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:
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:
- Now that you have listed your assets, who should inherit these assets?
- Should all the assets go to the spouse?
- Should children/grandchildren share in the inheritance?
- Are there any specific bequests that you want to go to certain individuals or charities?
- Have you provided for some children during your lifetime and want to equalize the inheritance at you death?
- Should closely held business stock pass only to those children who are active in the business?
- Should you compensate the others with assets of comparable value?
- 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.
- 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.