DON'T FORGET THESE IMPORTANT POINTS IN YOUR ESTATE PLAN
Let's assume you have a family of four, a house, and some money in savings and investments. Who inherits your belongings if you pass away? Is it family, a friend or perhaps a cause to which you are strongly attached? Estate planning is necessary to implement your intentions.
Roughly two-thirds of Americans do not have an estate plan, according to a recent survey from Caring.com. If you are among the minority of US adults who have prepared a will, living trust, advance directives, and other end-of-life documents, you may think that your estate plan is finished. But you may want to reconsider. An estate plan is a living set of documents meant to be regularly reviewed and updated as life changes happen. Even if you are diligent about updating your plan, many aspects often get overlooked, such as what will happen if a trustee or beneficiary dies. Paying attention to the smallest details, such as the ones below, can help keep your final wishes intact.
WHAT IS ESTATE PLANNING?
Estate planning is ensuring your estate, or everything you own, is distributed to the intended people when you die. This may include:
Having an estate plan is extremely important for multiple reasons. Having an estate plan helps ensure that:
Your estate will never go to random beneficiaries. By designating your beneficiaries, you guarantee that they will be the sole recipients of what you leave behind.
You help support and maintain your family's lifestyle. Estate planning offers a financial safety net for your family so they can maintain their standard of living in the event of your death.
You can lessen your beneficiaries' taxes. Federal taxes can take a big chunk out of an inheritance, but estate planning can minimize those costs.
You remove the family feud. Naming beneficiaries and describing their inheritance might prevent squabbling among family members.
You'll enjoy greater peace of mind. Creating a coherent strategy with your estate planning attorney allows you to sleep well at night knowing your loved one's future is secure.
DO YOU HAVE BACKUP DECISION MAKERS?
You can include the following people in your estate plan to ensure that your wishes are carried out:
Personal Representative: The person you appoint to administer your estate through the probate process after you pass away
Trustee: The person you name to manage your trust’s money and property
Guardian: Somebody you legally appoint to care for your children, including adult children who cannot take care of themselves
Power of Attorney Agent: A designated person is given the legal right to act on your behalf in medical or financial matters, in case you become unable to take care of these affairs yourself.
It's critical to choose wisely when it comes to these key players. They'll have a significant amount of influence over you and your affairs, so you need to be confident that they'll act in your best interest. However, there may come a time when they are no longer able (or willing) to do what you ask them to do. In your estate planning documents, you should list your first choice as well as at least two backups for each of these positions.
Certain life events may change your mind about who you want in these positions. For example, your chosen trustee starts to exhibit bad financial handling skills. Or, a guardian starts to have issues with their own children. Perhaps a guardian simply 'ages out' of your desired range, and you need to think about having someone younger as guardian. Another potential legal guardian might be too young at the moment but would mature into the perfect candidate within five to ten years.
The main point is that you should reexamine your selection of trusted decision-makers and include backup names. Alternatives will ensure that critical end-of-life decisions aren't left in the hands of the courts.
WHAT WILL HAPPEN TO YOUR PETS WHEN YOU'RE GONE?
Pets are a part of the family for many pet owners, and in some ways, they may be more reliant on their guardians than children are. If you cannot take care of your pets for any reason, who will?
It's likely not the case that your pets have been overlooked—and if you're an empty nester, they may be receiving the attention once reserved for your children. However, they may not have been at the top of your mind when you met with an estate planning lawyer to develop your unique estate plan. You may want to go back and incorporate your dogs and cats into your documents.
It's a good idea to have a list of other individuals you can call if your first choice is unavailable to care for your pets. You should also include instructions for how your loved ones may locate an excellent home, or places you are comfortable having your pet surrendered to, in the event no one can care for them. It is best to document your desires for their care in writing beyond naming a caretaker for the animals that survive you. By doing this, the person you entrust your pets with will be well-informed about their specific needs, such as any medications or allergies they have, their favorite toys, and how best to manage any quirks.
HAVE YOU NAMED CONTINGENT BENEFICIARIES?
There are times you will need a contingent or backup beneficiary in addition to your primary beneficiaries. A beneficiary is someone you designate in your estate plan to inherit money and property, such as bank accounts, investments, and insurance policies. Upon your passing and the administration of your estate, these assets are distributed to or managed for chosen beneficiaries. However, problems can occur when the following happens:
The primary beneficiary cannot be found.
The primary beneficiary will not take their inheritance.
By naming a contingent beneficiary—or multiple beneficiaries, if you have doubts—you can ensure that your money and property are passed on according to your wishes, rather than state law. This avoids potential delays in distribution, increased estate settling costs, and family fighting.
HAVE YOU THOUGHT ABOUT THE UNTHINKABLE?
It's unfortunate, but you should be prepared for the highly unlikely event that all of your beneficiaries pass away earlier than you. While having contingent beneficiaries may help in this scenario, it might not be enough depending on where you live. Without any surviving family, the government could take over your estate.
It isn't uncommon for individuals without many relatives to face this scenario. You can include a remote contingent beneficiary clause or a family disaster plan in your estate plan. You may designate a charity or other organization to receive money and property in the event of an unforeseeable calamity.
PREPARING FOR THE UNTHINKABLE
For many Americans, illness, accidents, or other unexpected life events serve as a wake-up call that they should have a basic will, at the very least. Although incredibly important, many people still put off estate planning because of:
Lack of money and property
Lack of knowledge about the process
Concerns about costs
Estate planning does not have to be complicated or expensive, and when you consider the potential costs of not having an estate plan, can you really afford to leave things to chance—or the government? The truth is, a little bit of planning can save your family a lot of money, stress, and heartache down the road. And if you already have an estate plan in place, it's still important to review it regularly and make updates as needed.
Our estate planning attorneys are thorough and detail-oriented. The experienced estate planning attorneys at DuPont & Blumenstiel in Dublin, Ohio can help you get started with your documents, or update your existing plan. To schedule an appointment, please contact our office at 614-389-9711.
Want to know more about what documents make up an estate plan? Download our Consumer's Guide to Estate Planning in Ohio.