Seven Reasons Why Everyone Should Have a Will

old willEstate planning is a broad concept that can incorporate tax planning, financial and retirement planning, planning for disability and planning for death.  As this suggests you should not only consult an attorney as part of your estate planning, but you also may want to engage a financial planner, banker, insurance agent, care manager, funeral director, your clergyman and others.  Certainly discussing your plans with your family is something you should seriously consider.  Making sure all family members understand your planning and your wishes can prevent many post-death battles and bad feelings.

Aside from taxes, you need a quality, up-to-date estate plan for a whole host of reasons, regardless of your estate’s value.  Here are six significant issues everyone should address:

  1. Plan for your medical care, including disability.  This requires several documents. Define exactly how your medical needs should be addressed and by whom with a medical power of attorney.  Also, consider a living will (in Texas this is referred to as a directive to physicians and family), which directs whether extraordinary efforts should be used to sustain your life in defined circumstances.  Also cover the financial aspects of your medical care, whether it be through buying long-term care insurance, Medicaid, or income generating investments.  Execute a durable power of attorney to authorize a trusted agent to step in and handle your affairs other than medical decisions.
  2. Avoid family disputes.  Clearly state how you want your estate divided and handled.  Traditionally this is done with a will, but it can also be handled via a living trust.  The professional experts on your estate planning team can advise you which of those are best for you.
  3. Update beneficiary forms.  Many of your benefits will pass direct to your beneficiaries.  But that will only happen if you have signed beneficiary designations.  So for your IRAs, annuities, life insurance policies and some other bank and investment accounts, check that you have signed beneficiary designations.  You should check these every few years to make sure they follow your current wishes.  Don’t forget to update them when you or family members have significant life events such as marriage, divorce, severe illness, etc..
  4. Think of others.  If you anticipate having to help a loved one (e.g., elderly parent or special needs child), develop a plan now.  Make appropriate adjustments to your estate planning documents to accommodate that plan.  Also, who will care for your children if you and your spouse both die while the children are minors?  What if you are living, but unable to care for your minor children?  Designation of a guardian in your will will not help your children if you are still living, but unable to care for them.  You need an additional document!
  5. Consider a money manager.  Develop a plan for asset management if you don’t think the beneficiary(s) of your investment portfolio is capable of management.  This might involve placing assets into a trust, the terms of which can be set up in your will or living trust.
  6. Plan for succession.  If you own a business or other complicated asset, plan the transition of management and ownership.  Will your spouse or children really want to continue the business?  Will all of them want to be involved in management?  Is there a way for one or more of them to sell the business?  Valuable businesses can quickly be virtually worthless or have their operations seriously damaged if this transition process is not realistically and thoroughly planned for.
  7. Reduce cost and hassle of probate.  Having a will doesn’t avoid probate, but it can significantly reduce the cost and complexity of probate.  Designate who is to receive your estate; otherwise state law will determine who is to receive your estate and a court will have to determine who your heirs are.  Designate who will handle your estate as your executor; otherwise the court will determine who will administer your estate.  These processes may require the appointment of additional attorneys, the testimony of additional witnesses and the filing of additional paperwork by your attorney.

Estate planning involves many aspects of your life and can take a long time to think through and implement.  Don’t allow your estate to be ravaged for lack of planning.  Take a first step now.  Call your estate planning attorney today.

Posted in Advance Directives, Beneficiary designation, Divorce, Estate administration, Estate Planning, Financial Planning, HIPAA, Power of Attorney, Uncategorized, Wills | Tagged , , , , , , , , | Comments Off

Preparing to Call Your Estate Planning Attorney

telephoneI know most of you can barely hold yourself back from dialing that phone and calling your estate planning attorney to set an appointment to do your will.  But let’s reign in some of that enthusiasm and do a little preparation first.  What things should you be thinking about before you meet with your estate planner.

1.  How large an estate do you have?

Your estate planning attorney needs to get at least a rough idea of the size of your estate and what constitutes it, so he or she can appropriately advise you.  If your estate is large enough, special trusts within the will may be suggested.  Or the planner may suggest that you begin some lifetime giving on a regular basis to your children or others in order to accomplish your objectives and reduce the size of your estate to avoid estate taxes.

2. Who will inherit your property?

For most people, it isn’t hard to decide who gets what.  But you may wish to disinherit some people or make special provision for others.  After you make your first choices, you need to think who you want to receive your property if those first selections don’t survive you.

3. Who will serve as executor to handle your estate?

Every will should name someone to serve as executor, to carry out the terms of the will. Be sure that the person you have in mind is willing to serve and has the skills to do well at the job — the job shouldn’t come as a surprise. For more information, see my previous post on executors.

4. Who will serve as guardian for your children?

If your children are under 18 or you might have children after you prepare the will, decide who you want to raise them in the very unlikely event that you and their other parent can’t. For more information, see my previous post on guardians.

5. Who will manage children’s property and any other property put into a trust?

If you leave property to children or young adults, you should choose an adult to manage whatever they inherit.  Additionally, there may be a variety of trusts that could be created by your will if certain circumstances arise at the time of your death.  The person who manages this property is a trustee.    For more information, see my previous post on trustees.  When relatively small amounts are involved for minors you may just need a custodian under the Uniform Transfer to Minors Act (UTMA).

Once you’ve made these decisions, you are ready to call your estate planning attorney.  Don’t put this off.  More than once I’ve had a client pass away before we completed the process of getting their will in place.  This can have disastrous consequences to the achievement of your desires.

Once you have the will signed and witnessed appropriately, be sure to store it in a safe place and let your executor know how he or she can find and access it when you die.

For more information on any of the specific subjects mentioned above, enter the term you are looking for in the Search box on this page of my Blog.

Posted in Estate Planning, Guardianship, Trustee, Trusts, Wills | Tagged , , , , , , | Comments Off

Key Issues In Selecting A Trustee

A trustee should be designated any time you are creating a trust.  There are many types of trusts.  Sometimes we create trusts to be effective immediately.  Other times we create them within a will to be effective upon death or if certain events occur at death (for example, if your children are still minors when you die, a trust in your will might then become effective to hold bequests to your  children).

trust2So who should you select as a trustee?  And who should you designate as successor trustee to take over in the event your original choice becomes unwilling or unable to fulfill the role.

The trustee of a trust has a number of key duties which may help you to understand who the proper trustee would be in your situation. The trustee has a duty to set up the trusts administrative and accounting procedures, and devise an investment plan for the assets. Investment plans are very important, as the goals of the trust will dictate what sorts of investments are included in the trust.

While there are numerous pluses and minuses in making any selection, here are a few things to keep in mind.  Does the individual know your family dynamics, know the beneficiaries and know your objectives in creating the trust?  Is the individual too close to your family or the beneficiaries so that undue pressure might be put on them by those people?  Will troublesome jealousy arise if one family member is selected over others?  Is the individual you are considering likely to die or retire before the anticipated term of the trust is complete?  If so, do you have successors who will be able to step in or are they of the same age so that those same issues are likely to arise with them at about the same time?

Depending on the size of your trust and the investments it is to hold, a corporate trustee might be something to consider.  Corporate trustees can be the trust department of a bank, brokerage firm, insurance company or credit union.  Private trust companies also fulfill these duties.  And a recent development is the rise of professional trustees – individuals with training in the field who will serve as your trustee and often times as executor or agent, as well.  Different companies have varying rules on the fees they charge, the assets they handle (many will not handle real estate), the size trust they will accept and other requirements, so you should speak with a variety of companies before you select a corporate trustee.

The downside of a corporate trustee for many people is the fee they charge.  Also, if the corporate trustee is a large institution, the trustee may be far away or very difficult to contact. But the positives of such a selection can easily counter balance that concern.

The benefits of having a corporate trustee include their professionalism and experience.  They are set up to manage trust assets, work with beneficiaries, deal with your professional team of attorneys, accountants and financial managers, while at the same time being impartial, skilled, and insured in case negligence does occur. Many people find the peace of mind of having a corporate trustee to be priceless.

Selecting a trustee is one of the most important decisions in your estate planning, and one that should not be taken lightly. Spend time talking with your estate planning attorney about what choices are right for you, and realize that choosing a trustee is not bestowing an “honor” on someone. You are placing the mantle of responsibility and a potentially huge burden on them.  While many friends and family members are more than happy to agree to take on that responsibility, it does not necessarily mean that they understand the extent of their obligations or are the best choice.

Posted in Estate administration, Estate Planning, Trustee, Trusts, Wills | Tagged , , , , , | Comments Off

The Danger of Not Reviewing Your Will

old willI cannot tell you how many times I hear people tell me “I already have a Will. I don’t need your services.” That statement might be correct, but often people don’t recall exactly what is in their Will. That’s why it is essential that people review their Will whenever a major life event occurs or at a minimum, every four or five years. It amazes me how many people forget that they designated Uncle Jim to be the guardian of their children and Uncle Jim is now in jail for drug violations, or they gave grandma’s jewelry to a niece and they now have their own daughter who they would prefer to have it. These are just a few examples of things we forget unless we periodically review our Will.

So, how do you go about making changes to your Will? The answer is that it depends on the types of changes you want to make. If you need to make a minor change, like adding a specific bequest or updating the last name of a beneficiary who’s gotten married, then you may want to use a Codicil. A Codicil is a legal document that changes a specific provision of a Will, while leaving all of the other provisions exactly as they originally were. A Codicil needs to be signed and witnessed with the same formality as your original Will, so you’ll need to get the help of your estate planning attorney.

On the other hand, if you need to make a big change to your Will, such as disinheriting one of your beneficiaries; or if you need to make several small changes, you’ll likely want to have your estate planning attorney draw up a new Will for you to sign. This will make it easier for your executor to follow your intentions when the time comes to probate your Will and distribute your assets.

The easier your Will is to read and follow, the less likely a Will contest becomes, saving time and money during the probate process. There is no hard and fast legal rule that dictates when a Codicil should be used as opposed to when a new Will should be made. However, if one of the beneficiaries in your Will is likely to receive something of less value after the Codicil is executed there are some attorneys who believe executing a new Will is more likely to ensure your new wishes are fulfilled than if you simply execute a Codicil. If there’s any doubt, the best thing to do is to check with a qualified estate planning attorney.

Posted in Estate Planning, Inheritance, Trusts, Will challenge, Wills | Tagged , , , , , | Comments Off

Four Key Reasons to Have a Will

The question occasionally arises at a social event when someone introduces me as an attorney who helps people with their estate planning. “I don’t really need a will, do I?” Here are some thoughts on that question.

old will1. Children – If you and your wife should die before your children are of legal age, your children will need to have a guardian appointed for them. If you would like to tell the court who you think that should be, you can do so in your will. Otherwise, the court will make a decision without your input. If any of your children have special needs, it is critical that you include a special needs trust for any inheritance that child might receive so they don’t lose their government benefits.

2. Distribute your estate as you wish – If you don’t have a will when you die, much and possibly all of your estate will be distributed according to the laws of the state where you live. Those laws usually follow a traditional distribution for the traditional family. For example, everything to spouse if this is the first marriage and children of only this marriage. But if you have a non-traditional relationship (for example, multiple marriages, children of different wives, no marriage, etc.) the distribution under state law is likely to be far different than you desire. You can avoid this by preparing a will that contains your wishes.

3. Minimize family disputes – No amount of planning can guarantee someone won’t contest the distribution of your estate. But good advance planning can help minimize such disputes and help ensure the outcome will be as you desire. Even with good advance planning, the best way to avoid family disputes is to communicate your wishes to your family while you are still living. The more often your wishes are discussed with everyone involved, the better.

4. Reduce expenses – If you die without a will and probate of your estate is required, you are very likely to have to get approval of the probate court for every action needed to distribute your estate. That means multiple pleadings and hearings, which translates into fees and expenses. Much of this can be avoided with a properly prepared will.

These are general reasons for planning that apply to most everyone. Depending on your situation, there may be numerous other reasons why you should have a will. The wisest course for estate planning is to retain and follow the advice of an attorney licensed in your state of residence and experienced in estate planning and probate law.

Posted in Community Property, Estate administration, Estate Planning, Guardianship, Probate, Special Needs Trust, Wills | Tagged , , , , , | Comments Off