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Preparing for the Unexpected: Estate Planning Tips

Consider the following six tips to setting up a comprehensive estate plan to help protect your estate, assets, children, and legacy and to ensure what is left to your loved ones is what you originally intended.

1) If you are single and over the age of 18, consider a…

Will (last will and testament): This is a written document which leaves your estate to named persons or entities, including portions or percentages of the estate, specific gifts, trusts for management and future distribution of all or a portion of the estate. A will typically names an executor to manage the estate as well as states the authority and obligations of the executor in the management and distribution of the estate and sometimes gives funeral and/or burial instructions. Assets in a will can include real estate, cars, bank accounts, stocks and bonds.

If you are in a relationship but unmarried, you should consider…

Adjustments to your will: If you are in a relationship but unmarried, be sure to 1) set up a will, if you haven’t already, if you want your life partner (unmarried) to inherit your possessions OR 2) update your will to include your unmarried life partner, otherwise it will go to your closest relatives as directed by state law.

Trust: A trust is a legal entity that can hold title to property for the benefit of one of more persons or entities. Contrary to popular belief, trusts are not just for the affluent. Setting up a trust is an excellent way to control what happens to your estate, regardless of its size, to prevent the frustrating and expensive probate process.

2) If you are married, consider…

Living Trust: One of the most valuable benefits of a living trust is that it allows for ease in transition of your estate and outlines how you would like your affairs handled if you become incapacitated. You and your spouse are typically the primary beneficiaries of the trust with beneficiaries, such as children, named after your deaths. A living trust allows you to retain control of your assets as long as you are able to manage your own affairs. In a trust you are able to address all of your significant property in one document and the desired transfer/distribution of your property upon your passing. When set up properly, a living trust can protect your estate from probate, the process a will may undergo to prove its validity, and potentially save thousands of dollars in attorney fees to settle the estate, as well as time.

3) If you have children, consider…

Guardianship: In order to prevent confusion as to who will take care of your child or children after your passing, it is important to establish guardianship of your children in the event of you and your spouse’s passing, which can be done in a will. Have a qualified advisor help you think this decision through, since it can have a huge impact on the lives of your children.

4) If you are retired or getting ready to retire, consider…

Financial contracts (beneficiary designations): More than likely you’ve accumulated assets such as annuities, life insurance, and IRAs that are considered financial contracts. These types of assets are not considered to be part of a probate estate and are generally not accounted for in a will. With that said, you need to designate beneficiaries with your custodian and check to make sure that the designation is accepted and will produce your desired result.

If for some reason your IRA custodian is unable to identify your beneficiary, or if the amount of the account value you would like passed on to your beneficiaries isn’t what was anticipated (i.e. account value dropped and the specific monetary amounts you’d required to be left are no longer feasible), this ambiguity can result in legal fees, time and ultimately not leaving what you intended to your heirs. Instead consider leaving a percentage to beneficiaries. No matter what the state of the economy or your account balance, a percentage is always a definable amount.

Estate planning for your retirement accounts (reduce tax liabilities): Most people forget to do estate planning for traditional IRAs, 401(k)s and other types of retirement accounts. These dollars have typically never been taxed and there are changes to law that now afford you the opportunity to control how and when they are taxed. Tools like the multi-generational IRA and the Roth IRA can drastically reduce the income tax impact your beneficiaries will face when they inherit these accounts.

Long-term care insurance: With Americans living longer, the risk of outliving one’s life savings due to the high costs of medical and long-term care is a tough reality for many. One way to combat this situation is to explore the option of long-term care insurance. This type of insurance is designed to give coverage for necessary medical or personal care services provided, such as a nursing home or in-home care.

5) If you or a loved one is in a nursing home and you still have assets, consider…

Nursing home or assisted living plan: There may be government benefits available to help pay for the high cost of care while retaining some of your life savings. This can be especially important if there is still a healthy spouse living at home or if there is an interest in passing on some of your life savings to your heirs. A qualified advisor can explain options such as Medicaid or the Veteran’s Aid and Attendance Benefits Program and help you determine if you are eligible for such programs.

6) Regardless of your stage of life and where you are in the estate planning process, consider…

Durable power of attorney for health care (living will): These are legally qualified advance directives, giving instructions as to what actions should be taken for your healthcare in the event you are no longer able to make decisions due to illness or incapacitation. Typically, if you do not have a durable power of attorney for health care it can cause problems in the decision making process, if needed, and the decision making will be left to your parents, children or next closest living relative, rather than honoring your wishes.

Tips for Estate Planning Success

Once you have an understanding of what you need to meet your estate planning needs, you need to complete your estate plan ensuring it’s legally binding. Consider the following tips for estate planning success:

1) Pick an estate planning team.

You will need a qualified team of experts to provide you with the counsel and tools you need to implement a comprehensive estate plan. Be sure to meet with a few individuals to ensure you feel comfortable with and confident in the persons you select.

Be sure your team takes a comprehensive approach to your estate plan and that all areas are working together and in your best interest.

Seek the advice of more than one expert. Ideally, you should receive counsel from an estate planning attorney, tax accountant, financial planner, and insurance agent. An attorney should be put in charge of drafting a will, creating a trust, or drafting a Power of Attorney. A tax accountant can help you figure out what your estate’s tax bill will be and can explore the advantages of tax-deferred investment strategies with you. A financial planner can recommend investments that are best suited to your estate plan and can tell you how your retirement income will be distributed in retirement, as well as an inheritance after your passing. Lastly, an insurance agent can help you with matters involving life insurance, disability coverage, and more.

Don’t attempt to set up your own plan. While there is a lot of information available in books and on the Internet, I do not advise setting up your estate plan on your own. The estate planning process is a tricky thing to attempt without the help of one or more professionals. By using information you pull from the Internet or read in a book, you run the risk of missing important changes to laws governing estate planning. An attorney is responsible for keeping track of any relevant changes and how they will impact your estate plan. Also, know that a small mistake, like a wrong word, in one of your documents can potentially change the way that the court interprets what you meant.

2) Explain your arrangements to those close to you and tell them where they can locate all-important documents, should they become necessary.

One complication that many families face when they have lost a loved one and are trying to take care of final arrangements is locating the appropriate documents. Discuss your estate plan with your loved ones. Be clear about your intentions and be sure to let several trusted family members know where your documents are stored.

Don’t keep your estate documents in a safe-deposit box if it’s just in your name. This delays the process as it takes a court order to open one after the owner dies. Key information should be stored in a fireproof box in their homes or in an airtight bag in the freezer to protect them from fire or flood.

Telling your family about the arrangements you have made will help to dispel any potential conflicts after you are gone. Inheritance can be a loaded issue, and to help promote family harmony after your passing, it is best to let the individuals affected know your plans. Of course, use your discretion and only reveal to them what you wish. I always recommend that my clients be open and honest with loved ones about their wishes. Explaining your plan openly gives you the opportunity to clear up any misunderstandings and to answer any questions your family may have. I usually find that by eliminating surprises you also help to eliminate fights.

3) Evaluate your plan on an annual basis and when you have a life-changing event.

Once you have completed all these steps and all documents are up-to-date, be sure to keep them current. It is very important that you evaluate your estate plan with your team on an annual basis AND when a life-changing event happens. Re-evaluate your estate plan documents to make sure they are up-to-date and that you have the best plan for the unexpected. Also, be sure your estate plan is tailored to fit your current situation and goals.

Estate planning is not a one-time job. There are a number of life changes that call for a review of your plan. Some of these changes, such as marriage, divorce, birth or death are all life events that warrant a reevaluation of your estate plan. Work with a professional to be sure your plan is current and always reflects your final wishes.


– What is probate, how can this process impact your estate and how can you protect your estate from it?

– What types of “life” events should cause you to re-evaluate your estate and retirement plan?

– What is the difference between a will and living will?

– What is the difference between a trust and a living trust?

– How can you pass some of your assets onto a charity efficiently and what is the process for doing so?

– What are some things to consider when selecting guardians for your children?

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