Advisor Q&A

Estate Planning Essentials

Q&A with Porter L. “Buddy” Ozanne, III, AEP®

Who should have an estate plan?

Before talking about an estate plan, it’s important to define what it is first. Your estate includes everything you own, including your home, 401k, bank accounts, stocks, bonds, life insurance, and personal effects. However, an estate plan is not just about your assets, it is about your wishes and your desires, and what you want to have happen if something were to happen to you. The estate planning process is designed to help you think through those things that all of us want to put on the back burner, such as who would make your health care decisions if you become incapacitated, who would care for your children if you pass away, and how your family will be provided for if something unexpected happens to you or your spouse. The complexity of estate plans can vary depending on your specific needs and your family structure. Not everyone needs a full blown estate plan, but everyone needs to go through the process of contemplating different scenarios and their impact in order to minimize the financial and emotional costs of settling an estate.

What are common misconceptions or mistakes that people make with their estate plans?

It’s a fact of life that many individuals are on their second marriage, and one common mistake we see in estate planning as a result of this is overlooking the possibility of unintended heirs. For example, if a widowed spouse remarries and puts your assets in joint names with a new significant other, the new spouse will inherit all jointly owned assets if and when the widowed spouse passes away, and your children may be disinherited. A good estate plan can ensure that intended heirs are provided for and that unintended heirs are excluded. Another common mistake we see is that many business owners fail to accurately value business assets in their estate. We advise our clients who are business owners to do business exit strategy and succession planning that establishes a fair market value of the firm, and may include arranging buy-sell agreements with business partners. Another misconception or mistake in estate planning involves underestimating the financial burden on survivors, and failing to plan appropriately. The financial burden not only includes the expenses of day-to-day living, but also the costs of attorney’s fees, executor’s commissions, and gift and estate taxes.  The estate tax is the highest tax most people will ever pay, and it can take executors and beneficiaries by surprise It is important to have a plan that minimizes your tax consequences and fees, and that also works to preserve more of your assets for your beneficiaries.

What happens if you don't have an estate plan?

If you don’t have an estate plan and a will, the state will have a plan for you. The state will determine how your assets should be distributed. Additionally, your estate could go into probate which can be a very expensive and public process.

What are the fees associated with estate planning?

Like it or not, the passing of assets from one generation to the next comes at an expense, either in the form of developing a plan and strategy, or in the form of unexpected taxes and attorney’s fees in situations where there is no estate plan. While our fees vary greatly depending on the complexity of an estate, our fees are reasonable, and we strive to provide a thorough, high quality plan for every individual, family or business. We charge by the project, not by the hour. Over the past 40 years of helping couples, families and businesses plan their estates, we have observed that the time and cost associated with estate planning is miniscule compared to the time and costs that families or beneficiaries must endure when there is no plan.

Porter L. “Buddy” Ozanne, III, AEP®
Porter L. “Buddy” Ozanne, III, AEP®

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