The myth that only the wealthy need estate planning is dead. No pun intended. Virtually everyone needs end-of-life planning so it helps to understand what that is and how to go about it.

I have been to 11 funerals so far this year and helped the beneficiaries transfer assets. No two estate plans were the same and every situation had some kind of a surprise that could have been avoided if the client had kept their estate plan current.

Let me start out by stating I am not an attorney, and yes you should consult a good estate planning attorney in conjunction with your financial planning advisor. Let your advisors work together for you to provide the best coordinated outcome on your behalf.

The financial plan is a good place to start. Here you can identify what your goals and fears are in a safe place. Building a strategy that includes how to handle your income needs when you need assistance, how to protect your spendthrift nephew should he inherit and how to avoid expensive pitfalls along the way are a crucial part of the financial plan. You did the hard part. You earned and saved and invested and paid taxes. Now don’t let someone else throw it all away through lack of proper planning.

Start by voicing your concerns. Most parents are worried about picking a guardian for their young children or transferring money to a naïve adult child. Your advisors need to hear these concerns so they can help you develop a plan that works for you. Here are a few basics that everyone should be aware of.

Have primary and contingent beneficiaries on every account. This includes TOD (Transfer on Death) instructions on non-IRA plans. Remember these pass by your signed beneficiary forms, not by will. Keep in mind that adding a child as a joint owner on your investment account may negate the step-up-in-basis on your appreciated assets. Under current law, your beneficiaries will be able to declare your date-of-death valuation as their new cost basis on inherited assets.

Keep your financial plan up-to-date with net worth and income statements so when the estate laws change it is easy to assess your situation.

Have a will that names a primary and successor personal representative who will handle your estate and distribute assets to your beneficiaries. Have a conversation with this person when you set up the will and when you make changes. Leave written instruction on how to handle personal effects and what your personal wishes are.

Have a living will designed to help with end-of-life care, including naming a health care agent and power of attorney should you become incapacitated.

Discuss and learn about different types of trusts and if they add value in your situation. Be careful putting on too many restrictions that encumber the beneficiary with high costs of administration if that can be avoided. The main purpose of a trust is to avoid probate and creditors, not to control your kids from the grave. Leave some flexibility on identifying the successor trustee. Consider naming an adult child with the caveat that they work with a certified financial planner. If you insist on a bank trust department you may find the costs are prohibitive and there is little flexibility in self-directed investments.

Have a conversation with your adult beneficiaries about your wishes including gifting and charitable contributions. Include them in your financial planning meetings so they can learn the value of a good strategy and know how to seek advice.

Understand the difference between income tax due on an inherited asset where taxes were deferred, estate taxes if any, and gifts made during your lifetime and how they affect your estate. Current law allows for a $5 million exemption from estate taxes; however, this does not mean there would be no income taxes due. The current law will sunset in 2012.

Patricia Kummer has been an independent certified financial planner for 25 years and is president of Kummer Financial Strategies Inc., a registered investment advisor in Highlands Ranch. She welcomes your questions at www.kummerfinancial.com or call the economic hotline at 303-683-5800. Any material discussed is meant for informational purposes only and not a substitute for individual advice.