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Plan ahead with estate plan

In the last couple of months, the topic of estate planning has come up more than once. While your tax information is fresh in your mind, this is a great time to review and update your estate plan, if you have one. Catherine Hammond Shell, managing partner for the Hammond Law Group in Colorado Springs, said about 70 percent of Americans have no plan in place. Even people who recognize the need for an estate plan often don’t have one – perhaps due to procrastination or the topic of death.There are several types of estate plans, the most basic being a will plus three supplemental documents: health care power of attorney, health care proxy and durable power of attorney. Another option is a revocable trust, sometimes known as a living trust, which can offer a comprehensive plan to manage your assets during your lifetime and distribute them after your death. Most people fail to appreciate the full importance of a written estate plan, especially if they feel their estate is too small to justify the time and expense of preparing one.Here are five basic reasons why you should have a will.To choose beneficiaries: State intestate succession laws determine how your property will be distributed if you die without a valid estate plan. These distributions may be contrary to what you want. In effect, by not having a plan, you are allowing the state to choose your beneficiaries. Further, a plan allows you to specify not only who will receive the property but also how much each beneficiary will receive.To minimize taxes: Many people feel they do not need a will because their taxable estate does not exceed the amount allowed to pass free of federal estate tax. For those dying in 2009, this amount is $3,500,000, plus whatever goes to a surviving spouse or charity. However, your taxable estate may be larger than you think. For example, life insurance, qualified retirement plan benefits and IRAs typically pass outside of a will or estate administration. But retirement plan benefits and IRAs (and sometimes life insurance) are still part of your federal estate and can cause your estate to go over the threshold amount. Changes in the size of your estate may warrant a re-examination of your estate plan.To appoint a guardian: If for no other reason, you should prepare a will to name a guardian for minor children in the event of your death without a surviving spouse. While naming a guardian does not bind either the named guardian or the court, it does indicate your wishes, which courts generally try to accommodate.To name a personal representative: Once known as an executor or executrix, without an estate plan, you cannot appoint someone you trust to carry out the administration of your estate. If you do not specifically name an executor in a will, a court will appoint someone to handle your estate, perhaps someone you might not have chosen. There is an advantage, and peace of mind, in selecting an executor you trust.To establish domicile: You may wish to firmly establish domicile (permanent legal residence) in a particular state for tax or other reasons. If you move frequently or own homes in more than one state, each state in which you reside could try to impose death or inheritance taxes at the time of death, possibly subjecting your estate to multiple probate proceedings. To lessen the risk of this, you should execute a will that clearly indicates your intended state of domicile. Another choice would be to establish a revocable trust that can hold real estate in several states and, if the trust is funded correctly, potentially avoid numerous probates.Which one are you? Do you have an estate plan that is current or have you procrastinated? Remember to look for an attorney whose practice is limited to estate planning. You should not use a real estate or bankruptcy attorney to provide your estate planning documents, even if he or she is related.On my Web site,, there are a series of educational articles and examples to browse and use at no charge.About Alex Donnell and Colorado Comprehensive Wealth ManagementAs a nationally published author, Alex Donnell has written articles on estate planning, financial planning and investments. Donnell, founder and president of Colorado Comprehensive Wealth Management in Colorado Springs and independent investment advisor representative for Heartland Financial Consultants, has been a part of the financial services industry for over 16 years.Securities offered through Securities America, Inc. Member FINRA/SIPC, L. Alexander Donnell, registered representative. Advisory services offered through Heartland Financial, L. Alexander Donnell, investment advisor representative. Colorado Comprehensive Wealth Management, LLC, Heartland Financial Companies, Donnell Services and Securities America are not affiliated.Securities America and its representatives do not provide tax or legal advice. Any tax or legal information provided here is merely a summary of our understanding and interpretation of current tax and/or legal regulation and is not exhaustive. Please consult an appropriate advisor regarding your personal situation prior to acting on the information in this letter. 04/2009

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