Failure to plan is planning to fail. However, more pernicious than failing to plan, is having a poor estate plan. The reason for this is obvious, you think you have a plan in place that protects your interests and provides for your beneficiaries. Unfortunately, having estate planning documents prepared and put in place does not necessary address every threat that is lurking to derail your wishes and desires.
Most estate planning professionals will tell you that family conflict is the number one risk to a peaceful inheritance. This conflict could arise from any number of reasons, some of which cannot be planned for in advance. However, one common source of conflict is unequal treatment of children in the estate plan with no communication to the family that such treatment was intentional and the reasons for the distribution established. If children are given no explanation of the decision-making process they can begin to think the worst of one another.
Sloppy or No Estate Planning
If you have not done any estate planning or if what you think you have done as “estate planning” is ineffective, your estate could be subject to the state’s intestacy laws. In short, these laws predetermine who will inherit your estate and in what proportions. These laws only provide for people who are related to you by marriage or blood and they can become quite complex if you have children from more than one marriage. If you have no estate plan, or an ineffective estate plan you are simply leaving your legacy in the hands of the government.
To ensure that your wishes are being carried out and are protected from the ever-present dangers that can arise, it is important to know what a successful estate plan looks like.
No (or Little) Family Conflict
The goal is for there to be no surprises. No matter how you choose to distribute your estate you should have open and honest conversations with your family about your decisions and the reasons for those decisions. Even in the absence of conversation with your family, you need to be sure that you discuss your plans and the reasons for those plans with your attorney so your estate plan can be drafted appropriately to provide the utmost legal protection for your wishes.
Eliminate (or Minimize) Costs and Taxes
Watching an inheritance get whittled away by taxes and fees is a cause of frustration and hard feelings for your loved ones. Your intent in preparing your estate plan is to benefit your loved ones, not the government or attorneys. Working with a qualified estate planning attorney can help ensure that your assets are handled in a way that minimizes taxes and administrative costs.
A Chosen Representative
It is important to consider that as you age you may not be able to handle all your affairs on your own and you may require the assistance of a loved one. This could be in the area of either your financial affairs or perhaps healthcare. It is important to designate individuals to assist with these functions prior to their assistance being necessary. You should consider choosing someone who you can trust and who understands you and your desires, not necessarily who may be most convenient. Do not rely on the hope that everyone around you “knows” who you would want in charge. You should ensure that you have granted the proper authority through the appropriate legal documents.
Ensure that Everyone Gets what you Want
Your assets that remain after you pass may be, or may in some way, represent your legacy. You should definitely take time to consider how you want to share your legacy with family and friends. Consider including an explanation as to why you have left someone a particular inheritance. Additionally, if you have any wishes as to how someone uses a gift of money, that individual may appreciate hearing the hopes and dreams you have for them and their future even though you are no longer with them.
Documents are Up-to-Date
Estate planning is one of those areas where there always seems to be some life event “just on the horizon” that will occur and then it will be the “perfect time” to put a plan in place. Unfortunately, it is impossible to tell what tomorrow may bring and it is certainly better to have some plan than no plan at all. Of course, no matter what life stage you are in, and the potential life changes that may be upcoming, if you establish an estate plan today it is important to review that estate plan on a regular basis to determine if it needs updating. Major life changes are an obvious indicator that an estate plan should be reviewed, but other circumstances might be birth or death of a family member, purchase or sale of a major asset, change in health, or even change in the law.
Take some time to think through your estate plan and let us guide you through the legal portion. Do not leave your legacy in the hands of the government.