When you think of estate planning, do you envision a gated stone manor house surrounded by rolling hills?

While that is one type of estate, the one we’re referring to is the property left by a person at death. There is a tongue-in-cheek expression that says your estate is what’s above the ground when you’re put six feet under. A little blunt, perhaps, but certainly a clear definition for sure.

Estate Planning is the “who gets what and how do your financial obligations and final expenses get paid” part. We all know that we have to pay our debts at death and some taxes, but with a little organization, you may be able to minimize that tax impact and preserve more of your assets for your heirs.

Your first step is to draw a will. (and not on the back of a napkin) A will defines what will happen to what you’ve left behind and lets your wishes be known. Even if you don't have children, there are people in your life who will inherit your property. Your wishes for passing on those possessions are up to you. You need to put your wishes in writing. A will can take care of most of that communication.

Over time, your goals will change, and circumstances change. Just as you should periodically review your financial plan, you should also periodically review your “estate plan” and your will. This is particularly true if you’ve had an event or life “trigger” occur. Triggers are things like marriage, divorce, a loved one's death, giving birth, adopting a child, a parent taking ill, changing positions in your company or starting your own business.

Obviously, this depends on your individual situation, some plans will include more than others. Some also depends on whether you choose to include things like a living will. Your attorney can help you with all the questions you’ll have.

The major parts of an estate plan may include:

You've put all the documents in place. You've had the advice of your tax accountant, your attorney, and your financial advisor. What else is there?

Communication. Make sure you tell your family and other people who need to know about your final wishes.

The questions listed below can help you start to structure your estate plan and to consider some actions that you need to take right now.

If you're thinking of making a plan for your estate and taking care of your loved ones in the event of your passing, what do you need to do? Where and how do you start? You can start with pondering the questions listed above. Then you need to evaluate your needs and create a checklist of things to do to put the estate plan together.

First, determine how much planning you really need to do. Some estates are enormous and need the help of attorneys and tax specialists to create complex and inclusive documents. But even if you don’t have a great deal of wealth, you still need to do some degree of planning. Take an inventory of what you have and what your wishes are. It may be as simple as asking a few questions and looking at a few numbers.

Two key components of your initial needs evaluation are an estate analysis and a settlement cost analysis.

The estate analysis includes an in-depth review of your current estate-settlement arrangements. This estate analysis will also disclose potential problems in your present plan (if you have one) and give you the tools to make decisions about making changes to your estate plan.

For example, you may believe that your current arrangements are all taken care of in a will that leaves everything to your spouse. However, if you’ve named anyone else as a beneficiary on other documents (life insurance policies, retirement or pension plans, joint property deeds) those instructions will likely overrule anything set forth in a will. You want to ensure that all your instructions work harmoniously to follow your exact wishes. In addition, you may want to think about alternative asset ownership arrangements for some assets. Why? While your spouse will receive your estate free of estate taxes if he or she is a U.S. citizen, anything your spouse receives above the applicable exclusion amount ($1.5 million for 2005, gradually rising to $3.5 million by 2009, followed by the repeal of estate taxes in 2010) will be subject to estate taxes upon his or her death.

An estate settlement cost analysis makes some educated guesses about what it will cost to settle your estate. In estimating these costs, you can see if there are holes in your estate plan, such as providing enough funds to cover your expenses without bankrupting what you're trying to leave to your heirs. Remember to take into account that inflation will add to the expenses as well as any specific personal or charitable bequests.

Estate planning can be very complex. And while a simple will may adequately serve the estate planning needs of some people, most of us should meet with a qualified legal advisor to be sure you are developing a plan that is consistent with your objectives. A software package can't replace the guidance of a trained professional

Finally, be sure to recognize that estate planning is also an ongoing process that may mean that you need to reassess your plan to be sure they work with your changing goals and needs. And, because estate planning often includes the many facets of your personal finances, it involves coordinating the efforts of qualified legal, tax, insurance, and financial professionals.

When you make plans for your estate, be sure you have addressed the following areas:

Be sure you have a will in which you have named an executor / executrix or trustee and you are both comfortable with the ability of that person to carry out your wishes, and that you have asked that person to do it. Your designee for these functions should feel comfortable taking this responsibility on. Even though it will cost more, it's often wiser to name a professional, such as a lawyer, than to saddle a relative with this function. A professional can be a more neutral arbiter in case of a dispute among the heirs.

Be sure you have a medical directive in place sometimes called a living will. You need to be sure that someone is in charge, that is, has your health care proxy, in case you become incapacitated. Again, be sure to discuss this with your designee and be sure that he or she has a copy of the Durable Power of Attorney and Medical Directive so that medical professionals can speak with your designee.

Do you also have long-term disability insurance? Or long-term care insurance in case you need nursing home care? Put these on your list for essential components in a comprehensive plan.

Would a living trust work in your plan and avoid probate? If so, be sure to title your assets in the name of the trust.

In your will, you should name a guardian for your children in case you and your spouse are both deceased. Be sure to speak with your designated guardian so that there are no surprises.

Consider leaving your estate to a trust to ensure that your children are provided for, in case your spouse remarries and then pre-deceases the new spouse.

Be sure you have enough life insurance to provide some income for your spouse at least in the short term, provide for estate settlement costs, pay off loans and so on.

Do you need an irrevocable life insurance trust to exclude the insurance proceeds from being taxed as part of your estate? Would you consider treating a trust for charitable contributions?

If you are married, you can take advantage of the marital deduction. Be sure to discuss this with a tax professional to be sure you are not letting money slip away.

There are currently $1.5 million that are "applicable exclusion amounts" that your estate plan (and your spouse's plan) can claim. That exclusion will cut down on your estate taxes. Check out if both you and your spouse can individually qualify for this exclusion amount.

Remember that you can make $11,000 gifts to family members without being subject to a gift tax. This is the amount under current law. Keep up on changes to this amount to take full advantage of the exclusion. You may want to make gift of some assets that are likely to appreciate in the future in order to maximize future tax savings.

Setting up a charitable trust fund could also provide tax benefits to your future estate taxes and current income taxes.

Do you have a management succession plan in place? How about insurance to cover recruiting your replacement or buying out your heirs? If you have a business, you probably need key-person insurance. If you have partners, you may need to have both a buy/sell agreement and insurance so that your business can remain viable and can provide your heirs with an inheritance.

Be sure that part of your exit plan for retirement, also includes your wishes in case of an unscheduled departure.

There are many situations that we hope don't happen. Many of them are covered by insurance. We buy long-term health care insurance, we buy accident insurance on our cars, we buy insurance to spare our homes from potential lawsuits. Even though we hope these things won't happen, they may, and so we plan for the possibility.

In our estate plans, we also need to think about the very real possibility that one spouse will go before the other.

We want to provide for that spouse with insurance until the spouse can get a new job, sell the house, and settle the dust after the loss. Then we need to think about beyond that, especially if there are children. We may have put funds aside for the children's education, but what about another possibility.

If the spouse remarries, has children or marries someone with children, what happens when your former spouse then dies? Do the possessions and funds you set aside for your children either get divided or with the "new" children or do your children get cut out all together? How can you safeguard your children's future in case you aren't there? Leave your estate in trust to your spouse. That way, your spouse has lifetime access to the funds, but when he or she passes, it goes to the children because it never belonged to your spouse.

A trust estate is worth considering if you have children. Check with your financial planner to consider your specific situation.

Once possible solution to outrageous estate taxes is to create a Living Trust. Make no mistake, trusts are not just for the very wealthy. The truth is people from all walks of life may benefit from a trust.

What Is a Trust?
In general, a trust is a legal entity that is central to a three-part agreement in which the owner of an asset (the grantor) transfers the legal title of that asset to the trust to benefit one or more beneficiaries. The trust is then managed by one or more trustees. Trusts may be revocable or irrevocable and may be included in a will to take effect at death.

Revocable trusts can be changed or revoked at any time. For this reason, the IRS considers any trust assets to still be included in the grantor's taxable estate, so there goes your tax advantage. This also means that the grantor must pay income taxes on revenue generated by the trust and possibly estate taxes on those assets remaining after his or her death. Most revocable trusts become irrevocable at the death or disability of the grantor.

Irrevocable trusts cannot be changed once they are executed. The assets placed into an irrevocable trust are permanently removed from a grantor's estate and transferred to the trust. Income and capital gains taxes on assets in the trust are paid by the trust, not the grantor. Upon a grantor's death, the assets in the trust are not considered part of the grantor's estate and are therefore not subject to estate taxes.

A trust needs a trustee to handle investments and manage trust assets. The grantor appoints this trustee and can work with the trustee on major decisions, or the trustee can be assigned full authority to act on the grantor's behalf.

A trustee may be an attorney or accountant, or may be someone with an expertise in taxes, estate law or money management. Trustees have a responsibility, known as "fiduciary responsibility" to act in the grantor's best interest.

Although trusts can be used in many ways, they are most commonly used to:

Most people use trusts to help maintain control of assets while they're alive and medically competent, as well as (indirectly) to maintain control of the disposition of assets if they're medically unable to do so or in the event of death.