(This is the second installment in a two-part series discussing the use of simple wills.)
If you have ultimately decided that you want to have a will, your next step is to make an appointment with an estate planning attorney to help you design an estate plan that is suitable for your needs and circumstances.
But, before you reach for the phone to make that call, a little planning of your own will make the meeting more efficient (and probably less costly).
A Little More Conversation
Having a frank discussion with your spouse about your overall estate planning objectives is a good idea. Spouses needn’t be in agreement on everything because each spouse can make different provisions in his or her separate will. However, having some basic understanding and agreement on the major concepts will make the job easier for all concerned.
Some fundamental questions should be considered before meeting with an attorney:
1. What is your basic desire for the distribution of your estate? Most clients intend to benefit their children, if they have any, but you can also consider making bequests to friends, other family members, charitable gifts, or a combination of any of them.
2. If you have children, do you wish for them to share equally in your estate or do you have reasons to treat them differently? You have no obligation to treat your children equally, although, more often than not, that is how parents choose to treat their children (often from the fear of appearing to favor one child over another). Yet, some children may have greater needs than others, particularly if they are grown and you already have been able to develop some sense as to the career or financial path on which each child’s life seems to be taking them. One child could have medical issues where he needs a greater portion of your estate to pay for their medical expenses. Or, where there is a disparity in age between the eldest and youngest, you may wish to have more funds available to pay for the youngest child’s education.
3. If your children are not old enough to inherit your estate yet, do you have someone whom you would like to manage those monies for their benefit until they are old enough to receive them? (Monies can be set aside in a trust or in a custodianship until the children reach an age where they can be responsible enough to manage their own money. Or, if not placed in a trust or custodianship, a guardian of the child’s estate can be appointed by the court to manage the inheritance until the child becomes an adult. Trusts, custodianships and guardianships are outside the scope of this post and will have to be the subject of a future article.) In any case, you will need to select someone who can manage those funds until the child(ren) is/are older. That person can be another family member, a friend, or a professional fiduciary.
4. If your children are adults with children of their own, do you wish to benefit your grandchildren with direct gifts to them? Or do you prefer to leave your estate to your children and allow them to make the decisions about how to benefit your grandchildren? The former approach makes certain that the grandchildren receive a specific gift whereas the latter approach builds in greater flexibility for your children, yet is reliant upon your children passing along some of their own inheritance to your grandchildren.
5. If you want to benefit a charity with some or all of your assets, which charitable organization do you wish to benefit with that gift? Is your gift-giving faith based? Is it designed to fund medical research or some other work that will improve the world for future generations? Do you want to benefit a national charity, or do you prefer to be charitable closer to home in your own community? There are no right or wrong answers as most any charity would stand to benefit from a cash bequest. But, in selecting a charity, choose the one whose programs and ideals are most consistent with your own.
Just What Do You Own?
It is easy to think that, if asked, you can quickly list out all of the assets that you own. But, after a meeting with your attorney in which many new concepts may have been introduced to you, it can be easy to overlook an asset or two. So, while you have some free time before your meeting, pencil out a list of all of your assets. Be sure to include all real estate, any securities or other investments, any partnership or limited liability company interests, any business(es) which you may own, any promissory notes or other debts owed to you, bank accounts, cars, valuable antiques and jewelry, and cash.
It is important for the attorney to gain an understanding of the net value of your estate to determine what type of estate plan will be best suited for your needs. With the “fiscal cliff deal” reached between Congress, in 2013, each person can now transfer a combined total of $5.25 million during their lifetime (by gift) and at death. Therefore, knowing the amount of the equity (fair market value less any debt) in each of your assets will assist the attorney in assessing whether your estate needs a more sophisticated plan to avoid estate taxes, or, because your estate is small enough that it is unlikely to be taxed at your death, your estate’s gift-giving plan can be designed without any regard to taxes.
Be Well Represented
If your estate plan does not utilize a trust, it is quite possible that your estate will need to be probated. In the probate process, an individual (known as the “personal representative” or “executor”) is charged with the responsibility of managing that process. You should give thought to whom you would select for that task. Many clients nominate one of their children, but it can also be a trusted friend, or a professional fiduciary. Whomever you select, it should be someone who has reasonable arithmetic skills and who is accustomed to (or at least not intimidated by) working with an attorney.
If you have minor children, you should give thought to whom to nominate to serve as their guardian should you die before they become adults. There should be a guardian of their person and a guardian of their estate. The guardian of their person will most likely be the person with whom the children will live, while the guardian of their estate would be the person charged with managing their finances while they remain a minor. These positions can be filled by the same individual, or you can nominate different persons to serve in each capacity.
You will assist your family by clearly stating any preferences which you may have regarding your desires for the disposition of your remains upon death. If you would like to be cremated, that should be stated in your will, along with any special instructions as to what you would like done with your ashes. If you have any prepaid burial arrangements, you should provide a copy of the contract to the lawyer.
What To Take With You To The Appointment
You will expedite the process of preparing your estate planning documents if you take the documents describing your assets to the initial meeting with your attorney. He or she will need to see how the assets are currently titled and verify the values of any financial assets. So, be certain to take copies of documents such as deeds and appraisals to any real property, the most recent mortgage statement showing the amount of the outstanding debt, the trust deeds securing that debt, the most recent statement for any brokerage, money market, or bank accounts, copies of any promissory notes owed to you and any trust deeds which might secure the notes, copies of any partnership agreements or limited liability company operating agreements, leases, and automobile certificates of title (“pink slips”). If you have any other loans, be certain to take the note or other loan documents.
Where There’s A Will
If you are still a part of the 55% of Americans who don’t have a will, and you are tired of waking up during the night and worrying about what kind of mess you will leave behind for your family if you die without one, take that simple step of contacting an attorney to have one prepared for you.
Having a will professionally prepared is generally not a terribly difficult process. If your attorney advises that you use a simple will, the cost will also be surprisingly affordable. Incorporating trusts and other more sophisticated forms of estate planning can increase the cost, but they can also make the lives of your loved ones much easier after you are gone, and they can often save your estate from substantial estate taxes or probate costs.
Please feel free to give us a call if we can assist you in completing this important estate planning process.