One of the best aspects of my practice is that I get to help my clients in a variety of different ways, in a role like a “family attorney”.  Often, not only do I help clients with their employment agreement, home purchase, taxes and financial planning, but I will also prepare or review their estate plan to make sure it fits appropriately within the big picture of their taxes, finances, insurance and career goals.

Estate planning is a unique combination of state-specific law and federal tax law, both of which are fairly complicated.  That said, there are some general concepts that you should have in mind when having a will drawn:

  1. Pretty much everyone reading this blog needs a will.  I know that death is an unpleasant concept.  I know that doctors don’t have time to deal with this and don’t want to spend the money on it.  But estate planning is crucial to your long-term plan.  It can create significant tax savings, avoid costly litigation and make sure you have the people you want in the key roles of guardian, trustee, personal representative and power of attorney.  Don’t wait for your next job, your next child, more net worth, etc.  Go ahead and get the process started.
  2. Not all of your assets flow through your estate.  In most if not all states, assets that have a designated beneficiary, such as your IRAs, 401k(s), and bank accounts, will pass outside of your estate to the person who you designated when you set up those accounts.  The same could apply to your home depending on how it is titled.  As a result, for many people, they have much more wealth that will go outside of their estate than through their estate.
  3. Your estate plan needs to look ahead indefinitely, even though you should revisit your estate plan annually.  This means that if you have one child, your estate plan should contemplate having more kids.  Or if you have a fair amount of assets, then your estate plan should prepare for if you have a taxable estate.  It should also describe what happens if your stated beneficiaries, child guardians, trustees, etc. predecease you.  If you calendar a review of your will annually, then it will likely only take 15-30 minutes of your time, and probably once every 2-3 years you will see something that should be changed.
  4. You need to honest with your attorney.  If your spouse doesn’t know about your child from another relationship, or that you are set to inherit some money down the road, then request a separate meeting with the attorney or even use different attorneys.  Not disclosing this information to your attorney can completely blow up your estate plan and create significant heartache for everyone involved.
  5. Your estate plan is more than just a will.  Depending on the state, you will also likely need to sign a financial power of attorney, healthcare power of attorney and a living will.  Under some circumstances, you may also benefit from an insurance trust, family trust, or other type of document.
  6. If you have minor children, then your will likely needs to contain a trust in the event that both parents pass away.  These types of trusts can avoid a court proceeding to determine who will be in charge of these assets under a “gift to minors” statute, contain asset protection based limitations on how the money can be used, and control when the money is ultimately distributed.  It is a great way to protect children from themselves and their creditors while hopefully ensuring that their needs will be met by someone you trust.
  7. Unless you have a taxable estate or some other unique situation, your will should not be very expensive.  Although prices will vary by area of the country and experience, if someone quotes you a fee of much more than $1,500 or $2,000 for an estate plan, then get a second opinion.  In fact, unless you have a good referral for the estate planning attorney and the price seems reasonable, then take the time to get at least two quotes.
  8. Very few of you need a revocable trust or any other alternative estate plan, so avoid gimmicks or anything else that seems too good to be true.  Most of these types of documents are for use in very limited situations, so if someone suggests anything outside of a standard will, and you do not have something approaching a taxable estate ($10 million) or other unique situation, then at least do your homework if not seek a second opinion.
  9. Your digital assets and HIPAA rights need to be factored.  Google, Facebook and other major social sites have chosen not to accept the broad language of a financial power of attorney or will and are not letting your personal representative or power of attorney access your Facebook pictures, reset a password or delete an account.  A similar issue exists with your estate planning documents needing specific HIPAA language.  As a result, make sure that you discuss these issues with your estate planning attorney.
  10. Check your beneficiary designations periodically.  I mentioned above how most people have more assets that will flow outside of their estate than through their estate.  It is crucial to review those beneficiary designations every couple of years.  In some cases, especially with minor children, it may be necessary to make your secondary beneficiary point back to the trust created under your will, although some accounts, such as an IRA, could invoke some less desirable tax consequences that you should discuss with your attorney.

-Richard

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