Scott Tominaga Explains A Step-by-Step Guide to How To Prepare an Estate Planning

Estate planning is a crucial process that ensures that the assets of individuals are allocated in accordance with their wishes after their demise. Moreover, it also helps cut down taxes and legal complexities for their heirs, as per Scott Tominaga. This article aims to provide a step-by-step guide on how to create an effective estate plan.

Step 1: Define Goals

Before the formation of the estate plan, people should define their goals. They should consider what they want to achieve with their estate plan. Whether it is for minimizing taxes, ensuring that the children are taken care of, allocating the resources among the hires, or transferring all resources to a charitable establishment – identifying these goals will determine the subsequent steps.

Step 2: Evaluate Assets

Assess an all-embracing inventory of the assets. This should comprise real estate, bank accounts, retirement accounts, personal property, investments aside from assets of sentimental value, if any, etc. as per Scott Tominaga. It’s also crucial to be aware of the total value of all estates to make an informed decision.  

Step 3: Select an Executor

Choose a trusted executor who will take care of the estate after the death of the person.  The executor will be liable for ensuring the wishes of the person are carried out, settling debts, and allocating assets. Individuals need to consider the financial expertise, integrity, and willingness of the executor to assume such responsibilities.

Step 4: Draft a Will

A will, in essence, is the pillar of any estate plan. It summarizes how people wish their assets to be distributed, decides the guardians for nurturing minor children, etc. For drafting the will, the person needs to hire an attorney who should be well-versed in drafting a will and the legal guidelines under the State’s law. The executor needs to be present at the time of drafting the will and to be authorized by the person making the will. 

Step 5: Consider Trusts

In consideration of the situation, planning for setting up a trust might be beneficial. Setting trusts helps bypass the need for probate, provides an extra layer of privacy, and manages resources for beneficiaries who might not have financial know-how. Noteworthy, recoverable trusts are popular choices for their greater flexibility, whereas irrevocable trusts can offer tax advantages.

Step 6: Consider the Need for Power of Attorney

Individuals should consider, what if they become disabled. This is the time the necessity of appointing someone to provide power of attorney comes. Entrusting a family member with ‘ power of attorney ‘ is a smart choice as it authorizes the person to manage all financial affairs on their behalf. These documents are necessary to ensure an individual is willing to entrust someone to execute these tasks due to their inability or non-availability (for instance if someone goes abroad and cannot be present)

Step 7. Undergo Tax Matters

Make sure to talk to a tax professional to find strategies for lowering estate taxes and maximizing that the heirs inherit. This may include creating trusts or gifting assets. 

Step 8. Review and Update the Plan

An estate plan needs to be updated with the changes in the lives of the loved ones. For instance marriage, birth of a child, divorce, or acquisition of more assets needs reviewing and updating of the estate plan as necessity arises. Also if there is a need to change the designation of the beneficiary, for certain assets like life insurance or retirement accounts, update the same as per necessity. 

To conclude, once the estate plan is prepared, it makes sense to communicate the details of the plan that describes the wishes of the person to their family members alongside the executor. This transparency helps avoid confusion or conflicts later on.