Estate Planning Tips for 2019

Estate planning documents serve many important functions both during life and after death. Not having such documents can present many different kinds of problems. Here are five tips for getting your estate planning in order.

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1. Don’t procrastinate

According to a 2017 study by Caring.com, over 60 percent of U.S. adults don’t have a will.[1] Of those who have taken the step to create an estate plan, the majority are adults age 72 and older. When is the proper time to create an estate plan? Now. Many people, particularly young adults likely procrastinate on this important job thinking “I’m too young to need an estate plan,” “I’m not going to die anytime soon,” or “I’m too busy to handle that right now.”

The truth is making an estate plan is about more than just planning for your death. It allows you to appoint people to handle your financial affairs and make health care decisions for you in the event you are incapacitated. Parents of young children can make a plan for the care and support of those minor children in the event both parents are gone. An estate plan allows for you to direct how you want your property to be distributed after your death.

Without these important documents, an agent or executor would have to jump through a lot more hoops in order to take care of you and your affairs. Without a power of attorney, if you were to be incapacitated, a court would have to open a guardianship proceeding in order to appoint someone to make health care decisions and manage your finances. Without a provision in a will, a court proceeding would also be needed to appoint a guardian for your minor children, and the court may not pick the person you would have chosen. State law directs who receives the decedent’s property when someone dies without a will.

Leave your heirs with a clear plan for how you want your affairs managed. Don’t wait any longer to start planning your estate.

2. Make a proper inventory of your assets  

Before you visit with an attorney it is a good idea to spend some time taking an inventory of all your assets and liabilities. Doing so will assist both you and your attorney in determining the best kind of estate plan for your situation. There are also certain types of estate planning strategies for different types of assets and ways to keep your assets from going through a probate proceeding. For example, life insurance policies, retirement accounts, and investment accounts are non-probate assets so long as you have a proper beneficiary named.
 
Having an idea of the value of your estate will also go a long way in determining how you want it to be divided and managed between your beneficiaries. For example, parents of minor children with a large estate may consider setting up a trust to provide for their children over time, instead of giving a newly turned 18-year-old a large lump sum inheritance that they may not spend wisely.
 
3. Consider setting up a revocable trust  

Just like a will, a trust is an estate planning instrument which allows you to direct how your property is managed and distributed after death. Unlike a will, however, a trust keeps your property out of probate. In setting up a trust, a trustee is appointed to manage property that is transferred into the trust. By making these transfers to the trust during your lifetime, or by having the beneficiary on certain assets your trust, your property avoids having to go through probate after your death.
 
Additionally, a trust is a great tool for setting up management provisions to care and provide for your beneficiaries when you have concerns about them spending the money frivolously. A trust can also provide your beneficiaries with certain protections against creditors and against divorce.

4. Choose a trustworthy executor or trustee

Regardless of the type of estate plan you choose, it is important to appoint an executor or trustee who you trust to handle your affairs honestly, as you direct and who will deal justly and fairly with your beneficiaries. While state law does provide certain standards for executors or trustees to meet, you want to make sure you don’t have any reservations about the person you are choosing to handle your affairs.

For example, say a married couple appoints their oldest child to be trust of their trust once they are both gone. What happens if that oldest child does not get along well with his siblings? If there is any chance the older child will not handle the trust properly for his siblings, it may be best for the couple to appoint a neutral third party instead.

Sometimes people choose a corporate trustee, such as a bank trust department, as trust of a trust. While there is nothing wrong with doing so, it is a good idea to have clear provisions for how the beneficiaries of the trust can have a corporate trustee removed in the event the trustee is not acting in the best interests of one of the beneficiaries.

Lastly, you also want to make sure the agents you choose are individuals you trust to handle your money. These people will have access to your finances, cash, bank accounts, etc. so it is important that you pick someone who will act honestly and with integrity.

5. Hire an attorney  

These days, with so much information on the computer, it is easy to find DIY estate planning on websites like legalzoom.com. While these sites can seem like an attractive and cost-effective alternative to meeting with an attorney, they can make mistakes, not conform with your state’s law, or not adequately account for your specific situation and family dynamic. Therefore, it is definitely recommended that you take the time and spend a little money to make sure your estate plan is done correctly and that it will be valid at the time it is needed.
 
Ready to get started? Call the office to set up an estate planning consultation today!

[1] Walls, Barbranda Lumpkins. “Haven’t Done a Will Yet?” AARP, February 24, 2017. https://www.aarp.org/money/investing/info-2017/half-of-adults-do-not-have-wills.html