Estate planning an important step to take

Feb. 25--It doesn't matter how many items people acquire during their lifetimes, there is one truism that affects everyone -- you can't take them with you when you die.

That's why estate planning is so important, as it gives a person control over how those things are given to the people or organizations they care the most about.

In order to ensure their wishes are carried out, instructions need to be provided stating who will receive items, what they will receive and when they will receive it. The trick is also to make this happen with the least amount paid in taxes, legal fees and court costs.

Estate planning can include the following things:

--Instructions for care if you become disabled before you die;

--A guardian and inheritance manager for minor children;

--Life insurance to provide for your family at your death, disability income insurance to replace your income if you cannot work due to illness or injury and long-term care insurance to help pay for your care in case of an extended illness or injury;

--Providing for the transfer of your business at your retirement, disability or death; and

--Minimizing taxes, court costs and unnecessary legal fees.

Without a plan in writing, the government will carry out its own plan, which may not be the most beneficial for the deceased's family or follow the wishes of the deceased.

If someone dies without an intentional estate plan, their assets will be distributed according to the probate laws of Alabama. This means the person's spouse could receive only a fraction of the person's estate, which may not be enough to live on. If the person has minor children, the court will control their inheritance. If both parents die, such as in a car accident, the court will appoint a guardian without knowing who the parents would have chosen.

David Turner, a representative with Country Financial in Athens, said there is also an estate tax to worry about, which is why he emphasizes the importance of life insurance.

"Basically, you are trying to pay the estate taxes where your kids don't have to pay it," Turner said. "You can pay it with life insurance proceeds, and they are income tax-free. If a person does nothing, once their death occurs, say they've got a half-million-dollar estate tax they have to pay. That's going to come out of the estate. If you pay that through life insurance proceeds, that saves the heirs from having to worry about owing money in estate taxes."

Turner said a life insurance policy would be much less expensive than worrying about the government taking things out of the estate to pay the tax.

"When Elvis Presley died, his net worth was in the $6 -- 8 million range, but he had an estate tax of $3.5 million, so they took half of his estate automatically to pay the estate tax. In order to keep from losing things you've acquired your whole life, you can pay those taxes by buying a life insurance policy."

A will or living trust is also a big part of estate planning. While a will is less expensive initially than a living trust, it does not avoid probate and any assets titled in a deceased person's name or directed by their will must go through the state probate office before they can be distributed to the heirs.

The process can become expensive, with legal fees, executor fees and court costs, and can also be time-consuming, taking anywhere from nine months to two years or longer.

A living trust can avoid probate at death, and assets can stay in a trust, managed by a selected trustee, until the beneficiaries reach an age at which the deceased person wants them to inherit it. The trust can continue longer to provide a loved one with special needs or protect the assets from beneficiaries' creditors, spouses and irresponsible spending.

Nobody wants to think about their own mortality, but it is one of the facts of life. Careful estate planning can make sure those you leave behind are taken care of, the way you want them to be.

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