In my estate planning practice, it is not uncommon to meet new clients who want a housing plan prepared, but are a bit vague about what to include in the plan. Quite often, initial conversations begin with the client saying something like, “I want a will . . . or should I have trust? Do I need anything else?” Actually, it’s a good question to start a discussion.
Most people realize that their inheritance plan must provide for the distribution of their assets after their death. That, of course, is an important element of an estate plan, but there is much more to consider in a well-designed plan. Before meeting with your attorney for the first time, you should also think about things like who you want to work with if you become incapacitated; would you want your doctor alive if you were near the point of death with little chance of recovery; who you would like to have the authority to sign important papers for you in your absence; and, who do you want to raise your children if you suddenly die. There are a variety of personal circumstances that affect estate planning, but let me offer the following as things you should consider before you even meet with an attorney to discuss your own estate plans.
Should I have a will or trust?
This is usually among the first questions a client asks during the initial meeting. Many are aware that trust will evade probate, but that’s only true if trust is properly funded, meaning that all of their assets are transferred to the trust. However, not every estate plan requires guardianship, and you may not need to incur the additional expense of having your attorney set up a trust, if a will suits your needs. And, contrary to what some people think, having that belief no avoid property taxes.
A trust may be a good choice for you, if it is less likely that you will acquire more assets in the years to come. What often happens, however, is that people will have an established trust and then acquire new assets that they neglect to place in the trust. Then when they die, the assets outside the trust must go through a probate that overrides the intention to establish a trust. So, before deciding on trust as a key element of your own real estate plan, take some time to consider your future investment plans and major acquisitions.
There are several other advantages of a trust, which may make it the right choice for you. For example, if you become incapacitated, your guardian will be able to step in and manage your assets without having to find a court-appointed conservator. In that sense, a trust document is more all-encompassing and flexible than a regular will.
What else should I consider in my housing plan?
Estate planning isn’t just about deciding who gets to your wealth when you die. It’s also about making decisions about what you want to happen if you are terminally ill or incapacitated.
Every estate plan must include an advance directive, which used to be called a living will. This document allows you to appoint a health care representative to make health care decisions for you, including end-of-life decisions, when you are unable to do so.
Similarly, we recommend that you provide a long-lasting power of attorney to a trusted family member or friend so that your appointed agent can manage your financial and business affairs in your absence or incapacity. A durable power of attorney remains in effect for as long as you are alive and must provide that it will be effective even if you are unable to.
What about my bank accounts, life insurance and investment accounts?
Careful estate planning should include a review of all your assets, including checking the beneficiary designations you have listed in your retirement plan and in relation to your investments and bank accounts. With such a beneficiary designation, these assets will be transferred outside the probate process to the persons whom you have previously designated as beneficiaries of this account. It is important that you review your beneficiary designation to ensure that your chosen beneficiary matches your current intentions for the disposition of your property.
A thorough review of your portfolio and consideration of the issues described above before meeting with your estate planning attorney will allow you to realize the maximum benefit from your meeting. This will also help your attorney to focus his discussion with you on the aspects of the process that are most relevant to your goals and needs.
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