When done strategically and methodically, estate planning can greatly smooth the processes and paperwork that follows a death. Handled improperly or haphazardly (or not handled at all), that process can become a tedious, time-intensive nightmare. Below are a few important do’s and don’ts to keep in mind when you’re thinking about your estate plan.
The Dos
Do cover the essential foundational documents.
Make sure you have a comprehensive plan consisting of a last will and testament (or a revocable trust), and medical and financial powers of attorney. Consider creating a trust to handle certain financial assets or a living will to address end of life decisions. Your estate planning attorney can help you determine what type of trust makes the most sense for you and your family.
Do coordinate your beneficiary designations.
Beneficiaries for bank accounts, life insurance policies, investment and retirement accounts (IRAs or 401ks) should align with your estate plan. Make a list of all of your accounts and triple check your beneficiaries match your wishes.
Do properly fund your trusts.
If you have a revocable trust, keep in mind that an empty trust will not avoid probate. Ensure any real estate, accounts, or major assets that you intend to be handled through a trust are properly re-titled or assigned into the trust name.
Do review your plan regularly and make updates.
Life situations change, marriages sometimes end, and you may outlive a beneficiary. It’s incredibly important to regularly review your estate plan documents and make any updates to keep it aligned to your current situation. Accidental disinheritance can easily happen when an estate plan is out of date.
Do communicate with your family and agents.
An estate plan shouldn’t be a secret that your family has to work to uncover. Talk with your Personal Representative, trustee, and healthcare proxy early so that they understand your wishes and the full scope of the role you’d like them to assume. And let your family members know where your documents are and what they entail so that they don’t have to hunt for them.
The Don’ts
Don’t rely on DIY templates or generic online resources.
There is no one-size-fits-all when it comes to estate planning. Each plan should be tailored to individual circumstances. Estate laws vary from state to state, and generic forms will not address specific state execution requirements, taxation, or special asset structures.
Don’t forget about contingent beneficiaries.
A contingent beneficiary is essentially a backup for your primary beneficiary, in the event that your primary passes away before you or at the same time as you. Without a contingency beneficiary, it will be up to the court to determine the next recipient.
Don’t choose your Personal Representative or trustee out of a sense of obligation.
Just because a person’s status or birth order may make them seem like the proper choice, you need to consider the entire picture. Are they good with finances? Are they organized? Do they have the emotional maturity to handle the estate administration? Choose proxies whom you trust to perform their duties according to your wishes.
Don’t underestimate tax implications or digital asset organization.
When you’re considering how your assets will be distributed, make sure to factor in potential estate or income tax burdens from retirement account distributions or large estates. Also be sure to inventory digital accounts, passwords, and online assets and provide instructions for access.
Finally, don’t procrastinate.
The worst estate plan is no estate plan. No one knows when a health emergency may occur, and waiting to get your house in order puts you and your beneficiaries at risk. It’s never too early to create your estate plan. Taking the time to do it when you’re young and healthy allows you to make clear-headed, well thought out decisions.
Snow Atkinson Griess, LLC can help you create and update your estate plan.
Our estate planning attorneys have the knowledge and expertise to craft a comprehensive estate plan, as well as review and update an existing plan, to ensure it meets your needs while protecting your assets.