How to Prepare for an Estate Planning Meeting
You’ve put it off long enough. It’s time to get you financial affairs in order and make plans for that day when you will no longer be alive. What exactly do you own? How much of what you owe is encumbered with debt? Who do you want your cherished things to go to? How about passing down control of the business you worked so hard to build all these years? What about care for your minor children in case you and your spouse pass away while the children are still minors? Who will care for them? Will there be tax implications to your distributions? Wills? Trusts? The list can go on and on. A qualified Estate Planning Attorney can help guide you through the process and make certain you have the most efficient, wealth management and estate plan that fits your every need. In order make the most of your time for that meeting with your Estate Planning Attorney, here are some things you can do to be prepared:
- Make a Comprehensive List of Your Assets and Liabilities: You can’t begin to decide how to distribute your assets if you don’t have a complete picture of all of them. You need to list your house(s) (and mortgage), bank accounts, retirement or other investment accounts, and all personal belongings with value (collections, furs, jewelry), insurance policies. It will also be important for your attorney to understand exactly how you own these assets (whether in your own name, jointly with a spouse, etc.)
- Decide Where You Want That Special Belonging To Go: There are things that hold a certain sentimental value. Maybe they have been passed down through the generations. Typically, a spouse will leave all his/her personal belongings to the other spouse, and upon the last spouse’s death, the property would be divided equally among certain named beneficiaries (often children). While there will be a period of grieving when a loved one passes, it can soon be overtaken by a battle royale amongst surviving beneficiaries each of whom may claim an attachment to a particular piece of personal property. Planning ahead can help minimize hurt feeling or accusations of greed.
- Think About Who Will Be Your Personal Representative/Executor: When you pass away, a person will be named in your will or trust to act as the personal representative of your estate. This person, acting in a fiduciary capacity, will be charged with administering the estate for the benefit of the beneficiaries. This individual will be charged with marshalling all your assets, paying any outstanding debts or taxes that may be due, addressing any claims made against the estate, and then finally distributing your assets in accordance with your testamentary desires. In addition, you should be prepared to name a secondary Personal Representative/Executor in case the first individual named is unwilling or unable to carry out this role.
- Consider Separate Trusts for Your Children: One of the advantages of an estate plan that contains a trust is that the grantor(s) can segregate into separate trusts, assets for each child. The benefit of this is that the body of the trust may be insulated from claims from the beneficiary’s creditors, including a divorcing spouse. You are also able to postpone the timing of distributions to each child until a certain age has been reached. This is especially valuable if the children are minors or there is a fear that they will use the gift unwisely and all at once if they are so inclined. Along these lines, you must consider what would happen if one of your children should predecease you. Do you want that child’s share to revert to his/her remaining siblings? What if that deceased child had a child of his or her own? By advanced planning for these types of possibilities, separate trusts can be established to respond to such an occurrence.
- Begin To Think About Who Should Act As Trustee: If you establish a trust, after the death of the last surviving grantor, someone has to be there to administer the trust as it was written. If you have left behind young children, placing them in the role of Trustee of the trust (with appropriate oversight by a guardian) may not be the wisest choice. This is especially the if the trust is to provide for several generations. You may want to consider an institutional trustee (a bank or law firm) to carry out this role over time.
- Decide Who Will Carry Out Your Medical Directives If You Can’t: There may come a time when you are unable to make medical care decisions on your own. Without advanced care directives (Health Care Power of Attorney) you may be leaving the decisions about your own health care to a third party that may not necessarily share your beliefs or wishes. You will need to name a health care agent that will abide by your wishes. In addition, if that individual is unwilling or unable to carry out his/her role, you should be prepared to name successor agents.
- Decide How You Will Deal With Financial Affairs If You Cannot: Similar to a Health Care Power of Attorney, a Property Power of Attorney can grant your agent the right to manage your financial affairs if you are incapacitated. This individual, acting in a fiduciary capacity, must manage your financial affairs for your benefit and not his or her own. Again, a back-up agent should be considered in the event that the original agent is unwilling or unable to carry out his or her role.
- Consider a Personal Notes Page: Is there a specific dress or suit you would like to be buried in? How about music to be played during the wake? Is it your desire to be cremated instead of being buried? Carefully putting together a Personal Page, listing out specifics that might not be covered in a will or a trust can provide a good deal of comfort and guidance to those loved ones left behind.
- Consider Preserving Your Will in Electronic Format: This can be one of the easiest ways to show that you were fully competent at the time you executed the instrument and may blunt any challenges to testamentary capacity by a disgruntled heir. In addition, let’s face it, a will or a trust is a sterile piece of paper, coldly read by a family member or an attorney after your passing. By recoding your last wishes in electronic format, you can leave behind a lasting portrait of your wishes and desires.
There is much to think about when deciding on how to craft your estate plan. The points set out here are just a starting point. Your Estate Planning Attorney will have many more questions to ensure that what is ultimately decided accurately reflects your desires upon your passing.
With over 30 years’ experience in advising families on estate planning issues, let Boznos Law work with you to ensure your final wishes are carried out and your property distributed as you would have wanted.
Read our previous post about Buy-Sell Agreements.