1. I’ve done well for myself, but I’m far from a Rockefeller. Why do I need an estate plan?

Everybody needs an estate plan, regardless of wealth. In most of the cases discussed below, wealth isn’t the driving factor of your estate plan; it’s really more about the assurance that you will have control over who gets all of your “stuff” and when.

Through an estate plan, you can name a guardian for minor children and set up trusts for them so that they don’t receive assets at too young an age. You can also name your personal representative (otherwise known as an executor) instead of having the court select the person, and you can save that person from having to post a bond to the court to protect against errors. If you have any special collections you can stipulate who should receive them. If you are charitably inclined you can leave some of your assets to your favorite charities.

Additionally, having a plan in place can make things easier for those you left behind, as it is a clearly laid-out plan detailing your wishes so that there should be no question as to what should go where.

2. I already have a will. Do I need an estate plan, too? What’s the difference?

A will is just one part of your estate plan. Other parts, depending on your needs, include durable powers of attorney, health care directives (also known as living wills), trusts, life insurance, and beneficiary designations for retirement plans, annuities and life insurance, to name the most common. Most people need at least some of the additional tools of an estate plan.

3. I want to transfer as much wealth to my family as possible. What are some ways to reduce the taxes associated with this process?

There are a few ways to do this. First, consider gifting assets during your lifetime. In 2013 you can gift up to $14,000 to as many individuals as you like without being taxed, which means if you are married and have four children, you and your spouse can gift a total of $112,000 ($14,000 for each child from you and $14,000 for each child from your spouse) each year without worrying about gift taxes. If your four children each have spouses and/or children, the amount you can gift increases even more.

Second, you could set up an irrevocable trust. This method requires more expertise and should be done with the help of a qualified estate planning attorney. Before considering such a trust, be aware that any gift made to an irrevocable trust cannot be taken back, plus you lose day-to-day control over how the assets in the trust are used.

A third possibility is purchasing life insurance. Life insurance can enable to you replace any assets you may spend down in your lifetime and can also be used to either replace estate taxes that you may owe or to simply pass assets to your heirs income-tax free.

If you are charitably inclined, a good strategy to reduce taxes is to leave your IRAs and other retirement assets to charities and to replace those assets with life insurance to go to you heirs. You will then reduce your estate’s and heirs’ future income taxes, receive a charitable deduction for your estate, and pass assets to your children in a tax-advantaged manner.

4. How often should I review my estate plan?

You should probably review your estate plan every 3 – 4 years, though that doesn’t necessarily mean you’ll have to change your plan each time you review it. Other times to review your plan are when changes occur in either federal or state estate or tax laws, in your family situation (e.g., birth, death, marriage, divorce, etc.) or in your financial situation (e.g., receipt of a large inheritance, or loss of a job that causes you to drain your assets faster than expected).

5. What happens if I don’t have a will or an estate plan?

Your assets will pass according to state law regardless of your wishes, and your estate may end up paying more in taxes and probate fees. If you have minor children, they will receive the assets outright at either age 18 or 21, depending on the state. Spouses of second marriages may only receive half of your assets while the other half is left directly to your children. Relatives you would otherwise have left out of your will (or whom you have never met) may receive some or all of your assets.

Federal and state estate tax laws are complicated, and there’s no doubt that it’s in your benefit to have a trusted professional help you with your plan. The estate planning specialists from our Roundtable team are ready to work with your advisor and give recommendations according to your values and objectives – ask your advisor for more information today and get your estate planning questions answered.

This is for informational purposes only and should not be considered specific advice for any individual. Please see your legal, tax or financial advisor regarding your individual situation.