This week, I reached into my grab bag for a few best practices in estate planning. Everyone must have an estate plan because without one, you risk leaving your affairs a mess for others. Here are a few tips and ideas:
- KEEP IT CURRENT:
Keep your Powers of Attorney up-to-date. In the event of a disability, you want to ensure financial institutions and medical providers will accept these documents without reservation. Update them every 3-5 years.
- DON’T LET PROBATE SCARE YOU:
In Pennsylvania, don’t let the probate process scare you into writing big expensive estate plans to avoid probate. Probate is a relatively easy process in Pennsylvania compared to other states.
- FOLLOW THE THREE C’S:
In your estate plan, be CLEAR, be CONSISTENT, and be CAREFUL. Make sure you’re working with an attorney who only practices estate planning so you can rest assured knowing your plan meets this criteria. Make sure the language is clear, that nothing in the plan conflicts, and that you think through what you want your plan to say.
- HOPE FOR THE BEST, PLAN FOR THE WORST:
Estate planning is about as exciting as going to a dentist for many people. No one wants to do it, but it must be done. While you’re planning, make sure you plan for the worst-case scenario. For example, leaving your son a large inheritance and the chance that he could have creditor problems or he gets divorced and his ex-wife wants half of the estate. Yes, there are strategies we can put in place to protect an inheritance from these types of situations.
- GIFT PROPERLY:
Want to downsize, help your kids while you’re still living, or take care of the grandkids? Writing a check may make them smile, but there are other ways to make gifts, such as setting up life insurance policies inside trusts (great for asset protection) and creating a pension for life for your kids. If you want to gift, make sure you explore your options with qualified professionals. Doing so may provide multiple benefits to you and your heirs.