Estate Planning Tips – Do This, Not That!

If you’ve been reading my newsletter long enough, you know by now that my mantra is that everyone needs an estate plan, whether rich or poor, young or old. Your estate plan will look different than your neighbor’s, or that of the CEO of a Fortune 500 company. Everyone has an estate and a plan must accompany it.

Check out some tips I put together for help in thinking about revising a plan or starting from scratch.

First, the DO’s….

DO TAKE THE TIME TO COMPLETE AN ESTATE PLAN

If you don’t have a plan, no matter your wealth or age, the state laws will dictate what happens to your property when you pass away. Sure, sometimes that works in a very simple case, but many folks are surprised how rigid state laws are. For instance, if you’re married and have children and you don’t have a will, your spouse does not inherit all of your estate!

DO ORGANIZE YOUR INFORMATION AND DOCUMENTS

To have a ‘complete’ estate plan, not only must you have the legal documents, but your affairs must be organized. All important documents should be in a place that is easily accessible to you and your Trustees, Executors, etc. Use a fire proof safe at home to secure the documents.

Also, it is important to communicate generally with your loved ones and the appointed Executors, Trustees, agents, etc. so that there are no surprises when that time comes. Let them know where important information is, where documents are located, and who is appointed for which roles.

DO CONSIDER INSURANCE, INCLUDING LIFE INSURANCE AND LONG-TERM CARE INSURANCE

Part of planning means having proper protections, including insurance where appropriate. Life insurance has several uses, depending on your age and financial/estate planning goals. It can be costly, but life insurance creates an estate, provides instant liquidity, and is inheritance tax free. Some families have a majority of their estate tied up in real estate and retirement accounts. In a case like that, life insurance would be crucial so there is cash (liquidity) to pay taxes, final expenses, creditors, and more.

Long-term care insurance should also be considered. More popular today are hybrid life insurance/long-term care policies. You pay for a certain death benefit, most of which could be used for your long-term care needs if you ever needed it. If you’re interested, please let me know and I can run some initial quotes.

DO CONSIDER A TRUST

Think of a trust like a box with a shield around it. You determine what goes into the box, who gets it, when they get it, who will be in charge of it, and who it goes to after the initial beneficiary dies. This is an excellent tool across all levels of wealth, and is used for asset protection, bloodline protection and more. Sure, some trusts are complicated, but most are simple and easy to administer. This can be customized according to your goals, concerns and estate.

Trusts are also used for other purposes like avoiding probate, sheltering assets if a nursing home is needed in the future, and more. It is important to be open to new ideas, especially the use of trusts, if the use of a trust matches one of your goals.

DO REVIEW REGULARLY

Quite simply, an estate plan is a snapshot in time. Reviewing about every 5 years is a good marker. There is something worse than having no plan at all: Having an outdated plan.

DO CONSULT WITH AN ATTORNEY

Yes, everything is available on the internet today. I’m sure you can download an app for estate planning help. But the best thing you can do is visit with an attorney who has the experience to help you figure out the right plan for you, and get it done correctly. This is better known as peace of mind.

Think of it this way: Would you be your own doctor and perform surgery on yourself?

 

Now, the DON’T’s….

DON’T MAKE ASSUMPTIONS ABOUT ANYTHING

This is a general statement, but important. Too often, folks think that their kids or family will “work it out” and that they just need a very simple will or no plan at all. Never make assumptions like this. Plan for every possibility. Family members may get along today, but will they be getting along 20-30 years from now?

Also, don’t assume your neighbor, friend or co-worker is right when they give you estate planning advice. Would you rely on your handyman to tell you your medical condition and what surgery is needed? Get accurate advice from an estate planning and elder law attorney.

DON’T WAIT ‘TIL IT’S TOO LATE

A lot of times, folks will come to an event I’m holding but they don’t feel they’re ready to complete their estate plan yet. I never pressure folks to come see me and get their plan done, but what I tell them is this: If you wait until it’s too late, you won’t have an opportunity to plan. At that point, the plan is in the hands of your family, potentially the courts, and the intestate laws. Also when it gets too late, you have less or no opportunity to shelter assets in case of needing long-term care.

So, when is the right time to plan? When everything is going great and you don’t think you need to plan at all!

DON’T OVERLY COMPLICATE THE PLAN

Earlier, I mentioned trusts. They’re great tools but not for everyone. When you meet with me, we will go over your goals and concerns and come up with the most optimal plan. I have seen too many folks come in with previous plans that were overly complicated for minimal assets or issues, and folks with many issues and complicated estates with a 1 page handwritten will. An experienced attorney can help you find the balance.

I hope you found these tips helpful, as they are written based on my experiences practicing estate planning for over ten years. As always, if I can be of assistance in reviewing your estate/elder plan or helping you craft a plan, please call my office at (215) 706-0200 for a consultation. Initial estate planning consultations are complimentary.