If you are like most people, you will work an entire lifetime to accumulate assets: a home, cars, retirement plans, investments, savings, property, etc. The small amount of time and money required to create an estate plan will ensure that your assets are passed on to the people you want with the best possible tax consequences.

The more you understand the estate planning process, the better the chance that your estate plan will accomplish your desires.Components of Your Estate Plan Virtually every adult needs a will and a trust, regardless of age, marital status, or health. A will and a trust are written documents which:

• Outline how you wish to distribute your wealth or tangible personal property.
• Designate an executor or executrix (Will) and a trustee (Trust) who are responsible for taking inventory of your property, preserving your estate, paying creditors and taxes, and distributing the property among your beneficiaries.
• Appoint guardians for minor children.

Estate planning can involve more than just a will. It can also make arrangements for the accumulation and handling of assets while you are alive and upon your death. It may involve trusts to support your children until they are of age, to manage your assets during or after your lifetime, or to shelter your estate from taxes. It also may involve gifts to people or charities and the structuring of insurance.

Step One
The first step in estate planning is to take an inventory of your assets, including your home, stocks and bonds, bank accounts, insurance, retirement plans, and property. As you create the inventory it is important to note how the assets are owned - individually, jointly, tenants-in-common, partnership, etc. Then take a similar inventory of your debts a or liabilities.

Step Two
The second step is to determine what your goals are with respect to your estate. For example, do you want any assets to go to your children's education or to charity? Who would be a good candidate to serve as your executor, trustee, or as your children's guardian? They could be the same or they could be different. If something were to happen to your entire immediate family, what should happen to your property?

Step Three
The third step is to consider the tax ramifications of your plans. Until you have taken inventory of your assets and clearly defined your estate planning goals, you should not focus too heavily on the tax considerations. Any planner can minimize taxes when your goals and objectives are ignored. It takes a planner with years of training and expertise to implement your goals with the least amount of tax possible.

If You Die Without a Will
If you die without a will (referred to as "intestate"), the orphan's court will take control of your estate and distribute your assets according to Pennsylvania's intestacy laws. This method of distribution is designated by statute in a generic fashion, and may not match your goals. First, your assets may not go to the individuals you would have selected. Since Pennsylvania laws generally favor the closest family members (your spouse and children), other family members (grandchildren, siblings or parents) or non-relatives whom you may have wished to include will be overlooked. If you have surviving minor children, they may receive up to one-half of your estate when you may wish your surviving spouse to receive all of your estate.

Second, if you have minor children, you will not be able to select their guardian. In addition, the absence of a will places a greater burden on the minor children's guardian. Because the laws of intestacy give part of the estate directly to the children, the guardian (even if it is the surviving spouse) must petition thecourt each year for an allowance to support the children, and must report expenditures.

Third, without a will, the court will appoint an administrator of your estate. If there is no relative willing or able to serve as administrator, the court may appoint a professional administrator who you do not know. Many people find comfort in selecting someone they know and trust to oversee their estate.

Finally, if you die intestate, your estate will not have the benefit of tax planning to minimize the effects of federal and Pennsylvania taxes.

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