Estate planning may include addressing the following:

• How your property will pass at death.
• Who will have custody of your minor children if you die before they become adults.
• How your property will be managed during lifetime disability.
• How your "person" will be treated during lifetime disability.
• How to protect your assets from potential claims.
• How to save taxes.
• How to make gifts during lifetime.
• How to minimize the impact of death or disability on your business.

        Every individual is allowed a unified credit that permits a certain amount in assets to pass free of estate and gift tax. If your total estate is worth less than the unified credit exclusion amount, no federal estate tax will be due. The credit is $2,000,000 per person in 2006, but the amount will increase to $3,500,000 per person by the year 2009 and it will be repealed in 2010. Unless Congress acts to extend the repeal, the limit will be repealed in 2011. You are also allowed to pass an unlimited amount of assets to your spouse during your life and at death and this is known as the unlimited marital deduction. Although this sounds attractive, when the second spouse, the estate may be subject to significant estate taxes. (Please see the page on trusts for more information on how the credit and deduction work in estate planning.)

Planning How Your Property Will Pass at Death.

        There are several ways to transfer property at death. In most cases, the way the property is owned during life will determine who receives the asset after the owner is deceased. A probate court is only necessary if there is property held in a single name (and there's no named beneficiary) or if the owner dies without a will.
 

• Joint ownership- three variations
• joint tenancy- A and B own property in equal shares at all times. At A's death, B would own the property outright. During A and B's lives, they can transfer the property without the other's permission and/or partition the property by court order or agreement.
• tenancy by the entirety- A and B own property (usually a married couple) in equal shares. At A's death, B owns outright, but they cannot sell, transfer, or partition the property without the other's consent during life.
• tenants in common- A and B own property and the shares can be unequal. At A's death, the property passes to his heirs and B retains his share. New owners are B and A's heirs. The property can also be transferred without the other's consent and this form of ownership would have to pass through the probate courts.

 
• Account registration
• The property could have "in trust for" or "payable on death to" as part of its registration, which would guide its transfer. A trust could be funded or unfunded and it would receive property by direction of the will or the beneficiary designation.

 
• Designated beneficiary
• Life insurance policies and retirement plans have a beneficiary named and the property passes directly to the beneficiary at the owner's death.

 
• Will
• A will is a legal document used to direct the transfer of property that is held in your sole name. It allows you to name an executor to oversee the distribution and appoint guardians for your minor children. All property that is held jointly, in trust, or has a beneficiary listed will bypass the will and go directly to the named heir. All property passing by a will must go through probate court first.

 
• Intestacy law
• For people who die without a will, the laws of intestacy will be used to transfer the property. The law determines your "heirs" if die without a will and it's a best guess as to what the owner would have wanted. The court appoints an executor and will name a guardian for any minor children.

 
• Disclaimers
• If no estate planning is done during life, the heirs can disclaim the property and it may offer some alternatives to paying the estate tax. Although possible, disclaimers are not the best method of estate planning available.

 
• Lifetime Gifts
• Lifetime giving is usually a good wat to plan for estates. You are allowed to gift $11,000 in value per donee, per year. This transfer escapes tax entirely and can be repeated for each individual as long as the value of the gift does not exceed $11,000 in any given year. The gifts can also be combined with a spouse to total $22,000 per person per year and gifts can be directed to a college savings plan as well. Any amount over the $11,000 limit is considered a taxable gift and is reduced off the exception amount of the donor.