The objectives in building and distributing an estate are not the same for any two people. Nor do these objectives receive the same priority from different people. The goal is to construct a plan that is tailored to your individual situation. Still there are certain elements to an effective plan that are common to all. The following six (6) elements should assist you in beginning your plan. They are not exhaustive by any means and competent professional advice is required to complete a plan suited to your needs.
While a great many people do too little planning, once you get started it is easy to get carried away with "over planning" and things can get too confusing. There are times when complexity cannot be avoided. However, the general rule is never do anything that will render the plan more complex unless there is a compelling reason.
A good estate plan is one that you feel comfortable living with. Even if the plan is perfect from the point of view of giving security and maximum preservation of values, it is no good if you are not comfortable living with it. Simplicity is not always the touchstone of a plan. Some people may want to use every possible device, no matter how complicated, as long as some tax or probate expense will be saved. While a balanced approach is best, the plan must be comfortable to you.
People and circumstances change. Therefore, flexibility in the plan is desirable. The irrevocable trust, while useful to avoid taxes, is an example of inflexibility that should be avoided unless there is a compelling reason. Once you put all or part of your estate into an irrevocable trust, the reasons for doing so may change. Yet, when such a change occurs, it is too late to correct the irrevocable mistake. Gifts that are made today may backfire on you and the grantee may become estranged tomorrow. For most, the benefits of such a gift giving idea can be accomplished leaving you the flexibility of undoing it later with the use of a revocable (not irrevocable) trust such as a "payable on death" account. Joint tenancies should be avoided as they are considered a gift, expose your assets to your child's creditors, and can have disastrous tax consequences.
Naturally, you want to plan for what will happen to your estate if, God forbid, you were to die within the near future. Your plan based upon what you know today to make sure your estate is distributed in the best possible manner. The longer you live, however, the more likely many factors that influence your decisions today may change. If every will were reexamined annually, this would present no problem. However, very few people actually review their plans each year to assure it conforms to any changed conditions. Thus it is important to assure adequate contingencies are in place to cover reasonably foreseeable future events. Annual review of your plan is still advised. I suggest you do it at the same time you do taxes each year. Even so, farsighted planning avoids the need to constantly return to your lawyer each year. Although I'd love to hear from you, I am quite confident you would rather save any unnecessary expense.
There are too numerous situations to mention which may require cash in an emergency. Assets range in "liquidity" from highly liquid (such as good old USA $currency$) to "frozen" assets (such as large undeveloped tracts of land and closely held stock which may be difficult to quickly sell at their full value). An objective in any plan is to avoid having too much of the estate invested in assets that may become difficult to liquidate when death comes. Another objective is to use, as far as possible, those tools which minimize the difficulties of the frozen type of asset.
It is a bad mistake to let avoidance of taxes be the overriding objective of an estate plan. The first concern is to make sure that you and your family are provided for in the manner you desire. Permitting quick access to needed cash and assuring sufficient estate assets are available to your survivors should be of prime importance. Tax planning is very important. But, no tax planning is necessary if adequate assurances have not been made that there will be an estate to pass on to your legatees. Furthermore, as state above, the planning objectives of any two people are rarely the same. Thus, it is extremely important that you come to grip with what you value, and that this be incorporated into your life and your plan which is a reflection of your life. A well conceived estate plan includes all of a person's plans and ambitions for the rest of the years of his or her life and the years following death. It includes making provisions for the variety of contingencies that face everyone.