Wills and Estate Planning:
A General Overview
WHAT IS ESTATE PLANNING?
Proper estate planning involves much more than wills alone. Estate planning includes planning for the possibilities of disability, retirement, illness, and death. Such planning relates to wealth accumulation, pensions, insurance (life, disability, and protection of your assets from liability), wills, living wills, powers of attorney and numerous other concerns. Your attorney can assist you to plan for your future and the future of your intended beneficiaries.
WHAT IS A WILL?
A will is a legal document which determines what will happen to some or all of your property after your death.
However, wills are not the only documents which affect how your property is passed on upon your death. In order to control how your property is passed on to others, you must be aware of how your property is transferred at death. You must then coordinate your estate plan to reach your chosen goals. For example, money that you keep in a joint bank account will become the property of the survivor. This is true of other jointly held property with right of survivorship (known as joint tenancy). Likewise, life insurance policies often list a named beneficiary who will take the proceeds upon your death. You should either arrange to have all of your assets under the control of your will, or plan your will accordingly. For example, you might omit someone from your will whom you provide for with assets outside of your will, such as a life insurance beneficiary. Your attorney can best advise you on these complex matters.
ESTATE CONCERNS
- Insurance Beneficiaries
- Real Estate
- Bank Accounts
- Stocks & Bonds
- Jewelry & Furs
- Automobiles & Boats
- Home Furnishings
- Computers & Electronic Equipment
PROPER ESTATE PLANNING
- Determine exactly to whom your estate will be distributed upon your death.
- Determine who your beneficiaries will be and what they each will receive.
- Determine what will happen if some of your beneficiaries die before you do.
- As part of the will, provide that assets be placed in trust for the benefit of a beneficiary who would not be able to handle the asset (such as a child, or person without sufficient sophistication to manage substantial assets). If you set up a trust, you will also determine who will serve as trustee to administer the trust and provide instructions which the trustee must follow in the administration of the trust.
- Determine who will handle the administration of your estate (including who will do so if some of your selections die before you do).
- Plan your estate to minimize taxes and the expenses of administration.
- Select the person(s) who will act as guardians for your children under the age of 18 (acting on your behalf to raise and protect your children).
- Plan your estate to insure adequate liquidity (available cash) to allow for the payment of expenses and still leave monies for beneficiaries without forcing the sale of assets at a loss.
- Ensure that your lawyer has a copy of your will and your executor is notified of the location of the original.
DO I NEED A WILL?
Most people should have a will. You may also benefit from other forms of planning, such as by having a power of attorney or living will. You can only properly decide this after consulting with an attorney who can provide you with advice on these matters.
DISADVANTAGES OF NO WILL
- In many states, your property may be transferred to the state.
- Your property may be distributed according to state law.
- You will not be able to select a guardian for you children.
- You will not be able to select an executor for your estate.
- Complicates estate distribution.
CONSIDERATIONS WITH CHILDREN
If you have children you should have a will to provide for a choice of person(s) to act in the place of their parents in the event both parents predecease the children. You should establish a trust for your children and provide for its proper administration according to your wishes and by your selected trustees.
- Who will take care of the children?
- How will daily expenses for the children be met?
- What about educational expenses?
EXECUTORS TO HANDLE YOUR ESTATE
The appointment of persons to handle your estate is crucial. You should appoint several alternative choices to protect against the possibility that some choices may not be able to serve at the time of your death.
If your estate is uncomplicated, a relative or friend can serve as your executor. If your estate is more complicated, however, a professional executor may be needed to handle more complicated matters such as financial issues, property and the upkeep of records.
EXECUTORS’ RESPONSIBILITIES
- Distributes property to heirs
- Pays debts
- Pays taxes
- Locates assets
- Locates heirs
POWER OF ATTORNEY
A power of attorney is a legal document in which a person appoints another to act in his or her place. The power to act may be limited to specific matters or circumstances or may be so general that the agent may take any action that the principal could take.
In estate planning powers of attorney are most often used to appoint an agent to act when a person becomes disabled and unable to make decisions on his/her own behalf. Without this it may be impossible to manage your assets if you become disabled.
LIVING WILLS
A specialized medical power of attorney is needed to appoint someone to make medical decisions on your own behalf if you become unable to make decisions for yourself. You may choose to simply appoint an agent or you may also provide direction to the agent as to how the agent should act. The term “living wills” is often associated with decisions to remove life support systems from terminally ill patients. However, they may also be used to allow the agent to make medical decisions on your behalf which do not involve life and death. Living wills can help assure that your intentions are carried out. This can make it much easier on your survivors, both emotionally and financially.
WHAT IF I DIE WITHOUT MAKING A WILL?
If you die without a will, your estate will be administered in accordance with state law. This law will determine who has the right to act as the administrator of the estate, what procedures must be followed, and who will be the beneficiaries of your estate. This will most likely mean that the administration will be more difficult, costly, and will mostly like result in your estate being distributed contrary to the way you would want. If children are involved, the courts may administer their assets for years to come. Any opportunity to save costs and taxes will be lost.
CHANGE OF CIRCUMSTANCES
The birth of a child or the divorce of a person who makes or is named in a will may automatically change the legal effect of a will without you knowing of this legal effect. Even if the legal effect were unchanged, you may want to plan your estate differently under the new circumstances. It is important to review your will and other documents as circumstances change (including changes in your wealth and changes relating to your beneficiaries or fiduciaries). You may also want to take into account any gifts that you have made since your last will was made, to avoid duplication to the detriment of other beneficiaries.
THE RIGHTS OF YOUR SPOUSE
The right of a spouse to take a share of the estate despite what the will says is important to consider not only when making a will, but also as circumstances change. For example, a change in a spouse’s financial circumstance may mean that the spouse’s entitlement to elect against the will has changed.
CHANGING YOUR WILL
You can change your will at any time as long as you remain legally competent. However, you should plan your will to take into account changes in your circumstances that can be anticipated, such as the death of beneficiaries and fiduciaries, or the birth or adoption of children. Changes in the law, in your circumstances, or of others whom you may choose to help may also require that you change your will.
CONCLUSION
Planning for your future and the future of your loved ones can be of great benefit. Ask your lawyer for assistance without delay to ensure that your estate is distributed to your chosen heirs while paying a minimum of taxes and administration expenses. Your lawyer will be able to help you complete your estate plan cost effectively and wisely.
A LAWYER WILL ASSIST YOU IN:
- Appointing an executor for your estate
- Creating trusts
- Naming a guardian for your children
- Allocating taxes
