Estate 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:
- 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.
- 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.
- 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..
- 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!
- 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.
- 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.
- 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.