ESTATE PLANNING

Majority of American Adults Are Going Through Life Without A Properly Executed Estate Plan. Many People Don't Even Know Exactly What Estate Planning Is, Or Why It Is Important.

A LOOK AT

By Larry Parman
OKLAHOMA ESTATE PLANNING ATTORNEY

According to surveys, the majority of American adults are going through life without a properly executed estate plan. Many people don't even know exactly what estate planning is, or why it is important. Everyone is going to pass away someday. This may not be the most pleasant subject to contemplate, but it is simply a fact of life. You must prepare for this inevitability in advance, and it requires the execution of certain legally binding documents.

VEHICLES OF ASSET TRANSFER

Estate planning involves arranging for the transfer of your financial assets after you pass away. There are numerous different ways to get assets into the hands of your loved ones. The best course of action is going to vary on a case-by-case basis depending on your unique personal situation.

LAST WILLS

A Look at Estate Planning

www.ParmanLaw.com

The most commonly used asset transfer vehicle is the last will or last will and testament. In this estate planning document you record your wishes regarding the transfer of your property. You also name an executor or executrix who will be in charge of handling the business of the estate. If you are a parent of a dependent child you would want to nominate a potential guardian when you create a last will. This individual would care for the child if both parents were to pass away.

REVOCABLE LIVING TRUSTS

An alternative to a last will as a vehicle of asset transfer is a revocable living trust. With these trusts you name a trustee to administer the trust after you die. You can name an individual, but many people prefer to use a bank or a trust company. The trustee that you select distributes assets to the beneficiary or beneficiaries that you name in the trust agreement. You decide on the nature of these distributions when you are drawing up the trust. Many people think that trusts are only for wealthy individuals. In fact, revocable living trusts do not address many of the concerns that wealthy people have. This type of trust is utilized to enable the transfer of assets outside of the probate process. Probate is the legal process of the estate administration. It takes place under the supervision of the probate court. Probate avoidance is appealing because probate is time-consuming, it can be costly, as it is a public proceeding.

A Look at Estate Planning

www.ParmanLaw.com

ESTATE TAX EFFICIENCY

We have a federal estate tax in the United States, and it can reduce the value of your wealth considerably as it is being passed on to your heirs. At the present time the maximum rate of the federal estate tax is 40 percent. The amount of the estate tax exclusion in 2014 is $5.34 million. The portion of your wealth that exceeds $5.34 million in value would potentially be subject to the federal estate tax. Estate planning can involve positioning your assets in a tax efficient manner so that your estate tax exposure is mitigated.

ASSET PROTECTION

Estate planning can include efforts to protect assets from creditors and claimants. There are various different ways of accomplishing this goal. The creation of a family limited partnership can be a way to protect assets. Limited liability companies are also used for asset protection.

A Look at Estate Planning

www.ParmanLaw.com

SPECIAL CIRCUMSTANCES
Your family dynamic will play a role when you are planning your estate. For example, if you have a person with a disability who is receiving government benefits on your inheritance list you must tread lightly. A direct inheritance could lead to the forfeiture of these benefits. This type of situation is addressed through the creation of a supplemental or special needs trust. There is also the matter of a spendthrift heir. You may have someone in the family who is prone to burning through money quickly. He or she may squander a direct inheritance in short order. You can protect a poor money manager from his or her own bad decisions by making this individual the beneficiary of a spendthrift trust. The trustee would handle the assets, and the beneficiary would have no control over them. Measured distributions would be made to the beneficiary in accordance with your wishes. These are a of couple of

examples others.

special

circumstances, but there are

INCAPACITY PLANNING
Arranging for the transfer of your financial assets is at the root of estate planning. However, it also involves preparing for the twilight years that will precede your death.

A Look at Estate Planning

www.ParmanLaw.com

Incapacity is possible. You can prepare for this eventuality by empowering decision-makers to handle your affairs in the event of your incapacitation. This is done through the execution of documents called durable powers of attorney. You should also execute a living will stating your preferences regarding the use of life sustaining measures.

CONCLUSION
All responsible adults should work with a licensed estate planning attorney to create a comprehensive estate plan. If you do nothing your family would be left behind to deal with the aftermath. Negative consequences could arise, and they can be easily avoided if you plan ahead appropriately with the benefit of legal counsel.

REFERENCES
Forbes http://www.forbes.com/sites/janetnovack/2012/10/14/the-forbes-guide-toestate-planning/ American Bar Association http://www.americanbar.org/groups/real_property_trust_estate/resources/est ate_planning.html

A Look at Estate Planning

www.ParmanLaw.com

About the Author

Larry Parman
After helping his own family deal with a lengthy probate and a battle with the IRS following his fathers death in a farm accident, Larry made a decision to help families create effective estate plans designed to reduce taxes, and minimize legal interference with the transfer o f assets to ones heirs, and protect his clients assets from predators and creditors. Following a dozen years in the investment banking and financial services business, in the mid-1980s Mr. Parman formed a law firm that gives families the peace of mind that comes from having created a premier estate and financial plan. After forming his law firm in 1984, he offered a series of public and private seminars to inform the public about using a Living Trust as the foundation of a familys estate plan. Today, Pa rman & Easterday is one of the leading business and estate planning law firms in the Midwest. The firms primary focus is on business and estate planning, elder law, asset protection, and providing effective estate planning solutions for clients. Today, the firms premier estate plan design is referred to as a Legacy Wealth Plan. Mr. Parman is a frequent guest on the radio and can be seen on television talk shows explaining the importance of proper estate planning. Prosperity Productions selected Mr. Parman as a featured speaker in a nationally-recognized educational video on Living Trusts. He is the author of numerous published articles on financial and estate planning matters and the co-author of two books, Estate Planning Basics: A Crash Course in Safeguarding Your Legacy and Guiding Those Left Behind in Oklahoma: Settling the Affairs of Your Loved Ones. Mr. Parman is a member and Fellow of the American Academy of Estate Planning Attorneys. He is also a member of the Oklahoma and Missouri Bar Associations, the American Bar Association, and the Oklahoma City Estate Planning Council.

www.ParmanLaw.com
OVERLAND PARK, KS 10740 Nall Avenue, Suite 160 Overland Park, KS 66211 Phone: (913) 385-9400 Fax: (913) 385-9422
A Look at Estate Planning

OKLAHOMA CITY, OK 13913-B Quail Pointe Drive Oklahoma City, OK 73134 Phone: (405) 843-6100 Fax: (405) 917-7018
www.ParmanLaw.com