Estate Planning In North Dakota

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Estate Planning Steps

Like most planning processes, estate planning can be described as a series of steps.

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Steps in Estate Planning

Estate Planning can be described as a series of steps.  This page introduces one description of such steps.

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Initiate the discussion

Perhaps the greatest hurdle in the path of most families is lack of communication. All too often, family members are hesitant to discuss estate planning. Parents considering retirement may wish to delay any discussion because of the unpleasant overtones connected with growing old and dying. Adult children may not mention estate planning to avoid placing additional stress on their parents and grandparents and because they do not wish to appear greedy or as if they are trying to "take over."

How do family members initiate a discussion about the need to develop an estate plan without causing misunderstandings? One way is to use this publication as a conversation piece. Share what you learn with other family members. Encourage them to read the material. The NDSU publication FS-522, "Family Communication and Family Meetings," may be helpful and is available at your local county office of the NDSU Extension Service.

Other ways to stimulate conversation include reading books, magazine articles and publications from banks, trust companies and other reputable sources or attending estate planning seminars or meetings. These may serve as the basis of discussion and illustrate the benefits of planning (and the consequences of not planning).

Other opportunities can come from visits with attorneys, bankers, accountants and insurance representatives. A discussion of estate matters may come up in an incidental fashion and serve to initiate action. It's tragic -- but true -- that the death of a neighbor, friend or relative may lead a family to realize that estate planning is not a subject to be overlooked.

Once the discussion is initiated, it should be easier to discuss the family's situation, concerns and objectives. Difficult decisions may need to be made. But the alternative is letting someone else decide.

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Take stock of the present

The next step is to make a critical review of your present financial situation. This step is crucial because it is the foundation of your entire estate plan. The end result will be satisfactory only if the information is complete.

The checklist,"What My Attorney Should Know," will give you an idea of the information needed. It asks for family information, locations of legal and business papers and names and addresses of people you consult for advice. The checklist also will help you determine what your estate contains (liabilities as well as assets), its value and how ownership of property is held (see the discussion on property ownership ). It is a good idea to review with professionals every document that bears on your personal and business situation to avoid "surprises" later.

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Develop objectives

As you begin forming an estate plan, think about objectives for your estate. What do you want to accomplish? Objectives vary from family to family due to differences in liabilities and assets, abilities and ages of survivors, number of children and values that are important to the person making the estate plan. The objectives of each family member, as well as overall family objectives, should be considered. Remember that objectives may change with your age, marital status, income, amount and kind of property and other circumstances.

Some common objectives are listed below. Check those that apply to your situation and list any you wish to add. If there is conflict among the objectives, they should be ranked in order of importance.

  1. Provide security for surviving spouse.
  2. Relieve surviving spouse of estate management responsibilities.
  3. Provide security for both spouses after retirement.
  4. Retire at age _____.
  5. Provide security for an incapacitated family member.
  6. Assure continuity of farm, ranch or other business.
  7. Provide educational opportunities for beneficiaries.
  8. Assist beneficiaries, including in-laws, to get started in business.
  9. Minimize estate and inheritance taxes.
  10. Name guardians, conservators, or trustees for minor children.
  11. Name the personal representative (executor) of the estate.
  12. Provide means for paying expenses of estate settlement, taxes and other debts.
  13. Provide equitable (not necessarily equal) treatment of family members.
  14. Transfer specific property to specific people.
  15. Make gifts to family members and others during lifetime.
  16. Reduce income taxes by disposing of income property during life.
  17. Transfer property during life by installment sale.
  18. Provide for charitable bequests to a favorite charity or organization.
  19. Minimize probate and settlement costs.
  20. Review current operation and ownership of farm, ranch or other business.
  21. Protect estate from depletion through use of long term care insurance.
  22. Other

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Choose professional advisers and discuss objectives

Estate planning is technical and complex. Most people do not have enough time to learn all they need to know to plan an estate thoroughly or to keep up with changes in state and federal laws. That's where professionals, such as attorneys, accountants, financial advisers, trust officers and life insurance underwriters, can help.

An attorney with expertise and experience in property law, probate, trusts, tax law and other estate settlement issues generally serves as the key person on the team, coordinating the work of other team members.

When working with professionals to design and implement an estate plan, be aware that they may have different opinions. You have the final say, however. It is important that you be as knowledgeable as possible about your objectives, your situation and various estate planning alternatives and their consequences. Ask questions. Insist on understanding the plan and its implications.

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Consider alternatives and implement the plan

There may be several ways to reach your objectives. Ask your professional advisers to explain the alternatives. Explore the consequences of each one. Decide who is to receive what, when and how.

You may need a sounding board -- someone to talk things over with, try ideas on and get reactions from. This may be your spouse, a friend, a partner or one of your professional advisers. A sounding board can help you explore the needs of your beneficiaries, your property and its value to your family, and the proper balance between providing for your own future and meeting your estate planning objectives.

Once the plan has been formulated, it is important to implement it. Otherwise, the time, energy and money involved in the previous steps may have been wasted.

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Review and modify

Once your estate planning is completed, you can relax -- but only temporarily. We live in a world of continuous change, so your plan should change with your circumstances. For example, the value or nature of your property may change; your objectives may change; recipients may marry, divorce, die or have children; or tax laws may be revised.

Some professional advisers suggest a review of an estate plan every three to five years, or whenever there is a major change in your situation or the tax laws.

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