Estate Planning Is More Than Minimizing Estate Taxes

Estate Planning

Many people think of estate planning only as a way to reduce taxes. Actually, it is a lot more. Here are some of the issues you should consider:

Family communication

In many families, death and money are almost forbidden subjects. Yet some frank discussions with children (or parents) can prepare everyone for the unexpected. Be sure key family members can find important documents and are aware of any desired medical treatment options.

Your will

This document dictates how assets are distributed from your estate and can be used to designate legal guardians for dependents. You, not the courts, should make those decisions. Your will also names the person (executor) to oversee the estate until all assets are distributed and officially closed. Choose someone that is capable of understanding and carrying out your wishes.

Your retirement accounts

Carefully choose the beneficiary of your retirement plans, including IRAs. In most cases, the person receiving your retirement plan assets is the determined by the beneficiary form you sign, not your will.

Irrevocable life insurance trusts

Life insurance proceeds are not subject to income taxes, but may result in estate taxes if your estate is the beneficiary. Speak with a qualified attorney to learn how a life insurance trust may help keep proceeds out of your estate and taxes to a minimum.

Durable power of attorney for finances

This document enables another to handle your finances and your investments if you become incapacitated and are unable to make your own decisions. Without it, it may be necessary to go to court frequently just to handle routine transactions. Choose someone that is capable and knowledgeable such as an adult child, sibling or trusted friend. If you do not have someone like that, consider your attorney or accountant.

Medical directives

These documents are invoked if you are not capable of making health care decisions for yourself. A durable power of attorney for health care gives another person the ability to make medical decisions and a living will tells your family and medical personnel how you are to be treated if you become terminally ill. It also states your wishes about being placed on life support. Some states may separate forms for each.

Regular estate planning checkups

Estate plans should be reviewed regularly. Many estate attorneys suggest a review every three or four years. If your situation changes (divorce, death of a spouse, birth of children or grandchildren, changes in wealth status), you may want to review your plan more often. Moving to another state should also prompt estate plan review.

Use an expert

The estate laws are complex and the consequences of being inadequately prepared are significant. While you may want to do some investigation on your own, it is wise to use a qualified attorney for your estate planning needs.


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The information provided is not intended to be legal, tax, or financial advice or recommendations for any specific individual, business, or circumstance. TowneBank cannot guarantee that it is accurate, up to date, or appropriate for your situation. Financial calculators are provided for illustrative purposes only. You are encouraged to consult with a qualified attorney or financial advisor to understand how the law applies to your particular circumstances or for financial information specific to your personal or business situation.

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