If you are like most people, you want to postpone drafting your will and devising your estate plan almost as much as you want to put off dying. However, there are questions everyone needs to ponder and plan the answers to, or else people we love and care about may suffer the consequences of our failure to create an estate plan.
It is important to realize that if you own anything or hold any assets at your death, you will leave an estate. Leaving an unplanned estate will likely result in your family and loved ones being burdened with more trouble and less protection than you ever intended. An unplanned estate can involve tax collectors, lawyers, accountants and courtrooms—yes, courtrooms—all causing unnecessary stress and taxing anxiety on the very individuals who are mourning your death. As you can see, poor planning when it comes to your estate may have very undesirable results. However, with a little time and thought, these undesirous results may be avoided altogether.
It is without doubt that it is much preferable to plan your estate with the ability to set it up exactly the way you want it and ensure your assets are distributed to the individuals you select in the manner you indicate in your estate planning documents. How do you do that? First of all, planning an estate involves more than just the obvious question: “To whom do I want to leave something and how much should it be?”
Consider the following three scenarios:
- One option is that you designate a certain percentage of your estate to your loved ones, on the assumption that amount will suffice. That accomplished, you leave the rest to your favorite charity. But hold on! How can you safeguard against the government taking more than you expected in estate taxes, leaving your heirs poorer than they needed to be?
- What if something happens to you during your lifetime—as is true for millions of people every year—that leaves you unable to make decisions about your own health and welfare? Are you confident that the decisions made on your behalf will reflect what you want for yourself?
- Do you have a potential heir you don’t trust? If the law says that a certain portion of your estate must go to this person unless you say otherwise, don’t you want to say otherwise?
These are certainly all interesting queries and they comprise only a few of the considerations most people need to think about, but rarely do, prior to their death or incapacity.
It is in this typical situation that a knowledgeable and skilled lawyer proves worthwhile. The cultivation of a good, trusting relationship with a skilled and experienced attorney who specializes in estate planning, is certain to be a good decision for every individual.
Why? Things change. Laws change. The regulations governing estate taxes change. Even your personal relationships change. So it is critical that you find someone you can trust, someone who knows how everything works, a professional you can talk to honestly about your plans, hopes, desires in connection with devising an estate plan that fulfills your needs and wishes. Certainly, the more attractive alternative is an opportunity to consider all the choices available to you now, with the help of an expert ally, instead of leaving only limited choices for yourself (or your heirs) later on.
When you do spend the time and effort to consider all the options available to you with your attorney, you can expect the following to occur. First, a properly trained lawyer will urge you to also consult with a good financial professional—an accountant or investment counselor. Your lawyer will make sure that all financial recommendations and activities on your behalf are coordinated, so that everyone is on the most efficient path to your objectives.
In addition, you should be prepared to answer, candidly, numerous questions and you will need to furnish all professionals with up-to-date information about your financial situation, your retirement accounts, your life insurance policy(-ies) and your family. They will also ask you about your objectives and what you wish to happen while you’re alive and what you want to occur after your death.
The reason for this exchange of information is that the professional experts need the ability to see the whole picture surrounding your life, your wishes and your assets in order for them to offer you the best possible advice.
When your lawyer and financial professionals have completed their work in accordance with your guidance and instructions, they will make recommendations to you. These recommendations will be carefully designed to take maximum advantage of current laws and regulations and also to make your wishes, needs and desires attainable.
With this step of the estate planning process completed, it will then be your turn to ask questions, such as: “What does this paragraph mean?” “Why are we doing this in this particular way?” “How will this protect my wife from the IRS?” “Will this take care of me when I stop working?” “Will my kids be O.K.?” And so on, until you understand everything and are completely satisfied.
And let me make it clear that a good lawyer—a really good lawyer—will answer all your questions patiently, completely and in plain language.
It is important that you review your whole estate plan every three years or so, to keep up with changes in the law, your business and your relationships both inside and outside your family.
Now comes the toughest question of all—even though you know the answer: “When should you begin this process?” The answer, of course, is now.
