Estate Planning FAQ
We realize that planning for the unthinkable is never pleasant, but that doesn't lessen it's necessity. For those of us who don't know where to start, we've compiled a list of the most common questions we hear.
"Why should I have a lawyer do my will? There are plenty of do-it-yourself kits I could use."
The form kits for wills, living wills, etc. are very simple. That may be fine if your situation is simple: you are single, have no children, don't have a lot of assets, don't have any special needs or disabilities, etc. But if your situation is complex, you need to have a will or living will crafted to fit your situation.
Here are some complicating factors that may need to be addressed in your estate planning documents:
- blended families
- an estate large enough to generate a tax liability
- premarital or postmarital agreements in place
- separation in lieu of divorce
- large expected inheritances
- certain family members that you don't want to raise your children if something happens to you
- a history of discord among possible claimants to your estate
- a desire to have someone other than your next of kin act as guardian if you are incapacitated
- special needs or disabled children that will require special care
- certain property that must stay in one spouse's family
Also, keep in mind that when you consult with an attorney, what you are paying for is not the form used, but rather the advice and counseling that goes along with it. For example, an attorney might point out that if you have minor children or may have children in the near term, you should include a testamentary trust to hold any assets they inherit if you and your spouse both die. This avoids having to administer their assets through the Probate Court which is time consuming and expensive. It also allows you to control things like: who serves as trustee for them, how much is paid per month to the family who raises them, the age at which they get free rein over all of their inheritance, and the purposes for which the principal balance of their inheritance may be paid out early (college tuition or medical needs, for example).
"Why do I need a will?"
Getting everything approved by the Probate Court
is expensive and time consuming
If you don't have a will, the court chooses the person to administer your estate and monitors everything they do. This person must get the court’s approval for almost every significant action he or she takes with respect to the estate. This is expensive and time consuming.
Your children may receive distributions at too
young an age
If you die without a will, once your assets are divided according to the intestacy laws and your children reach age 18, the funds are theirs to use as they wish. Legal maturity doesn't necessarily mean emotional or financial maturity, and this could result in their inheritance being squandered, taken by creditors, or divided with an ex-spouse if they get divorced. In addition, their inheritance will be managed by a court appointed trustee until they turn 18. This trustee will have to get approval from the court again and again, and the expense is deducted from your child's inheritance. By creating a contingent trust in your will, you can appoint a trustee of your choosing and make the management of your child’s inheritance simpler and less expensive.
So that your assets go to the people you want
to receive them
If you do not specify who inherits your assets in a will, the intestacy laws will govern. The chances that the intestacy laws will divide your property just the way you would have are very low. For example, if you are married with children, all from your current marriage, your spouse would take 1/3 of your estate as well as a life estate in any real estate, and your children would split the other 2/3 evenly.
Equal distributions to children may not be fair
If you die without a will, and leave behind two children and no spouse, those two children will share equally in your estate. What if one of your children is 35 and a millionaire Wall Street banker, and the other is a freshman in college? What if one of your children has special needs?
Your children’s creditors may take their
With a will you can create a trust that ensures your legacy remains intact.
The court will appoint the guardian of your minor
children without your input
If you die without a will, the court will appoint the guardian of your minor children without factoring in your wishes. This may become a problem if you have a strained relationship with someone in your family. On the other hand, if you make a recommendation in your will, that can guide the court.
You may give the IRS more than you should
Intestacy distributions do not incorporate any tax planning. As a result, more assets than necessary may be diverted from your heirs into the federal and state treasury.
And don’t forget to update it!
It is important to review your will every few years and after any major events like weddings, the birth of a child, a divorce, a change of residence, or major business events. When drafting your will you should attempt to look ahead 3 - 5 years, and then plan on revisiting your will at that time.
"What other documents do I need besides a will?"
Durable Statutory Power of Attorney - allows an individual named by you to manage your financial affairs if you become incapacitated.
Directive to Physicians (a.k.a. Living Will) - lays out what medical procedures you want done to save your life and at what point you would want to be taken off of life support.
Health Care Power of Attorney - gives an individual named by you the power to enforce your Living Will and make other health care decisions for you if you become incapacitated.
HIPAA Authorization - Authorizes individuals to receive your medical information from your health care provider. The HIPAA Authorizaiton goes hand in hand with the Health Care Power of Attorney.
Appointment of Guardian - may not be necessary if you have all of the above documents, but can still be advisable if you are worried that your children may argue over who should be guardian, or if you want to advise the court of a person or persons who should not be named your guardian.
"I have more questions..."
Please contact us.