Estate Planning: What You Need to Know to Get Started

In my first article, “Estate Plans: Do I Need One?,” we followed Tom and how his estate plan helped him and his loved ones through a series of life-altering events. We noted that an estate plan helps take away the uncertainty of what happens next, both during life and death, and helps resolve the top questions most people worry about when they think “What if something were to happen to me?”

Now it’s time to move forward with getting your estate plan, but where do you start? First let’s start with deciding who will prepare an estate plan for you. There are many options to create an estate plan, including the use of estate planning software or document preparation services. Many of those options look appealing because they can be prepared for a low cost. I will tell you that, as an estate planning attorney who has reviewed these documents, you are going to get what you pay for.

The reason those options cost less is because you are getting a “one size fits all” type of plan. I spend about as much time redrafting documents for clients who used these options first as I do drafting my own. Or worse, I have to go to court to fix something in a plan that I am no longer free to change without a Judge’s approval. It’s hard to tell a client who paid $100 for a Trust that it will now cost over $2,500.00 in attorney fees and court costs to fix a drafting mistake. Worse yet, sometimes those mistakes cannot be corrected. With that being said, the first and most important step in getting started on an estate plan is to find an estate planning attorney. The estate planner can develop a plan that is right for your situation and will be able to modify that plan as you experience life events that may cause that plan to change.

Once you find an estate planning attorney, the second part of the process is gathering information about your “estate.” The estate planner wants a picture of what you have, what it is worth, and how it is held. Collect and organize documents related to assets, liabilities, insurance, bank accounts and retirement plans. Identify all of your liabilities or debt owed. This information is necessary to advise you on matters related to income and estate taxes as well as how title to these assets may be changed with respect to the plan that is created for you.

Next, you will want to consider the person(s) you would want to play a part in your planning. Who will manage your assets when you are unable to do so for yourself or after you pass away? Who will make medical decisions for you in the event you are unable to make them for yourself? Often, clients name adult children to serve in these capacities, but selecting a child is not always the most appropriate choice. For example, serving as the Trustee of a Trust or Executor of a Will is often time and labor intensive; most people who have served as an Executor or Trustee will tell you it’s akin to having a second job. Think carefully about why you are selecting the individual to fulfill this role and how your selection may affect others who may play a part in your planning. Will this person have the time to serve in this role? Can this person be relied on to be proactive in the management of your personal and financial affairs? Will the selection of this person create conflict between siblings or relatives? Be prepared to discuss your choices with your estate planner and the reasoning behind your selection.

Finally, take an active role in the creation of your estate plan. I often have clients who come in for changes to an estate plan who tell me they never really understood what the documents said when they signed them. The benefits to creating and maintaining an estate plan is it ensures that YOUR estate will be distributed according to YOUR wishes, so be sure to tell your planner what matters to you, ask lots of questions and raise concerns.

 

You may contact Heidi Bitterman at the Law Offices of Donald P. Schweitzer, 201 So. Lake Ave. in Pasadena. For further information call (626) 683-8113 or visit http://www.pasadenalawoffice.com/.