Answering Your Questions about Estate Planning
What is an “estate?”
Almost everyone, single or married, has an estate. It consists of all your property, including for example:
- Real estate, for example, a home;
- Personal property such as cars and furniture;
- iIntangible property such as bank accounts, stocks and bonds, and pension and social security benefits, and the face value of your life insurance policies.
An estate plan is your instructions for the distribution of all your property after you die.
Isn’t a will all I need’?
Not necessarily. While a will often is the most important piece of an estate plan, it’s not the only part. A will distributes your assets upon your death. Yet, there are a number of options in addition to, or in place of, a will for distributing property.
Beneficiary designations, joint ownership and trusts can also be used to transfer property upon your death. In addition to other estate planning objectives of the client, choosing an appropriate asset transfer method is a crucial part of a properly planned estate.
How can an estate plan distribute my property quickly?
Everyone’s estate is different and requires individual attention. Many people need to control or even stagger payments to their loved ones for various reasons. Some people want their beneficiaries to receive the property left to them as quickly as possible. The various factors in each individual’s life need to be considered when planning your estate.
Estate planning can also minimize expenses by keeping the cost of transferring property to beneficiaries as low as possible. For example, choosing a competent executor for your estate and giving the executor the necessary authority to carry out your directives can save money and simplify the administration of your estate.
Would an estate plan help if I become mentally or physically incapacitated?
Absolutely. Estate planning deals with more than just what happens when someone dies. It involves planning for our lifetime as well. During estate planning, most people should plan for possible mental or physical incapacity during their lifetimes.
This planning is especially important for a single person who may wait to designate someone other than a relative to manage his or her property and affairs in the event of incapacity. A living will or a durable heathcare power of attorney can enable you to pick someone to make decisions for you about medical treatment, including decisions about using or terminating life support systems.
Moreover, you can select someone to direct your financial affairs in the event of your incapacity by executing a durable power of attorney for financial affairs. This type of power of attorney gives a specific named individual access to your assets and the authority to manage those assets, to pay bills, and to take any other act ion needed to keep your financial house in order during your incapacity.
I have a business. Should I account for it in my estate plan?
The answer is a resounding “yes”. As most business owners know, planning is a key element of success. An estate plan can make sure your business is not thrown into chaos upon your death or incapacity. You can provide for an orderly succession and continuation of its affairs by spelling out in your plan what will happen to the business, your ownership interests and your loved ones, upon your death or incapacity.
Can I help a favorite cause through my estate planning?
Yes. Your estate plan can help support religious, educational, and other charitable causes, either during your lifetime or upon your death, while at the same time allowing you to take advantage of tax laws designed to encourage philanthropy.
Can an estate plan help reduce taxes on my estate?
Yes. Every dollar your estate pays in estate taxes and/or administration expenses is a dollar that your beneficiaries won’t receive. A good estate plan gives the maximum allowed by law to your beneficiaries and the minimum to state and federal taxing authorities.
Isn’t an estate plan just for old people?
No. One glance at the news demonstrates that far too many young and middle age people die suddenly or, what is even more likely, become mentally or physically incapacitated. An estate plan can be tailored to anticipate these contingencies.
When should I plan my estate?
The time to plan for death or disability is now, when you’re healthy. As a general rule, people make better decisions when they feel good and tend to make worse decisions when coping with illness or physical stress, strain, or illness. Moreover, a so-called deathbed will, or one made by someone whose mental competence is questionable, may invite a legal challenge.
It is important not to procrastinate. Don’t put off making your estate plan until your estate reaches a certain level or value. Even if you don’t have as many assets now as you expect to have someday, it’s easy to update the plan every few years as your assets increase and your life circumstances change. If you put in a few hours now learning the basics and setting up your plan, you’ll be covered in case of an unexpected event.
My spouse doesn’t like to talk about finances or estate planning. What should I do?
You can’t plan your estate if you don’t know all the facts about your family’s assets. Yet many people don’t have basic information about their spouse’s income, how much is earned, what benefits he or she is entitled to, what his or her assets and debts are, and where assets are invested.
You need to know this information when planning your estate. It’s especially important to know who holds title to real estate and what is known as titled personal property (for example, automobiles, boats, and recreational vehicles.) It is also important for you to know the beneficiaries of your spouse’s insurance policies, pension plans, retirement accounts, and other similar assets.
What can I do to minimize the costs of estate planning?
A lawyer or other professional often charges by the hour for the amount of work put into the estate plan. Ask about fees at your first consultation and inquire about how much your total estate plan might cost.
If your legal advisor charges by the hour, the more time you invest in locating relevant documents and putting your wishes in writing, the less preparatory work your advisor will have to do. This should go a long way toward reducing the final cost of your estate plan.
In other circumstances, the lawyer charges a flat fee for certain estate planning services. This arrangement allows you to know, at the beginning of the relationship, how much it will cost you to achieve a properly planned estate. As pointed out above, the money spent planning your estate will result in much greater savings for you and your loved ones in the future.
Should I consult an attorney as I plan my estate?
Yes. Even if you have a modest estate, professional advice is needed to achieve all of your objectives. Consultation with an experienced estate planning lawyer ensures that your property is distributed exactly where you want it to be, that your loved ones are fully protected, and that you are assured of proper care in the case of incapacity.
How do I find a lawyer to help me plan my estate?
The various professionals you normally use (i.e. financial planner, accountant, etc.) may be able to refer you to a reputable lawyer to assist you in the process. Additionally, the trust department of your local bank can give you the names of one or more attorneys experienced in estate planning. If you have a friend or relative who has executed a will recently, ask for the name of the attorney. Another source is your local bar association’s referral program, which lists attorneys knowledgeable in estate practice.
Attorneys often offer an initial consultation without charge. At this get-acquainted session, you can ask about the attorney’s experience in estate planning and get a firm idea of fees.
Be comfortable with the attorney you choose! A good estate attorney will have to ask questions about many private matters; it’s important for you to be comfortable discussing these personal considerations. Frank and open communication with your attorney is important in ensuring that you get an estate plan that fits your needs.
The attorneys at Resnick Law can help you with all your estate planning needs. Please call us at 248.642.5400 or click here to contact us online.
How does the process of estate planning work?
Don’t just expect to pile some papers on your lawyer’s desk and have a will or trust magically appear in a few weeks. Preparing these documents is seldom as simple as filling in blanks on a form. Most people will meet with their attorney several times depending on how extensive and complex the estate is.
At the first meeting, be prepared to tell your lawyer about some rather intimate details of your life, like much money you have; how many more children you plan to have, which relatives, friends, or other associates you want to get more or less of your estate.
After speaking with you, your attorney will explain the options for accomplishing your estate planning goals. This information will assist your attorney in preparing the finalized estate planning documents that, upon signing, will become legally effective to distribute your estate.