. Additionally, guarantees attached to a policy are determined on the basis of being able to make the necessary payments to the designated insurance company – life insurance policies are never insured by a bank or Federal Agency.

Now, let’s look at some points to consider when putting together a plan for your estate:

1. You will need to understand the value of your estate by including all property that you have control/shares in (I.E. Personal property, home ownership, real estate, bank accounts, investments, retirement plans, business holdings, and life insurance including any additional benefits.) Note that the value of your entire estate must exceed $11,200,000 to be considered for the Federal Estate Tax.

2. It is also important to know the main objective of your estate management and follow a plan aligned with that objective. Who, specifically, do you want to directly inherit your assets? It’s essential to designate an individual to handle your affairs should anything occur, such as premature death or the need to make important medical decisions on your behalf. Understand your potential spouse beneficiaries and any children that will need to be provided for. Make sure you are recognizing the fine details to ensure any issues that may arise are properly delegated and handled.

Concerns and questions will vary with each individual situation, but the good news is this can all be addressed by a professional who can guide you through the process.

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