Easy Steps for Estate Planning

Most people don’t have a will, never mind an estate plan. Planning your estate is an essential part of preparing for your later years in life. Before you start planning your estate make sure you have a will. If you don’t have a will at the time of your death your entire estate will end up in probate court. This means that the family you leave behind will have to fight to gain control of any of your assets. All of your important documents should be in one place. Consider a health care proxy, also known as a living will. Your living will should have a strong power of attorney that will ensure that your wishes will be carried out in the event that you’re unable to speak for yourself in a medical emergency or an accident.

Beware of online “do it yourself” programs. These software packages will get you started with your estate planning but you’ll want to hire an attorney to help you complete the form and legalize your signature. Your attorney will also be able to help you review your estate and guide you in making the right decisions. Your last will and testament will have to be notarized by yourself and by witnesses. Signatory laws will differ and depend on where you live. Make sure that one of your beneficiaries doesn’t sign as a witness.

If you have already set up an estate plan make sure that you review it on a regular basis. You’ll want to make changes to your estate and will when there are changes to your life such as divorce, marriage, the death of your spouse, the birth of a child, adoption, or when you move from one state to another. Have a clear list of all your assets and liabilities. Remember that your liabilities will have to be paid when you die. The remainder, less probate and administrative costs, will go to your beneficiaries. It will be up to you to decide what portion of your assets each of your beneficiaries receives.

Choose an executor who can manage your estate from the time of your death until the time that all of your assets have been dispersed. The executor needs to have the ability to manage your estate as well as the time to do so. Don’t forget to appoint a guardian for your children. Guardianship is a big issue and should be discussed with whomever you want to appoint for this important duty. Remember that planning your estate is probably a lot less complicated than you may think it is. Take the time to be prepared for your death by planning your estate today.

Estate Planning for Your Children

If you have minor children, estate planning is a very important step when it comes to planning for your death. Failing to name guardians for your children in your will can lead to custody issues that are easy to avoid by simply taking the time to decide who you want to take care of your minor children in the event of your death. Determining who will raise your children if you die can be a difficult decision. For this reason alone many parents avoid the issue of custody decisions since they’re unable to find someone who they think will be the perfect guardian.

Avoiding the issue of guardianship is the number one reason why people fail to plan their estate or have a will. By procrastinating the decision about custody parents put their children at risk in the event of their death. Unless you name a guardian the courts will name someone they feel is right for the role of guardian. And this could be someone who you least wanted to have custody of your children. Court battles for custody can be long and drawn out, especially if there is more than one applicant who is seeking custody. This can place a huge financial and emotional strain on your children as well as deplete the assets from your estate. The worst case scenario is that no one applies to take custody of your children. The courts may decide to give custody to someone in your family who really doesn’t want the responsibility or your children may end up in foster care.

When planning your estate try to choose guardians for your children who you know will want to take them. Don’t feel that you have to choose a family member; friends you trust can also be ideal candidates. Consider separating guardianship of your children from the assets of your estate. By naming someone other than the guardian to be the trustee of your children’s money you ensure that there are some checks and balances in place when it comes to deciding how that money is spent.

Always have a backup named for the guardian in the event that your first choice is unable to accept the role. Keep in mind that if you name a couple as the guardian the issue of their breakup may become an issue and this can lead to a legal battle for custody. For this reason alone it’s a good idea to name individuals as guardians. If you’re divorced, consider your ex-spouse as the guardian. Most of the time, your ex will want to have custody anyway. Why make it more difficult by naming someone else as guardian and risking a lengthy court battle?

Estate Planning: When and Where to Start

Many people don’t know when and where to start when it comes to planning their estate. It seems there are so many things that you need to know about estate planning such as trusts to reduce taxes, issues about guardianship, and how to distribute your assets. And then you need to think about finding the time and money to hire a lawyer to help you draft a will. So where do you start? Perhaps the best place to start is simply by thinking about what you want to happen when you’re gone. Nobody likes to think about their own death. But death is an eventuality and needs to be planned for by everyone. The sooner you think about planning your estate the sooner you can act. Once you have your estate in order you’ll be able to enjoy your later years knowing that your family is taken care of in the way you want.

Organize and arrange all of your financial information. Take into account all of your assets as well as your debt. You need to have accurate information about how much your estate is worth. Remember to include your intangible assets such as any investments you’ve made, your insurance policies, any art collections you have, and your personal property such jewelry and furniture. When you have a full picture of what your estate is all about you can decide what’s at risk. A lawyer experienced in estates can help you draft your will. Some questions that you’ll want answered are whether or not your estate will be subject to taxes and whether it will have to go through a probate court. As well, find out what the risks are to your estate in the event that you’re incapacitated and unable to make decisions for yourself.

Talk to your family and discuss what effect your estate planning will have on them. Talk about their wishes and how they want to see your assets distributed. At the same time, make certain that you talk about your own wishes since what you want is just as important. The more you talk before your death the less likely there are to be problems after your death. If you think that there may be difficulties after your death regarding the decisions you’ve outlined in your will you can consider a Legacy Trust which will have a more advanced strategy for dealing with your assets. A Legacy Trust will be much harder for anyone to contest. Keep an eye on the future. Your estate will grow and change over time so it’s important that you review it on a regular basis.

How to Handle Sibling Disputes Over a Power of Attorney

A power of attorney is one of the most important estate planning documents, but when one sibling is named in a power of attorney, there is the potential for disputes with other siblings. No matter which side you are on, it is important to know your rights and limitations.

A power of attorney allows someone to appoint another person — an “attorney-in-fact” or “agent” — to act in place of him or her – the “principal” — if the principal ever becomes incapacitated. There are two types of powers of attorney: financial and medical. Financial powers of attorney usually include the right to open bank accounts, withdraw funds from bank accounts, trade stock, pay bills, and cash checks. They could also include the right to give gifts. Medical powers of attorney allow the agent to make health care decisions. In all of these tasks, the agent is required to act in the best interests of the principal. The power of attorney document explains the specific duties of the agent.

When a parent names only one child to be the agent under a power of attorney, it can cause bad feelings and distrust. If you are dealing with a sibling who has been named agent under a power of attorney or if you have been named agent under a power of attorney over your siblings, the following are some things to keep in mind:

Right to information. Your parent doesn’t have to tell you whom he or she chose as the agent. In addition, the agent under the power of attorney isn’t required to provide information about the parent to other family members.
Access to the parent. An agent under a financial power of attorney should not have the right to bar a sibling from seeing their parent. A medical power of attorney may give the agent the right to prevent access to a parent if the agent believes the visit would be detrimental to the parent’s health.
Revoking a power of attorney. As long as the parent is competent, he or she can revoke a power of attorney at any time for any reason. The parent should put the revocation in writing and inform the old agent.
Removing an agent under power of attorney. Once a parent is no longer competent, he or she cannot revoke the power of attorney. If the agent is acting improperly, family members can file a petition in court challenging the agent. If the court finds the agent is not acting in the principal’s best interest, the court can revoke the power of attorney and appoint a guardian.
The power of attorney ends at death.If the principal under the power of attorney dies, the agent no longer has any power over the principal’s estate. The court will need to appoint an executor or personal representative to manage the decedent’s property.

If you are drafting a power of attorney document and want to avoid the potential for conflicts, there are some options. You can name co-agents in the document. You need to be careful how this is worded or it could cause more problems. The best way to name two co-agents is to let the agents act separately. Another option is to steer clear of family members and name a professional fiduciary.

Sibling disputes over how to provide care or where a parent will live can escalate into a guardianship battle that can cost the family thousands of dollars. Drafting a formal sibling agreement (also called a family care agreement) is a way to give guidance to the agent under the power of attorney and provide for consequences if the agreement isn’t followed. Even if you don’t draft a formal agreement, openly talking about the areas of potential disagreement can help. If necessary, a mediator can help families come to an agreement on care.

If you would like to learn more about powers of attorney and how you can benefit from having one, please give us a call today!

ESTATE PLANNING FOR YOUR SECOND MARRIAGE

While falling in love for a second time is a beautiful thing, it’s important to be aware that second marriages typically create the need for some fairly in-depth estate planning.

To ensure the bliss of this new union extends far beyond the wedding day, it’s critical to proactively and effectively address how your nuptials will affect your financial liabilities, existing benefits, and distribution of your assets to loved ones.

Communication Is Key

The first and most important step to ensure estate planning success in subsequent marriages is to have open and comprehensive conversations with your spouse and your family. You must clearly articulate your wishes and your concerns, and you must also provide a forum in which family members can share their thoughts and concerns.

Because these conversations can quickly become tactically or emotionally overwhelming, it’s a good idea to engage a trusted estate planning attorney or a professional family counselor. This impartial, professional third-party will ensure that your family conversations are collaborative and productive.

Don’t be Afraid to Ask the Hard Questions

Address estate planning details that are important to not only your long-term wedded bliss, but also the well-being of your entire family. Here are just a few of the key questions that come up in the event of a second marriage:

Do you or your spouse owe any debts to any ex-spouses?

Do either of you have other liabilities that might negatively impact each other’s financial standing?

Is either of you collecting benefits such as Social Security from a deceased spouse, and — if so — do you know how remarriage will affect those benefits?

If either you or your spouse-to-be are on Medicare or Medicaid, do you know if getting married will put the other party’s assets at risk?

If either of you have children from a previous marriage, do you know how you want to handle leaving assets to them and any other heirs?

If there are young children in your family, do you know how you plan to handle any guardianship issues and provide financially for those children?

Have you discussed whether you will keep your assets separate, commingle them, or create a hybrid solution that involves keeping some assets separated and commingling others?

Though this is just a sampling of the kinds of questions that can arise, it’s easy to see how one question can lead to another and another and so on. The complete scope of the situation can quickly become quite broad.

This is why it’s so important to create clarity around your wishes and then put those wishes in writing.

Document Your Plan

Once you’ve come to terms with all the possible issues and done the up-front work of having those important conversations with your family, the last step to put all this to bed is to get the appropriate estate planning documents drafted – Wills, trusts, powers of attorney, healthcare directives, etc. Click here to learn more about these.

Estate planning decisions for second marriages and blended families can be complicated. Give us a call and we’ll help you get this done. Once your plan is in place, you can rest assured that your intentions will be carried out.