According to experts, less than half of Syracuse Citizens have any estate-planning documents. But making arrangements for the time when you will be gone not only takes care of the people left behind; it also ensures that your bills are taken care of in the way that you desire. Here are a few estate planning tips that will guarantee your safe and efficient departure.
Write a Will
If you pass away without a will, the state may take over and divvy up your assets. Generally, spouses and children get first dibs, then other relatives like parents and siblings. If there is no family, assets go to the state. Also a will determines who will have custody of your children, if you were the last surviving parent.
Review Your Will/Trust Annually
Changes in your finances or personal relationships may necessitate a change in your final will. Since most of us don’t know when we’re going to die, dynamic life changes may require us to make updates to who gets what and how much. To not do so could lead to tension and arbitration among surviving members.
Acquire Life Insurance
At least make sure you have the basics covered when calculating how much life insurance may be necessary. Consider the summation of any outstanding debts you may have, your final expenses, and funds for savings goals, like college for the kids. With these costs covered, your family should be able to live comfortably on the reminder of your insurance.
Create Three Critical Additional Documents
Estate planning is about more than our final wishes, it also involves creating documents that determine what happens in case we are unable to take care of ourselves while we are living. A durable power of attorney lets you designate an agent to manage your finances and legal affairs. A Release-of-information form gives doctors permission to share your medical records with designated others. Advance directives can give power of attorney for health care decisions while you are living.
Work With An Estate Planning Team
Depending on how complex your estate may be, you might need the assistance of a whole estate planning team. Designate a tax professional that can help minimize the amount of income taxes your beneficiaries will pay on their inheritances. A financial advisor will create a suitable investment portfolio for all your assets. Also ensure that you hire a knowledgeable estate planning attorney. Estate planning attorneys help create wills and trusts, along with ensuring state and federal requirements are upheld. It is generally better to work with a local attorney, as they are most familiar with city and state laws. The purpose of estate planning is to help you achieve your personal and family goals after you pass away. It ensures that your assets will end up in the hands of those people whom you wish them to go to, so that you can reach your personal and financial goals even after you die. You also can reduce the amount of taxes paid by planning your estate in the right way to ensure that your heirs receive a larger inheritance.
The saying that the only two sure things in life are death and taxes has existed for centuries. While no one likes to think about dying, it is a certainty and something that must be faced. A plan for your estate consists of a set of documents that help you plan for taxes and death and it is something that nearly everyone needs regardless if their financial and familiar affairs are complex or simple.
The documents that make up an estate plan help you avoid problems that often arise upon your death. Many of these are problems most of us never think of during our lifetimes, or are things that we simply choose not to think of. But if there is no plan in place, these issues are handled by the courts. It is therefore very important to have a plan in place so that you can decide for yourself the best choices for your family, such as who will care for minor children, who will receive your property, and who will finalize your affairs.
Estate planning can be a rather complicated matter, and it does require good judgment to ensure that you achieve the outcomes you desire. It gives you the choice while you are alive to determine who, what, when, where and how your estate will be handled. It also allows for substantial savings when dealing with tax issues, court costs and attorney fees. Planning your estate also helps your loved ones avoid the burden of having to deal with bureaucracy and confusion after you pass away. Unfortunately, many people do not plan their estates because they believe that they don’t need an estate plan or they believe that their family members can handle the task of dividing up their assets. However, if you fail to have a solid estate plan in place to handle the settlement of your affairs after you die, the laws in your state will determine what must be done. This may result in family disagreements, assets going to the wrong people, and liability for estate taxes that could have been avoided. If you don’t have an estate plan in place before you die, your assets and affairs can be tied up for months. It is therefore of the utmost importance to plan your estate with care so that everything is handled properly (and according to your wishes) upon your death. Planning an estate can be a bit overwhelming. However, a reputable estate planning attorney has the knowledge and experience necessary to guide you through the process while keeping your interests and wishes in mind. When you have a good plan in place, you are given the peace of mind knowing that all of your affairs will be handled as you wish after you leave this earth.
Beneficiary Designations and Estate Planning After Divorce
If you are like most people who are getting divorced, or who have just gone through divorce, you no longer want your ex-spouse to be the beneficiary of your estate or to put your child (ren) in a position to be disinherited if your ex-spouse gets married again after the divorce. If your original plan was to leave everything to your spouse and then to your child(ren), your ex-spouse may still get much of your estate if you don’t modify your estate plans after divorce. While a divorce decree often automatically revokes any disposition of property made by your will to your ex- spouse (check your state law), your beneficiary designations – on things like your insurance and IRA will not automatically be revoked by your divorce decree. After a divorce, you should carefully review and probably amend the following items unless you still want to leave assets to your ex-spouse:
1. Beneficiary designations for the following financial instruments: Employer retirement plans, Individual Retirement Accounts (IRA), Life insurance, Annuities and Health savings accounts
2. Your will.
3. Transfer on Death (TOD) investment accounts
4. Payable on Death (POD) bank accounts
5. Revocable trusts
6. Advanced estate planning structures such as irrevocable trusts.
In most cases, you can change these items by simply requesting, completing and filing the appropriate form. Since retirement and employer plans may represent the most significant portion of your net worth and liquid assets, it is particularly important that you amend the beneficiary designations on these accounts, as soon as possible after your divorce. Because these pass to the named beneficiary by operation of contract, as opposed to by probate, your designations supersede your will. If no changes are made, your ex-spouse who was originally designated as the beneficiary will be entitled to the benefit, despite the existence of a will or trust designating otherwise.
Guardianship & Remarriage Issues
In a perfect world, if something happened to you, your ex-spouse would assume guardianship of your minor child(ren). However, that assumes that your ex-spouse wants to raise the child(ren)and is fit to do so. If your ex-spouse is likely to assume guardianship, he or she will be responsible for providing a residence for the child(ren), and providing care, support and education. If you are concerned that monies you leave to your child(ren)may not be used as you would like if your ex-spouse has access to those funds, you can specify in a Revocable Living Trust (RLT) that the trustee who takes over in the event of your death pay for specific items out of the funds of the trust such as private school tuition, extra-curricular activities, a car at a certain age, college applications and tuition. Thus, you can protect your child(ren)’s inheritance by having an RLT in place with a trustee who will carry out your wishes which you specifically designate. The money would not be paid directly to the guardian (your ex-spouse), but would be used for the benefit of the child(ren). This also prevents your assets – which should be for the benefit of your child(ren)- from getting into the hands of your ex-spouse’s new spouse if he or she gets married again. You should also consider naming successor guardians in the event your ex-spouse does not want to raise the kids or is otherwise unavailable, or if you believe your ex-spouse to be an unfit parent.
If you decide to get married again you should know that without legal documentation to indicate otherwise, your new spouse may generally be entitled to one-half of your marital estate. This could mean that you might unintentionally at least partially disinherit your existing child(ren). Your new spouse may not end up being the guardian of your child(ren), but he or she may receive half of the assets intended to provide for them. Most divorced parents typically desire to leave assets to care for both their new spouse and their child(ren). You should sit down with a financial advisor and an estate planning attorney to assess the options. An easy solution may be the use of additional life insurance to help you carry out your wish to provide for both your minor child(ren) and your new spouse.
If you have advanced estate planning structures such as irrevocable life insurance trusts (ILIT’s), Qualified Personal Residence Trusts (QPRT’s), and charitable trusts they will be very difficult, if not impossible, to amend, since the original intent of creating these structures was to make an irrevocable election, usually structured to benefit both husband and wife together. It is critical that you work closely with your attorney, as well as the trustee, to explore possible options. You should also keep in mind that many state have an “elective share statute” which means that a spouse (whether estranged or not) will automatically be entitled to a certain percentage of your estate. However, through proper planning, there are a number of ways to avoid or limit the assets which are subject to the elective share, and to provide that your estranged spouse does not receive more of your estate than you want. This is another reason it is advisable to re-visit your estate plan following divorce. If any of the issues raised in this article interest you, you should revisit your estate plan with the assistance of a qualified estate planning attorney and a financial advisor.
What to Think About Before Meeting Your Lawyer
In my estate planning practice, it is not uncommon to meet with a new client who wants an estate plan prepared, but is a bit vague as to what should be included in that plan. Quite frequently, the initial conversation begins with the client saying something like, “I would like a will… or should I have a trust?
Do I need anything else?” Actually, those are good questions to begin a discussion. Most folks recognize that their estate plan should provide for the distribution of their assets upon their death. That, of course, is an essential element of an estate plan, but there is more to consider in a well-designed plan. Prior to meeting with your attorney for the first time you should also be thinking about such things as who you want to handle your affairs should you become incapacitated; whether you would want your doctor to keep you alive should you be near the point of death with little chance of recovery; who you want to have the authority to sign important legal papers for you if you are unavailable; and, who you would want to raise your children if you suddenly die. There is a wide variety of personal circumstances which impact estate planning, but let me offer the following as items you should consider even before you meet with a lawyer to discuss your own estate plan.
Should I Have A Will Or A Trust?
This is typically among the first questions posed by clients during an initial meeting. Many are aware that a trust will avoid probate, but that is true only if the trust is properly funded, meaning that all of their assets are transferred into the trust. Not every estate plan needs a trust, however, and it may not be necessary for you to incur the additional cost of having your lawyer prepare a trust, when a will is suitable for your needs. And, contrary to what some folks think, having a trust does not avoid estate taxes. A trust may be the right choice for you, if it is unlikely that you will acquire more assets in the years ahead. What can often happen, however, is that folks will have a trust established and thereafter acquire new assets that they neglect to place in the trust. Then when they die the assets outside of the trust have to go through probate which defeats the intent of establishing a trust in the first place. So, before deciding upon a trust as the main element of your own estate plan, take some time to consider your future investment plans and major acquisitions.
There are some other advantages to a trust, which might make it the right choice for you. For example, should you become incapacitated, your trustee will be able to step in and manage your assets without having to seek a court appointed conservator. In that sense, a trust document is more all-encompassing and flexible than an ordinary will.
What Else Should I Consider In My Estate Plan?
Estate planning isn’t just about deciding who gets your wealth when you die. It is also about making decisions as to what you want to happen should you become seriously ill or incapacitated. Every estate plan should 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 give a durable power of attorney to a family member or trusted friend in order to allow your appointed agent to manage your financial and business affairs when you are unavailable or otherwise incapacitated. A durable power of attorney remains in effect so long as you are alive and should provide that it will be effective even in the event of your incapacity.
What About My Bank Accounts, Life Insurance And Investment Accounts?
Careful estate planning should include a review of all of your assets, including checking the beneficiary designations you have listed in your retirement plan and in regard to your investment and bank accounts. With such beneficiary designations, these assets will be transferred outside of the probate process to those persons you have previously designated as beneficiaries on these accounts. It is important that you review your beneficiary designations to ensure that your choice of beneficiaries is in accordance with your current intentions as to disposition of your estate.
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. It will also help your attorney to focus his or her discussion with you on aspects of the process that are most relevant to your goals and needs.
Free Initial Consultation with Lawyer
It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506