[CHECKLIST] 5 Important Issues To Consider In Your Own Estate Planning
Your "Estate Planning."
No one ever really wants to do it.
I represent a lot of lawyers and even they hate it at the start. But we all know that it's "the right thing to do."
And, if you want to control your legacy at all then at least a basic will or trust is essential.
And finally, in the end, when it's all done, everyone who does it feels: "Really relieved." "Much better." or even "Great!"... just
to quote a few happy estate planners.
And we're pretty good at making estate planning "interesting," really effective" and by some accounts, "actually quite enjoyable."
But even that (a simple will) seems like a hassle.
And the truth is that to do it right.... to have estate planning that really works...
To minimize fees and costs, to make sure that it works the right way, and to pick the right people for the right jobs (executors, trustees, agents, guardians, and trust protectors, it takes more than a will and more than an hour at the computer with Legalzoom(TM) and it costs a good bit more than a few hundred dollars.
But ahhhhhhh when it's done and done right then you KNOW what will happen, who will be in charge of financial and medical decisions at your death or upon your disability.
When you're finished with our quick estate planning process it's been fast (usually just two pre-arranged appointments) and you have determined who gets what, when and how to protect it from lawsuits, taxes, excessive fees, from taking too long and even
from an heir losing his or her inheritance in a divorce.
If you've done any elder law planning for yourself or a loved one you've also protected those assets from long term care and nursing home expenses.
You feel in control and your heirs can save thousands to tens of thousands, or even more in fees, costs, and taxes as well as weeks, months or even years of time and trouble.
Not everyone has the same needs or goals for their estate planning, but here are five really important, but often overlooked, issues to consider in your own case.
They are often forgotten or overlooked but they are vital and worth the three minutes it will take to review this list.
1. Will or Trust?
There is a right answer but it varies from person to person
Clients want clarity.
And one of the most common client questions is: "Should I use a will or a trust?"
Well, there is usually a clear answer but it's not the same for everyone.
So before you go to the lawyer here are a few thoughts on the question.
In Pennsylvania, unlike neighboring Delaware and many other states, the probate system is inexpensive, fast, and pretty easy. It doesn't cause long delays and estates and revocable (or living trusts) are both taxed at the same rate.
So, because a will can be less expensive than a will and a trust, and becasue the taxes are the same, many folks decide to save a thousand dollars (or more) and to do will rather than a trust.
And, a trust, in addition to being more expensive involves the additional work of putting all of your assets into the trust (not really as hard as it sounds).
BUT...and this is a big but... there are several important cases where the living trust is probably worth the extra time and money:
1) It can save probate fees and reduce administrative costs and in larger estates (those over a few million dollars, the extra cost of the trust over a will is quickly recovered.
2) If you're elderly and want someone else to manage your money (like a family member, bank or trust company, then a living trust might be the best and easiest option,
3) If you reside in a state where there is a significant probate fee or a complicated and time consuming probate system then the extra costs for a trust and will package are almost always worth it,
4) If you have a high liability job (such as a doctor, architect, or other professional position) and you have life insurance to pass to your heirs and want to protect it from claims against your estate then the trust makes practical AND economic sense,
5) If you have reside in and or have investment properties and/or a vaction home in more than one state, then the living trust might save your heirs from the fees of multiple or "ancillary" probates.
6) When you are disinheriting or reducing the share of an heir who might then challenge the will.
You see, a trust is harder and generally more expensive to challenge than a will, so discouraging a contest might preserve your wishes AND save your heirs tens of thousands to hundreds of thousands of dollars in a will or probate challenge.
2. Powers of Attorney and Living Wills Part of Any Great Plan
The will or trust are both incredibly important and essential pieces of your estate planning. But, they are really designed to transfer your assets (and to protect them) after you have passed away.
Well, the truth is that we may become incapacitated or lose cognitive functions long before we die.
And, that incapacity or cognitive event might be temporary. You might recover.
And when you do, it would be nice to see that your assets had been protected for you, used for you, preserved for you and still there for .....you!
That's where a health care and financial power of attorney can be very useful.
Even if you're married, your spouse does not automatically have the power to refinance or sell your home, to handle investments in your own name or in a retirement plan, or to make certain decisions for you.
And especially if you're remarried he or she may have a dispute with your adult children if these documents aren't carefully designed and properly executed to your specifications.
So ask your lawyer about not only a will and or trust, but also about both financial and medical powers of attorney and a living will to clarify your end of life wishes when there is no hope of recovery.
Without one, a court may have to appoint someone to make medical and financial decisions for you. That's expensive AND the court may not pick the person you'd select.
3. Who Should I Hire and How Much Should It Cost?
In Pennsylvania lawyers aren't permitted to say that they are "estate planning experts" or "estate planning specialists".
They cannot claim to be the "best" estate planning attorney.
They are permitted to tell you that they focus or limit their practices to doing certain types of work.
So, that's a good place to start.
If you're serious about estate planning ...and you should be if you have children and or grand children, some assets such as a home, a retirement account, a vaction home, business, and/or life insurance, then you probably don't want an on line robot doing your uncustomized planning or a local general practice lawyer who doesn't have the education or practical experience.
So, if lawyers cannot tell you how do you find out?
Personal referral from a person who has similar issues is a great place to start.
But their issues and personal preferences and their view of fees and what's important might not be the same as your
For that reason, rating services such as AVVO might be useful.
And on line research of their blogs, biographies and firms are also helpful.
Finally, call and ask a few questions:
1) Do they offer a fixed rate for estate planning?
2) Is the first consultation free or at an hourly or fixed fee? And if there is a fee is it credited to the
estate planning if you hire the lawyer?
3) What's the fee range? It's hard to say in advance what a fee will be. Many times clients come to see me thinking that they
want very basic planning and are prepared to spend only a small amount. However, as they
learn of all of the options, some clients select trusts rather than wills, or asset protect for their heirs - which cost more
but are important to the client.
4) Is there a process and how long does it take? I cannot tell you how many clients have, over the years, told
me that they started estate planning with a lawyer or firm only to find, months later that they still had no plan in place.
For that reason, we have an expedited planning process.
Now it can take some time to get that first appointment (after all this is what we do). We are well known for it and we're in demand. But once your appoitment is scheduled you're usually done, with signed documents within a few weeks and after only one more appointment.
Of course, there is some paper work (homework) but it's limited, well set out and easy to do.
And, our staff follows up and reminds you of appointments.
Finally, you can ask questions (at no additional charge) after you've signed your documents and we regularly check in and remind you when changes or updates might be needed.
Bottom Line: If you're looking for someone experienced in providing those services, fixed or hourly rate fees might be in the $900.00 to $4,500.00 range depending on the goals of your estate planning, whether or not you need a trust to protect your children from divorce, and the amount of insurance and other financial issues. If you need elder law or advanced estate planning which may involve irrevocable trusts and deeds, the costs can be much higher but then again so are the savings and benefits.
4. How Long Should It Take?
People don’t have time to read — they skim and move on.
They went from reading books to reading blogs to watching videos (the shorter the better).
People are busy and estate planning is low on the list of things to do when you have a few extra hours of time.
But we all know that we have to get it done. We owe it to our spouses, business partners, and our children and heirs.
For that reason, we have designed a very specific and streamlined process to get you exactly what you want and need in the shortest time possible....we get it...you're busy.
There are several keys to this:
First, once you set your appointment, we'll immediately send you a Diagnostic Estate Planning Questionnaire.
This takes a few minutes but the information is essential to for the lawyer to do the job right. And, the questions are easy to answer but get you thinking about the right things and the decisions you need to make.
While the lawyers will help you to understand the jobs and the differences between them: executor(s), trustee(s), guardians, agent(s) and trust protector(s), you should be thinking about these issues in advance. Likewise, you should be deciding who gets what. You don't want to be sitting with the lawyer and thinking about these issues for the first time.
And, while you may change your mind as you discover new options during the planning appointment, thinking, in advance, about the basics will save you both time and money.
At the planning appointment, you'll learn all of the options and how much each costs. You'll also make all of the choices (with as much help as you need) and you'll set an appointment...typically within a few weeks to review and then to sign the plan.
In short, many people get through the whole process..even if their planning is pretty complicated...from start to finish in just six to eight weeks and in only two appointments.
Sound impossible? We're pretty good at it and we have over 9,000 clients.
5. What Else Should I Consider and How Do I Stay Up To Date?
The variations on estate planning are infinite. Do you have a boat or plane, a vacation home or a family business? Are your assets in stocks or bonds? Closely held business interests, real estate?
Do you have children or grandchildren, or an heir with a special neeed?
Are you worried about protecting your heirs from losing his or her inheritance in a divorce or lawsuit? How about protecting your spouse or children from losing your assets if you become incapacitated and in a nursing home?
The answers to these questions will cause the advice of the estate planning attorney to vary. The choices for each are different.
But a few of the most important issue to discuss are:
1) elder law planning (to protect from nursing home spend down),
2) irrevocable life insurance trusts (often needed to protect survivng heirs and to keep the insurance from being taxed in the estate),
3) trusts for children, grandchildren, and heirs who have special needs,
4) trusts (often called beneficary controlled trusts) to protect ours heirs' inheritances from divorce and lawsuits
5) retirement account or "conduit trusts" to protect IRAs and 401(k)s for heirs