Estate Planning Basics

The first step in estate planning is to get organized.  Gather all of your important papers and documents and then get started on some of the basics you’ll need to complete the process. It is helpful if you have an idea of who you would like to name as your beneficiaries and as your executor or successor trustee. Your legal professional will need to gather important data and preferences from you in order to execute the appropriate legal documents.

Wills and Trusts

When creating an estate plan, there are two basic tools for passing on your property and assets: a will or a trust.  Each option has its own set of benefits and drawbacks.  A common estate planning mistake is to assume that one or the other is the best choice based on superficial data.

For instance, many people believe that a trust is necessary to avoid probate.  While this is frequently true, it is not always the case or the best option.  If your estate is comprised of assets that will directly pass to a designated beneficiary, you may not need a trust to avoid probate.  Similarly, if your estate qualifies, you may be eligible for a simplified version of probate and it may be in your best interest to spend a nominal amount of money on court costs and legal fees instead of paying for a trust.  The best way to avoid these basic but common errors is to consult with an attorney and go through the estate planning process to make sure your estate plan best meets your goals.

Another common estate planning mistake is a lack of execution.  It is not enough to create a plan.  You also need to follow through on each and every step, no matter how small.  Here are some common estate planning mistakes and the possible consequences of each.

  1. If you create a will or trust but do not communicate with your executor or successor trustee, he or she may decline to take on the job or misunderstand the role and responsibilities. It is important that you select an executor or trustee that is trustworthy and capable of doing the job.  Once you decide who should fill this important role, you should discuss the role and responsibilities with that individual.  Communicate clearly your wishes and give your nominated executor or trustee a copy of any important documents.
  2. Another common estate planning mistake is a lack of prioritizing. You need to decide what priority is most important.  Some people build their entire estate plan around saving money on taxes.  That is the top priority.  If you need to provide for a minor child or have a special needs dependent, their care and financial needs may be your top priority.  You may want to leave a large bequest to an educational institution or set up a scholarship fund in order to establish a family legacy.  If you have a family farm or other property that you want to stay in the family, you need to make a detailed and legally binding plan to make this happen.  It is important that you identify and then prioritize your goals in order to execute the best plan possible.
  3. Keep all of your important documents together in a safe place. If your will or trust and other estate documents, such as a life insurance policy, are all in different places, they may be difficult to find.  If you pass away unexpectedly, they may never be found.
  4. If you create a trust but don’t move your assets into it, or name the trust as a beneficiary of your assets, your estate may still go through probate. Taking care of getting your assets to “talk” to your trust is a critical step toward the success of your estate plan.
  5. Setting it and forgetting it. After you create your estate plan it is important to maintain it.  Too many people think that once the plan is created, their job is done.  You should review your estate plan regularly and adjust it if needed.  Life changes and odds are your estate plan will too.  Marriages, births and divorces are just a few life changing events that will directly impact your decisions regarding your estate.

 The Role of an Estate Planning Attorney

An experienced estate planning attorney can help you avoid common estate planning mistakes and guide you through the process.  I would be happy to help you ascertain your needs and then create all the legal documentation needed to put your estate plan into action.  If you have questions about an existing plan or would like to get started in setting one up, please contact my office.