An Estate Planning Checklist is provided that will help you gather your financial information, as well as other relevant facts. Once you have accumulated your information, we will meet and discuss your goals.

Fees. At the end of our initial conference, I will give you an estimate of your fee. Because each individual is unique, your particular estate plan may be simple or complex. However, I have included a schedule of fees covering the basic elements of estate plans that can be very effective for many individuals.

Your Estate Planning Team. Your attorney is only one member of your estate planning team. Other important professionals who can aid in the planning process include your financial advisor, insurance salesman, accountant and of course, you. It is often a good practice for the entire team to meet at least once during the planning process. That way, everyone involved can share their expertise and will come away with a better understanding of your objectives.

I am happy to work with any advisors you may have, or I can recommend professionals in each of these fields who can help you with your estate plan.

Elements of an Estate Plan

Your Will. A will is your written instructions for how certain assets will be distributed when you die. In your will you will name someone to carry out your wishes (your "Executor"). You may also recommend someone to care for your minor children (a "guardian"). However your will does not control the disposition of all of your assets. Typically life insurance and pension benefits, as well as assets owned jointly with your spouse or another person pass outside your will. Since these assets can be a sizeable part of your estate, you should coordinate your will with your plans to dispose of these other assets.

Trusts. A trust is a practical and flexible legal device by which one or more people you select (your "Trustees") manage assets for the benefit of others you name (the "beneficiaries"). Trusts can serve a variety of purposes:

You can establish a trust during your lifetime (a "living trust") or upon your death (a "testamentary trust"), and can make a trust the beneficiary of your will or an insurance policy or retirement plan. This technique (called "pourover") has the advantage of privacy since trusts, (unlike wills) never become public documents.

Sometimes trusts are made "irrevocable" for tax reasons and as a means for making gifts to charities and family members. Life insurance policies are commonly put in irrevocable trusts. However as the name suggests, gifts to an irrevocable trust cannot be recovered. Also, transfers during life to an irrevocable trust may be subject to gift tax.

Powers of Attorney. A power of attorney is a written authorization to have someone (your "attorney-in-fact") act for you in financial matters. A general power of attorney lists things your attorney-in-fact can do for you, such as managing your money or paying your bills. Often a power of attorney allows your attorney-in-fact to add assets to an existing living trust or make gifts to your family members.

Many people prepare powers of attorney in case they become disabled. Powers of attorney eliminate the inconvenience and expense of a "guardian", who would be appointed by the court to manage your financial affairs. Spouses often give powers of attorney to each other or a "standby" power of attorney to an adult child. A power of attorney terminates when you die.

Executors and Trustees. Your Executor takes control of your assets at your death, pays your debts and taxes and distributes the balance of your estate as you have directed in your will. A Trustee is a person or persons you name to manage trust assets according to the terms you specify in your trust. Trustees are bound by law to manage your assets prudently. Because no one can foresee the future, Trustees are often given discretion in using or distributing money to benefit family members (for example, payments for the education, health or support of a beneficiary), just as you might do if you were there.

Executors and Trustees, (along with Guardians mentioned above) are referred to as "Fiduciaries". Fiduciaries have a duty under the law to act in the best interests of the beneficiaries. In choosing an Executor or Trustee, you should consider their integrity, judgment, skill and experience. You are permitted to name more than one Executor or Trustee. Although a trusted family member will often make a suitable Executor or Trustee, professionals can be named to serve in these positions (an attorney as Executor or a bank trust department as Trustee, for example).

Estate and Gift Taxes. The federal government imposes a tax on the transfer of property above certain limits. Gift taxes are imposed for transfers made during life, and estate taxes on transfers at death. In addition, the generation-skipping transfer ("GST") tax is designed to tax transfers to grandchildren and more remote descendants that "skip" over a generation.

Current tax law provides that each individual may transfer certain amounts, by gift or at death, without gift or estate tax consequences (the "applicable exclusion amounts"). The applicable exclusion amounts have been changing in recent years, and will continue to change, making planning for estate and gift taxes particularly challenging. This makes regular, careful reviews of your estate plan even more important.

The gift tax applicable exclusion went up to $1,000,000 in 2002. For estates of individuals dying after 2003 and before 2010 the estate tax applicable exclusion amount will be:

In addition, the estate tax rate gradually drops from a graduated schedule with a top rate of 55% to a flat 45% rate over the same period.

Estates of individuals dying in 2010 will pay no estate tax, but this "repeal" of the tax lasts only for a single year. In 2011 the estate tax applicable exclusion amount will revert to $1,000,000. Many experts believe this provision of the law may be changed by future tax legislation. This volatility is an important reason to review your estate plan on a regular basis.

An individual may transfer an unlimited amount of assets to his or her spouse during life or at death (the "unlimited marital deduction"). While outright transfers are common, there are also advantages to establishing a trust for your spouse's benefit. A trust can give your spouse the lifetime benefit of property (income and principal if needed) without any estate tax burden on your death. This type of trust also can permit you to control how the remaining property will pass at your spouse's death.

Pursuant to the annual gift tax exclusion, an individual may transfer up to $11,000 per year to each of any number of other individuals with no gift tax consequences. The donees may be related to the donor or they may be entirely unrelated. Married individuals can combine their annual exclusions to transfer $22,000 per year to any individual. These gifts do not count against the applicable exclusion amounts.

State Taxes. Virginia has a pickup tax on estates. This means the state tax equals the maximum federal credit for state taxes paid, and as such, has no impact on the combined federal-state tax bill. However the federal law has changed from a credit for state death taxes to a deduction effective in 2005. This means the Virginia death tax is no longer neutral. Changes in state tax schemes are likely to result due to this federal change.

Basic Estate Tax Strategy for Married Couples with Children. For estates in the $1 million to $1.5 million levels, estate and gift taxes become important. This may seem like a lot of money, however when assets such as personal residences, retirement plans and life insurance are taken into account, more and more people potentially will be subject to transfer taxes and may not realize it.

A common strategy is the use of two trusts to take advantage of each spouse's applicable exclusion amount. While the first spouse to die can transfer everything to the other and avoid any tax in his estate (because of the unlimited marital deduction), the family could actually end up paying more estate tax than necessary at the death of the second spouse. By using a "Bypass Trust" along with a "Marital Trust", the couple can reduce their overall tax burden, ensure that the surviving spouse is supported during her life, and still pass significant assets to their children.

Keeping your Estate Plan Up-to-Date. Because your life is constantly changing, no one can guarantee that the estate plan you have worked so hard to prepare will be appropriate in the future. Changes in your assets, your family status and the law can outdate your estate plan. I encourage you to initiate a review of your estate plan every three to five years or whenever there are significant changes in your financial or family situation. Although I will be aware of major tax law changes, these are now so frequent and estate plans are so diverse that periodic reviews are the only practical way to keep your plan efficient.