If you do not have a formal written plan, the state has a plan for you. Estate planning can be as simple as having a Will directing who gets what; to elaborate plans that involve very sophisticated planning techniques.
Estate planning is not just for the rich, everybody must plan on the distribution of their assets regardless of the size. Your estate is everything you own right down to your underwear. It also includes anything in which you have an ownership interest. If your estate gets large enough then the government (Federal & State) is going to want their share of it before you can pass it to the next generation or anyone else other than your spouse. Depending on the size of your estate, the combined federal and state tax rate can be as high as 45% of the total value of your estate. The majority of people do not have 45% of their assets in cash; so much consideration should be given to how to pay the tax (see estate tax planning article). The government does not want your property, business, stocks, bonds or underwear, they want cash.
In summary, your estate is everything you own and estate planning is what you are going to do with it eventually. It really is that simple.
© R. Allen Greer, Jr., 2007
