Q: We’re married with two adult children, a modest amount of assets and haven’t gotten around to doing any estate planning. What can we do to quickly get our estate plans together and work most effectively with our attorney? – G. T., Vermont
A: Estate planning is important for everyone, regardless of the size of your estate. It’s the only way to control what happens to you as well as your assets if you become disabled or pass on.
You can’t just talk about estate planning; verbal agreements have no legal value. You’ll need to meet with an estate-planning attorney and put it in writing. The following two-part process can save you needless taxes, expenses and grief.
PART 1: PLAN AHEAD
Save time and money on legal fees by getting organized before meeting with your attorney:
STEP NO. 1 — DEFINE YOUR GOALS
Identify beneficiaries: Write down whom you want to inherit from you when you die. Specify how much, what percentage or which specific assets are to be given to each person and/or charity. Note the special needs of any beneficiary, such as a disability preventing the beneficiary from working.
Identify backup beneficiaries: Select backup beneficiaries in case your first choices do not survive you. If you don’t have strong feelings about an individual for this selection, consider selecting your favorite charity or cause.
Specify the timing of your estate’s distributions: Decide when distributions should be made to your heirs. Some beneficiaries can handle a large lump-sum distribution while others, such as children, benefit from distributions spread out.
Identify guardians: Select the Guardians of the Person to raise minor children should both you and your spouse die or become incapacitated. Also select the Guardians of the Property to handle your children’s inherited assets (or your assets, in the event you’re incapacitated). Also, identify backups.
Identify your executor(s) and trustee(s): Name the persons who would carry out your wishes after your death. You need an executor to administer your will, and if you have any trusts, you’ll need to name trustee(s) to manage trust assets. For each position, select several choices since you don’t know who will be willing/able to serve when the time comes. To provide a check-and-balance, consider selecting co- or tri-trustees in larger estates.
Identify other decision-makers: Select the persons to make health and money decisions for you if you’re incapacitated. These authorizations are given via two separate durable powers of attorney.
Special concerns: Outline any sensitive family circumstances or concerns you have, that could affect your estate so your attorney is aware of them. Also, decide whether your surviving spouse should be able to change who inherits your share of the assets. This is especially important if you have children from a prior marriage.
STEP NO. 2: ORGANIZE YOUR INFORMATION
Make a list of all of your assets and liabilities to identify exactly what’s in your estate. Estimate the dollar fair market value (sales price) for real estate and other unlisted assets.
Include everything that would be received by your heirs and beneficiaries if you were to die today. This includes your life insurance policies, annuities, IRAs, 401(k)s and other retirement plan benefits.
List all the primary and backup beneficiaries for any of your assets that have beneficiary designations (such as insurance policies, IRAs and 401(k)s).
Identify how you hold title (ownership) to each of your other assets. This can usually be found on your bank or brokerage statements, on your notes and deeds of trust, or your insurance or annuity policy.
Make a list of any important documents and where they are kept.
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Estate Planning Documents Outline
STEP NO. 3: SEEK THE RIGHT ATTORNEY
Identify several attorneys who specialize in estate planning. Get recommendations from your CPA, financial planner and friends. Estate planning is a special area of law and it is very important that the attorney you select is properly trained in estate planning and appropriately qualified to address your situation. You can check to see if he/she is a board certified specialist in estate planning law (which some states still describe as wills, trusts and estates law), an Estate Planning Law Specialist (EPLS) and or an Accredited Estate Planner® (AEP)®.
Call the attorneys and ask how many wills and trusts they have prepared this year and in the last 10 years. Ask whether the attorney also handles wills and trusts after a death to see if they’re familiar with handling the issues that come up after a death.
Find out how they charge. Estate planning is a specialty and thus some estate-planning attorneys charge from $100 to $450 per hour; others charge a flat fee. Make sure they will provide a written fee agreement to avoid surprises.
PART 2: WORKING WITH AN ATTORNEY
Bring your notes on goals (Step 1 above), your estate information (Step 2 above) and your current estate planning documents, if you have any, when you meet with your attorney.
1. Make the most of your first meeting.
Discuss your overall goals and see how they can be met. Explain in your own words the estate plan you envision, then ask your attorney about tax-saving strategies and the main documents you might want to have prepared such as:
Durable Power of Attorney for Property Management
Advance Health Care Directives
Bring any of the following information, if appropriate, with you to the attorney’s office:
Personal information, including the full name of you and your family members, addresses, Social Security numbers
A list of your financial advisers
A net worth statement showing all assets and liabilities, their current value and ownership
A budget or analysis of your cash flow
Employment benefits statements or summaries
Retirement plan(s) and beneficiary statement(s)
Life insurance policies
Deeds to real property
Partnership agreements and buy/sell agreements
Your last two years’ income tax returns
Any of the estate-planning documents listed above that you may have had prepared previously
A list of your questions, concerns and ideas
By providing advisers with this information, you could save one to five hours (or more) of billable time.
Before leaving your attorney’s office, request a brief simple written summary of your agreed upon estate plan to serve as a record of the decisions you made. Confirm that you’re taking advantage of all tax-saving possibilities and minimizing administrative costs.
2. Review and sign documents.
Have draft copies of your estate-planning documents sent to you for your review and approval. Note questions and changes in red ink in the margins. Be specific. If you have a large or complex estate situation, have a copy of your documents also sent to your CPA and/or financial adviser for their input.
Discuss questions and changes with your attorney.
After you sign the documents, ask your attorney where the documents should be kept and how much information about them should be provided to your family members, executors and trustees.
Estate-plan documents are technical, very dry and do not communicate personal feelings. Consider drafting a letter to your spouse and family expressing your final thoughts and feelings to them.
3. Take care of title and beneficiary designations.
Have your attorney make sure titles on your assets and your beneficiary designations are coordinated with your will and/or trust(s).
4. Update your estate plan.
Once a year, call your attorney to see if you need to update your estate plan. Call any time you have changes in your personal situation due to births, deaths, marriage or divorce, as well as significant increases or decreases in individual assets and/or the size of your estate.
CHECKLIST FOR MEETING WITH AN ESTATE PLANNING ATTORNEY
Update your net worth statement and gather your important documents.
Identify how, to whom (including charities) and when you want your assets distributed.
Identify executors, guardians and trustees.
Call estate-planning attorneys to assess their skills and set an appointment.
Discuss with your attorney your goals, tax-saving strategies and coordinating beneficiary designations on life insurance, annuities, IRAs, 401(k) plans and other retirement plans, along with title (ownership) of your assets.
This information is brought to you by The NAEPC Foundation and Noverus, your financial and estate planning partners. © Copyright NAEPC, The NAEPC Foundation, Noverus and Valentino Sabuco, CFP®, AEP®. Republished for educational purposes only with the permission of Valentino Sabuco.
Last edited Mar 15, 2012