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Planning an Estate

With an estate plan, you can ensure that your loved ones are taken care of financially after your death. Your estate plan can also give your family peace of mind by documenting what you want if you become mentally or physically disabled. Learn the basics about planning an estate in this section.

Who needs estate planning?
If you experience one of these life events, it’s time to create an up-to-date estate plan.  

  • You marry, divorce or remarry
  • You have a child 
  • The value of your assets changes significantly 
  • You have a business you’d like to protect 
  • You move to a different state 
  • You’d like to change the executor of your will or the administrator 
  • One of your heirs dies 
  • The laws affecting your estate change  


Why estate planning?
By creating an estate plan, you can:  

Protect your loved ones financially
Once your estate plan is in order and it is properly funded with life insurance, you can rest assured that your loved ones will be taken care of financially in the event of your death. 

Prevent family conflict
Often, families experience conflict when they try to divide up a loved one’s estate themselves. You can ease their emotional burden by clearly defining what you want in your estate plan.  

Avoid probate
Probate is the process through which a deceased person’s affairs are resolved through the state. Though life insurance and annuity products generally avoid going through probate, it’s important to create an estate plan if you want all of your assets to avoid this process.  

Ensure your business’ survival
Create an estate plan to make sure that your employees and goals for your business will be taken care of even if you die or become disabled unexpectedly.  

Minimize taxation on your estate
Individuals who have more than $5 million (this amount will reduce to $1 million in 2013) in property, joint property, life insurance, annuities and certain trusts may be subject to federal estate tax. By using proper estate planning techniques, you can minimize the taxes that your beneficiaries will be subject to.  

For example: Through a federal gift-tax exemption, you can give $13,000 a year to a loved one throughout your life, minimizing the amount of tax due on your estate at death.  

Another method for minimizing taxation is to use a trust. Often married couples leave their entire estate to the surviving spouse, which avoids taxation at the second death. By setting up a trust to hold $5 million, you can ensure that both spouses take full advantage of the $5 million exclusion.  Until 2013 the use of such a trust may not be necessary to ensure that both exemptions are used.

Talk to your Modern Woodmen representative about ways to minimize taxation on your estate.  

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Minimize taxation on your retirement plans
At your death, your IRAs, qualified plans and annuities will be subject to income taxation and potentially estate taxation.  With an estate tax rate as high as 46 percent and an income tax rate of approximately 35 percent, a $1 million IRA can potentially shrink to $351,000.  Talk to your Modern Woodmen representative about replacing this asset with life insurance and other strategies for dealing with this issue.  





A successful estate plan contains or accounts for the following elements:  

As part of your estate plan, you should have a will that specifies who is to receive your estate in the event of your death. It’s a good idea to also include a living will, so that your loved ones know what to do if you are incapacitated with no hope for recovery and a plan for what to do in case you become physically or mentally disabled.  

Power of attorney
It’s important to name a person that you trust to have power of attorney, so they can make unexpected decisions about financial and healthcare issues.  

Plan for minors
If you’re a parent, it’s important to specify who the legal guardian of your children would be if you and your spouse die. Otherwise, the court will choose their guardian. You should also be sure to provide for your children financially. You can set up a trust and determine the terms of how and when the money will be spent, such as at what age the children will receive money. Without any guidance from you, the court will appoint a custodian to manage your children’s money.   

Life insurance
When you create an estate plan, you need to reevaluate your life insurance coverage or purchase new coverage that accounts for estate taxes and estate administration fees, along with all other financial needs. After all, an estate plan isn’t worth much if it is not fully funded.  

Life insurance is not part of your probate estate, so make sure to review your life insurance beneficiary designations and coordinate with your estate plan.  

If you would like to leave money to a beneficiary without giving them complete control, you should add a trust to your estate plan. It is a great resource for leaving money to minors or special needs individuals because you can determine when your beneficiaries receive money and how it is distributed.  

Charitable giving
If you would like to leave a legacy to charity, make charitable contributions a part of your estate plan. Whether you name a charity as the beneficiary of your IRA, life insurance certificate or property, these contributions may be tax-deductible and reduce your taxable estate. You can also replace assets to loved ones with an income tax-free life insurance policy.


How to plan your estate
Review your estate with a Modern Woodmen representative.

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