Estate Planning

Simply stated, estate planning is a method for determining how to distribute your property during your life and at your death. It is the process of developing and implementing a master plan that facilitates the distribution of your property after your death and according to your goals and objectives.


At your death, you leave behind the people that you love and all your worldly goods. Without advance planning, you have no say about who gets what, and more of your property may go to others, like the federal government, instead of your loved ones. If you care about (1) how and to whom your property is distributed, and (2) ensuring that your property is preserved for your loved ones, you need to know more about estate planning.


As a process, estate planning requires a little effort on your part. First, you’ll want to come to terms with dying, at least to a degree that you can deal with the necessary planning. Understandably, your death can be a very uncomfortable subject, but unfortunately, the discussions in this area are full of references to your death, so it really can’t be avoided. Some statements may seem too businesslike and unfeeling, but tiptoeing around the subject of dying will only make the planning process more difficult. You will understand the process more easily and implement a more successful master plan if you approach it in a straightforward manner.


You may need to plan your estate especially if:


  • Your estate is valued at more than the estate tax

  • Applicable exclusion amount (formerly known as the unified credit), which equals $5.25 million for individuals and $10.5 million for married couples for deaths occurring in 2012.

  • Your income tax bracket is in excess of 10 percent

  • You have children who are minors or who have special needs

  • Your spouse is uncomfortable with or incapable of handling financial matters

  • You’re a business owner

  • You have property in more than one state

  • You intend to contribute to charity

  • You have special property, such as artwork or collectibles

  • You have strong feelings about health-care decisions

  • You have privacy concerns or want to avoid probate


How to do it


Designing a plan is a process that is unique to each estate owner. Don’t be intimidated or overwhelmed at the prospect. Even the most complex plan can be achieved if you proceed step by step. Remember, the peace of mind that comes with developing a successful estate plan is worth the time, trouble, and expense.


Understand your particular circumstances


Begin the estate planning process by understanding your particular circumstances, such as your age, health, wealth, etc.

Understand the factors that will affect your estate

You will also need to have some understanding of the factors that may affect the distribution of your estate, such as taxes, probate, liquidity, and incapacity.


Clarify your goals and objectives


When your particular circumstances and the factors that may affect your estate are clear, your goals and objectives should come into focus.

Understand the strategies that are available

With these goals and objectives now clear, you can begin to consider the different estate planning strategies that are available to you.


Formulate and implement a plan


Finally, after following these steps, you can formulate and implement a plan that works for you. Here are a few basic tips: (1) make sure you understand your plan, (2) rely on people you trust, and (3) keep your documents and information organized and within easy reach.


Perform periodic reviews


When you have implemented your master plan, be sure to perform a periodic review and, if necessary, make revisions that reflect any changing circumstances and tax laws.


How do you begin?


There are many estate planning strategies, including some that are implemented inter-vivos (during life), such as making gifts, and others post-mortem (after death), such as disclaimers. Before you choose which strategies are right for you, you need to understand your particular circumstances.


Understanding your particular circumstances results from gathering and analyzing the facts. The following questions may help you to accomplish this. If they are not easy to answer, you may have to make some estimates based on reasonable assumptions and expectations.


Information regarding your financial condition


  • What is your current income?

  • What is your income likely to be in the future?

  • How much do you spend each year?

  • What are your expenses likely to be in the future?

  • What are your current assets and debts?

  • Are your assets owned jointly or separately?

  • What estate planning strategies have you already implemented?


Family information


  • Who are the family members you intend to benefit?

  • What are the needs of each family member?


What are your goals and objectives?


You can’t formulate a successful plan without a clear and precise understanding of what your goals are. They can be based on your particular circumstances and the factors that may affect your estate, as discussed earlier, but your feelings and desires are just as important. The following are some goals and objectives you might consider:



  • Provide financial security for your family

  • Ensure that your property is preserved and passed on to your beneficiaries

  • Avoid disputes among family members, business owners, or with third parties (such as the IRS)

  • Provide for your children’s or grandchildren’s education

  • Provide for your favorite charity

  • Maintain control over or ensure the competent management of your property in case of incapacity

  • Minimize estate taxes and other costs

  • Avoid probate

  • Provide adequate liquidity for the settlement of your estate

  • Transfer ownership of your business to your beneficiaries


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