Category: Estate Planning

Saving Time and Money at the Attorney’s Office

by Douglas B. Oler

When first approached about writing an article on estate planning, several areas immediately came to mind, such as wills, revocable living trusts, jointly held property, saving probate expenses and saving death taxes.

I was then given a list of articles others had already written for Senior Life. It became obvious that most of the estate planning areas I considered important have already been covered.

As a result, I thought it would be helpful if I gave some tips on how to save time and money before the call or appointment with the attorney. Before you see the attorney and discuss wills, trusts, probate, death taxes, there are things you can do to make the planning process quicker, smoother and less costly.

The first steps in the estate planning process are the following:

1.    Assemble all existing documents
2.    Prepare an inventory of assets
3.    Assemble family information/history
4.    Identify family objectives

Let me discuss each of these areas separately.

Assembling all existing documents means taking to the attorney copies of existing wills, trusts, living wills, power of appointments, health care appointments, premarital agreements and deeds to real estate owned. The attorney needs these documents to review the existing plan. It may be that no changes need to be made. On the other hand due to changes in the law, changes in the assets or changes in the family situation, it may be that an entirely new plan and documents need to be implemented. This decision cannot be made effectively until the attorney reviews the existing documents and estate plan.

The next step would be to prepare an inventory of assets. This means listing all property at current market values including retirement plans and life insurance. Many attorneys will give you a questionnaire to complete before the conference. The form will ask you to list real estate, bank accounts, vehicles, stocks, bonds, annuities, retirement plans and life insurance. When it comes to listing personal property, do not list every fork and spoon but do include antiques, heirlooms, and jewelry that have special value.

Not only should you list the assets but it is important to know in general terms the market value of each asset. If you have recently applied for a loan the completed bank financial statement would be generally sufficient. If you’ve not done a financial statement then you may have to estimate the value of the real estate, call the bank to get current bank balances and get current values on the stocks and bonds.

When preparing the list of assets, be mindful of, and make the attorney aware of, any impending inheritances of consequence. Obviously, inheriting substantial amounts of assets could change the estate plan.

It is also important to not only list the assets but determine how these assets are held. For example, the attorney needs to know whether the assets are in husband’s name, wife’s name or joint names. Many clients fail to think about this matter. Many times a list is prepared with no thought as to how the assets are owned. The following outline is frequently used and very helpful to the attorney to have in advance of the planning conference:

  Checking Account
  Savings Account

Wills have no effect on jointly held assets. Thus, when writing a will it is crucial to know what assets are in joint names and what assets are in sole names. A great will and plan can be written, but if all assets are in joint names the will may be irrelevant.

The next information needed by the attorney is family information. Names, ages, addresses of family members are all important. This may appear easy but it can become complicated. This is particularly true if a family member has a disability. Thus, family history and medical conditions are needed. In addition, if family members are minors, then special conditions may have to be provided. So it is again crucial for the attorney to have family names, ages and capacity to complete an effective plan.

The last step is to try and identify estate planning objectives. This may be difficult before the meeting with the attorney. However, it can speed up the process if there is some forethought given to what the family objectives are. In order to trigger the reflection, the following questions are usually asked:

  1. Now that you have listed your assets, who should inherit these assets?
  2. Should all the assets go to the spouse?
  3. Should children/grandchildren share in the inheritance?
  4. Are there any specific bequests that you want to go to certain individuals or charities?
  5. Have you provided for some children during your lifetime and want to equalize the inheritance at you death?
  6. Should closely held business stock pass only to those children who are active in the business?
  7. Should you compensate the others with assets of comparable value?
  8. After determining who gets the assets when should the beneficiaries get the assets? In order to answer this question you need to focus on the age and maturity of the beneficiaries, the size of the estate and the needs of the beneficiaries and the tax  implications.
  9. Do you want to tie up any of the assets in trust with distribution to be made over a period of years?

In summary, if you assemble all existing documents, prepare an inventory of assets, list family information and identify family objectives in advance of the appointment with the attorney, you will save yourself time and money in the estate planning process. Now go get started.

Having a Will is Only the Beginning

by Richard E. Boston

For any number of people, estate planning consists solely of executing a will and making sure that they have adequate life insurance to provide for their burial. Granted, these are important and critical steps in anyone’s planning. But with a will and life insurance, you have dealt only with what happens at the time of your death.

What plans have you made to provide for those unexpected events that occur during one’s life, particularly as health issues become more of a probability than just a possibility? Instead of thinking only about providing for your spouse and family at your death, you should also consider doing what you can, while you can, to ease the emotional and financial burdens of those you care most about should your health fail, leaving you incompetent to execute legal documents.

In counseling new clients and when reviewing and updating the estate plans of existing clients, I strongly encourage the use of four documents as an essential beginning point for any estate plan, irregardless of the size of the estate. Those documents consist of a will, a durable power of attorney, a health care representative appointment, and a living will. The last three provide for the client’s needs while living.

DURABLE POWER OF ATTORNEY – this document provides for the ongoing conduct of the client’s financial and business affairs should he or she either not be able or not be available to carry out these functions. Most people name their spouse as the person to act on their behalf when they cannot. If the spouse should no longer be available, a successor is named in the document. Generally, this is one or more family members or a close friend. The power of attorney can either be made effective immediately upon its execution or it can be drafted so that it becomes effective only upon the client’s physician’s certifying that the patient is incompetent to manage his or her financial affairs.

This document is customarily very broad in the powers that it bestows on the person appointed to act, but such powers can be limited to a person’s specific needs. Some examples of what a power of attorney can provide for are the following: banking functions, including check writing; the execution of deeds, notes, mortgages and other documents dealing with real estate; the filing of income tax returns; estate planning functions; the operation of a business; or the handling of all types of insurance matters.

You may ask why this is important. In many instances it prevents the spouse or children from having to go to court to have a person declared incapacitated and to then have a guardian appointed to handle that person’s business and financial affairs as well as their day-to-day care. When the court becomes involved, an inventory of assets must be filed. This is a matter of public record. The family loses its financial privacy. A formal accounting must be filed with the court at least every two years by the guardian. This means accounting for all income and all monies spent. Too, any extraordinary expenditures may require court approval. With proper planning, all of this can usually be avoided, leaving such decisions to the family and not to the court’s discretion.

Another common scenario is where a house is owned jointly between a husband and wife. One spouse becomes incapacitated and at some point the house needs to be sold, whether that be because it’s too large, or money is needed for long-term nursing care, or for any number of reasons. The sale and transfer would require the signature of both husband and wife. With a power of attorney, this problem would be solved. Without a power of attorney, a court-appointed guardian would most likely be necessary in order to have someone with the legal right to sign the incapacitated spouse’s name to the deed.

HEALTH CARE REPRESENT-ATIVE APPOINTMENT – This document functions much like a power of attorney, but relates to a person’s health care needs rather than to business and financial affairs. Again, the spouse is usually named as the first choice with a family member or close friend being named as a successor.

The named health care representative is authorized to make health care decisions for you when you cannot do so. This power may need to be exercised only for a short period. Once you are again able to make your own health care decisions, you do so.

With this document, the attending medical personnel have someone with the legal authority that can make critical health care decisions as necessary. This could be as a result of an accident, or a general health-related problem such as an incapacitating stroke.

LIVING WILL – Most clients have strong feelings as to whether or not they wish to be kept alive if they have no chance of recovering and living a quality life. Should this circumstance arise, it is important that you leave a directive as to whether or not you wish to be placed on, or kept on, a life support system and if you are taken off of life support, whether or not you wish to continue to receive nutrition and hydration.

A living will provides a written statement of your wishes in this regard. This does two things. It provides the medical personnel with information they need. More importantly, it relieves your spouse or family from being left with the responsibility of trying to decide what you might want in this situation, yet being reluctant to make a decision that will end your life. This is an onerous decision to leave to your spouse and family. However, this is a decision that you can make by using a living will and thereby avoid placing those you care most about through this trauma and possibly having a decision made that you yourself would never have made.

Begin your estate plan with an appropriate will that carries out your wishes while meeting the needs of your survivors. But do not stop there. Make plans for your living as well as for your dying by incorporating the above planning tools into your basic estate plan. Should the need ever arise for their use, I can assure you that your family members’ lives will have been made abundantly easier as a result of your forethought.