Notably, simply having estate planning documents may not equate to an “Estate Plan.” An “Estate Plan” should be a collection of documents based on a holistic snapshot of your life and a thoughtful examination of your objectives. To a certain degree, the documents in an “Estate Plan” should coordinate to meet those objectives and still offer flexibility should life circumstances change.
WHO NEEDS TO PLAN? EVERYONE SHOULD PLAN
Especially if:
- you have dependents or minor children
- you have assets that need to be managed for dependents or minor children until a set age
- you have property that needs to be transferred upon death
- you have property that needs to be managed upon incapacity
- you want to designate someone to make health care decisions for you upon incapacity
- you want to direct the disposition of your remains
- you want to donate your organs
- you want to alleviate the burden and stress on the loved ones you leave behind
State property laws, state and federal tax laws, and regulations are in constant flux. While it may be tempting to prepare your own documents or purchase documents through online companies, this often results in unnecessary cost and unforeseen complications when the documents need to be used. When crafting an Estate Plan, consider meeting with a team of professionals that includes attorneys, certified public accountants, life insurance agents, brokers, trust officers, and financial planners. Meeting with a team of professionals can ensure (1) that your intentions do not conflict, and (2) that the language and tools used in your documents are appropriate to carry out your intentions.
Compiling a list of assets, understanding basic estate planning terminology, and having some objectives in mind can make a meeting with an attorney more efficient and productive. Taking the time to plan for the initial meeting can save time and money.
CHECKLIST FOR AN INITIAL APPOINTMENT
Identify assets, liabilities, and their value, their character, their titling
- Typical assets include everything over which you have an ownership interest, including but not limited to a primary residence, vacation property, mineral interests, bank and brokerage accounts, savings bonds, life insurance policies, tangible personal property, jewelry, art collections, guns, college and savings accounts
- Common liabilities include mortgages, car loans, lease payments, credit cards, charitable pledges, child support, spousal maintenance, student loans
Identify goals
- gaining and maintaining financial independence during life
- providing for and protecting for dependent loved ones
- making bequests to family, friends, charities
- acknowledging or equalizing for past gifts made during lifetime
- minimizing taxes
- ensuring efficient estate administration
- Identify beneficiaries and any limitations on the bequests for them
- Identify fiduciaries, including:
- Attorney-in-Fact
- Personal Representative/Executor/Administrator
- Guardian of Minor Children
- Trustee
- Trust Protector
WHAT DOCUMENTS MIGHT AN ESTATE PLAN INCLUDE?
A comprehensive Estate Plan may include the following:
Documents that take effect during life:
- Health Care Directive/Living Will
- Durable Power of Attorney (for Health Care and General Decision Making)
- Mental Health Advance Directive
- Revocable Living Trust/Irrevocable Trust
Documents or Contracts that take effect at death:
- Burial/Cremation Directive
- Beneficiary Designations (for life insurance, for retirement accounts, for investment accounts)
- Joint Tenants with Right of Survivorship
- Community Property Agreement
- Will
- Gift List
- Special Needs Trust/Supplemental Care Trust (third party or self-settled)
- Transfer on Death Deed
- Testamentary Trust (provisions are found in Will)
- Irrevocable Trust
WHAT DOES IT COST TO CREATE AN ESTATE PLAN?
Cost is an important consideration when creating an estate plan. Remember, the least expensive plan may not be the best plan. Thorough planning now will help to keep costs down in the future, and the investment and time of doing it correctly will be far less than having to resolve a matter which could have been avoided. Be sure to inquire upfront how legal fees are generated. Ultimately, an attorney’s fees for services must not be unreasonable. Whether a fee is reasonable may depend on the following:
- time and labor required
- novelty and difficulty of questions involved
- skill required to perform services properly
- fee customarily charged for similar services in the locality involved
- the amount involved and the results obtained
- time limitations imposed by the client or the circumstances (emergencies)
- nature and length of the professional relationship
- experience, reputation and ability of the lawyer to perform requested tasks
- terms of the fee agreement, including disclosure to client of material terms and knowledge of the lawyer’s billing practices
Some attorneys charge flat fees for estate planning documents or services. Others charge for services by the hour. Some attorneys do a combination of these billing practices. Be sure to ask questions and have a clear understanding of the billing practices before engaging an attorney.