Estate Planning

Estate planning overview

Estate Planning, Trust & Succession Planning can be simple and basic or complex depending on the size of the Estate.

A good part of planning for what may happen to a person’s assets upon death requires an understanding of the probate process and how assets are valued in the estate after death.

Generally speaking, anything that a person transfers at death to another person is subject to taxation. How to determine whether or not property is owned by the deceased is a question that has been addressed in several IRS Code Sections.

Before an individual can begin to plan for a possible federal estate tax liability, he or she must know the potential size of the liability through an evaluation. Once this is established, a plan can be put into place that will satisfy the liability, reduce it or eliminate it completely, if possible.

Common estate plans

Last Will & Testament

A Last Will & Testament is a legally binding document that establishes how your named assets (real property, bank accounts, belongings, etc.) will be distributed at your death.

This is accomplished by naming exactly who your beneficiaries will be and what they will receive from your estate. Wills may be as descriptive and as detailed as you wish.

In addition to naming exactly who will receive your assets, a Last Will & Testament is a flexible document whose purpose may include, but is not limited to the following:

  • Nominating a guardian for your minor children
  • Naming an executor
  • Provide for the establishment of a testamentary trust
  • To direct how debts, taxes and expenses are to be paid after your death

Even with a Last Will & Testament, however, the distribution of your assets may still be supervised by the probate court in a public proceeding that can take as long as one to two years to complete. See Living Trusts to discover how to avoid this system completely.

Your Last Will & Testament may be changed or revoked at any time as long as you are mentally competent.


  • Every will must be filed in probate to be legally effective, it is public record
  • Wills are subject to the expense and control of Probate
  • Court matters are public record
  • A will can be contested easily by anyone
  • Even the most simple Wills can be tied up in Probate court for 18 months or more


Probate is the court procedure that controls your assets when you die or if you become incapacitated. This legal process is costly and time consuming.

Problems with Probate

  • The average cost of Probate is 10-15% of the gross value of your assets.
  • The average estate takes 18 months to complete, if contested the estate could spend years in court.
  • All matters are controlled by the court and are public record. No assets are released without court approval.
  • Minor’s assets are held by the court until the child reaches the age of 18.
  • Assets held in other states are subject to that states probate proceedings.
  • Anyone can petition the probate court to control assets held in your name.

How to avoid Probate

Living Trust

A Revocable Living Trust is a written, legal document that allows you to privately and efficiently pass your assets (real property, bank accounts, stock, saving certificates, personal property etc.) to your family, friends or charitable organizations after your death. At the creation of your trust, all of your assets will be transferred from your name and titled in your trust. You retain unlimited access to and full control of your assets during your lifetime while you have your capacity.

A Revocable Living Trust allows you to appoint someone of your choice (as Successor Trustee) to manage your assets after your death or during your incapacitation. A Revocable Living Trust may be amended or revoked at any time as long as you are mentally competent. Once you pass away, the trust may no longer be changed and your Successor Trustee will manage the assets in line with the terms you have established within the trust. Your surviving spouse or child will commonly be named as your Successor Trustee.

Your Revocable Living Trust is private,and your estate will not pass through the probate courts, as long as it remains fully funded with all of your assets and your family will not be subjected to this long and expensive court process. Instead, your assets and belongings will be distributed privately and efficiently to your beneficiaries, under the terms that you have established within your trust.

Irrevocable Trust

An irrevocable trust is an arrangement in which the grantor departs with ownership and control of property usually during his lifetime. Usually this involves a gift of the property to the trust. The trust then stands as a separate taxable entity and pays tax on its accumulated income.

Irrevocable trusts typically receive a deduction for income that is distributed on a current basis. Because the grantor must permanently depart with the ownership and control of the property being transferred to the trust, such a device has limited appeal to most taxpayers.

The use of irrevocable trusts in sophisticated tax planning involves a multitude of complex tax rules. You should consult with a tax planning professional to obtain the optimal tax results

Need for Power of Attorney

Durable Power of Attorney

A Durable Power of Attorney gives another person (of your choice) the full legal authority to manage your financial affairs in the event that you are no longer able to make these decisions yourself. In the event of an unfortunate occurrence, this is an important document to ensure that your financial affairs will be taken care of in a way that is best for you.

A Durable Power of Attorney comes into affect only when you become incapacitated. This document allows an individual (again, of your choice) to sign your name on your behalf and manage all finances for any assets. You can revise or revoke your Durable Power of Attorney at any time, as long as you are mentally competent, and a Durable Power of Attorney can take effect as soon as it is signed.

Durable Power of Attorney for Health Care

A Durable Power of Attorney for Health Care gives another person (of your choice) the full legal authority to make all of your necessary health care decisions in the event that you are not able to make these decisions yourself. This is an important document to ensure that your healthcare and end of life decisions will be taken care of in a way that is best for you.

A Durable Power of Attorney for Health Care comes into affect only when you are terminally ill or become incapacitated. A durable Power of Attorney for Healthcare is also a flexible document and it allows you to establish how important end of life decisions (such as whether or not to use life sustaining measures such as life support) will be made.

You can revise or revoke your Durable Power of Attorney for Health Care at any time, including during a terminal illness, as long as you are mentally competent, and a Durable Power of Attorney for Health Care can take effect as soon as it is signed.

The Executor

The executor of the estate is appointed by will, while an estate administrator would be appointed by the probate court in the absence of a will (intestacy). Whether the estate is to be handled by an executor or an administrator, it is done under the control of the surrogate’s or probate court. When the testator dies with a valid will, the will is submitted to the court for probate. The court then officially appoints the named executor to administer the estate if he or she is qualified and willing to serve in that capacity.

For purposes of this tutorial, we will assume that a valid will exists which names a capable and willing executor

In many cases, particularly in large or complicated estates, a professional executor will be helpful. The professional executor, whether an attorney, CPA or trust officer will charge a fee that is often pre-established by letter. These fees vary greatly based on geographic area and the assets in the estate. A local bank trust department will be glad to supply you with samples of the fees charged in your area.

The duties of the executor of an estate include:

  • identifying the assets of the deceased
  • collecting any assets due the estate
  • paying costs of estate administration
  • paying debts of the deceased
  • paying any federal and state taxes due
  • distributing any remaining assets to the beneficiaries

The executor is also required to file any tax returns that are necessary as well as pay any taxes due. These would include:

  • income taxes
  • federal estate taxes
  • state estate and inheritance taxes

What are the costs of administering an estate include

  • Executor’s fees
  • Attorney’s fees
  • Miscellaneous fees

Executor’s fees

If the estate executor is a member of the immediate family, most likely the deceased’s will specified that he or she is to serve without fee. If, however, an institution, attorney or other non-family member is appointed, a fee will be charged.

These fees are usually based upon the size of the estate and might be something like:

  • 5% of the first $200,000
  • 3% of the next $200,000
  • 2% of the next $600,000
  • 1% of all probate assets in excess of $1,000,000

Attorney’s fees

Attorney’s fees are usually based on the size of the estate as well, with the same type of percentages charged as the executor’s fees. Standard schedules of fees differ from location to location, and the local Bar Associations generally provide guidelines.

In cases in which the deceased leaves an extremely large estate, the fees according to the schedule would become much too large for services rendered. In this case, an hourly rate is sometimes substituted. This is particularly true if the attorney is a part of a large law firm. Alternatively, the attorney may charge a fixed fee, particularly for a small, uncomplicated estate where the duties are relatively simple and straightforward.

Miscellaneous fees

Miscellaneous fees would include court costs, filing fees, expenses for postage, travel and telephone incurred in settlement of the estate, and any fees to appraisers, real estate brokers and the like, for valuation or sale of estate assets.

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