Nine Estate Planning Considerations

November 28, 2022

Presented by Rich LeBranti

Illness and death are unfortunate and unpredictable realities. However, as little as people like to consider being incapacitated or dying, creating a will and estate plan is vital to make sure that your wishes are carried out. The process of creating a will and estate plan may seem overwhelming, but this article will discuss the variety of ways that you may use to make this process easier. 

1. Hiring an estate attorney

With this process involving so many legalities, consulting an estate attorney is essential, for they can draw up necessary documents and provide legal advice. The price range is dependent on the complexity of your situation and can cost roughly a few hundred to a few thousand dollars. Either using online resources or getting referrals from friends and family is an effective way to find an attorney, and in instances involving unorthodox situations regarding family, a specialist should also be consulted. When interviewing attorneys, ask if they charge hourly or a flat fee, and if the answer is “hourly,” then determine their hourly rate, the estimated number of hours, and billing dates.

2. Naming an executor

Naming an executor is essential to having your will carried out, as the position is largely responsible for doing so. An executor validates your will in probate court, oversees the distribution of your assets, and pays bills and taxes. When selecting an executor, you must consider their judgment, ability to settle disputes, willingness to consult professionals, and ability to carry out your estate plan honestly and effectively. 

3. Keep your will current

Keeping your will accurate and updated will ensure that your wishes are followed after death. Once you have a will in place, confirm that your information (residence, marital status, deaths in family, etc…) is fully accurate to avoid confusion. You also should ensure that the beneficiaries (people or institutions that are inheriting assets) are current, for all assets with no named beneficiary pass on to your heirs. While this is not necessarily a negative thing, if your wishes are that an asset goes to another beneficiary then they must be legally implicated. 

4. Create a trust

A trust is a legal and financial agreement between the grantor (creator) and trustee that allows the trustee to manage assets within the trust. However, in a testamentary trust you need to choose a trustee who can make hard decisions and won’t irrationally give your money to beneficiaries. If chosen poorly, then a trustee can have unintended power over the grantor. Choosing a singular trustee is more efficient, but choosing two can provide a more secure system. 

The two main categories of trusts are living and testamentary. Living trusts take place during the lifetime of the grantor, and the grantor can also be the trustee in this situation. They are private, and not part of a will. However, there are two different types of living trusts: revocable and irrevocable. A revocable living trust is removable, avoids probate, does not avoid estate taxes, and is commonly used to quickly pass assets to heirs. On the other hand, an irrevocable living trust can’t be removed, is no longer part of the estate, not subject to estate taxes, and is commonly used to protect assets from estate taxes and creditors. Finally, a testamentary trust takes place upon the death of the grantor and exists as long as the grantor establishes, goes through probate, needs to be checked annually, and is commonly used to leave assets to young children and name a trustee. 

5. Living wills

You may want to consider whether a living will is beneficial. Usually accompanied by a durable power of attorney for health care, a living will allows you to declare your medical wishes in the case that you cannot communicate them yourself. 

6. Powers of Attorney and Health Care Proxies

Durable powers of attorney are documents that give another person to make decisions for you. You can control the scope of authority when you create the document and can revoke it at any time. Springing powers of attorney take effect only when the grantor has become incapacitated and cannot make financial decisions for themselves. Whoever you choose for your power of attorney must be trustworthy, for they have the power to dishonestly transfer funds to themself against your wishes. Another purpose of a power of attorney is in a medical context, which is known as a health care proxy. A health care proxy is appointed to make medical-related decisions when you are incapable of doing so yourself. Generally, appointing a spouse or close family member as your power of attorney or health care proxy agent is the safest choice. 

7. Insurance

When considering future planning, long-term insurance is an important factor to keep in mind. Medicare – a federal plan which takes effect at age 65 – provides basic healthcare coverage but unfortunately not long-term care, such as an assisted living facility. Well Medicaid covers these expenses, this form of healthcare is selective and qualifying is difficult. Life insurance is slightly more affordable depending on your situation and prevents your family from undergoing difficult financial burdens which can otherwise be avoided, as well as helping cover any debt you might have left for your family. 

8. Funerals

To save family from increased financial costs after you pass, you may consider either creating a joint account with a close family member or friend or using a Totten Trust (provided that these trusts are seen as legitimate in your state) – a trust which transfers the funds to the trustee upon your death – and deposit enough money to cover funeral expenses. It is also important that you let your wishes regarding a funeral (private funeral, public funeral, no funeral, etc…) be known by your family and friends so that your wishes are carried out. 

9. Personal Records

Keeping your records filed and current is essential to your estate planning and your executor when dividing your estate. First, keep current active records (current bills, bank statements, loan statements, etc…) in an easily accessible file cabinet or other easily accessible filing system. Next, keep permanent records (bank and brokerage statements, Social Security cards, your will, trusts, etc…) somewhere that you can still easily access them, but more private than your current active records. Lastly, keep original copies of birth/marriage certificates, stock and bond certificates, military service records, real estate and vehicle titles, and family heirlooms in a safe deposit box which can only be accessed by somebody with the key and legal authorization to do so. It is recommended that your executor has a key along with a close family member or friend.

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