Estate Planning Is About Knowing Your Priorities

Thinking about the world and how our loved ones will fare after we pass away can be very difficult. Although we all know that we will pass away at some point, this is not something most people like to dwell on. However, by proactively planning and prioritizing your goals, you can craft an estate plan that allows your wish to provide the best future for your loved ones to become a reality. The first step in creating an estate plan is to consider your priorities. Your goals and wishes will be unique to your circumstances, the needs of your loved ones, and your desires to support your favorite charities.

Getting clear on your priorities is important to the estate planning process because we need to work together with your other advisors to ensure that you have enough money and property at your death to carry out your wishes. This coordinated effort will also help ensure that your wishes do not contradict each other or create any significant issues.

Some Common Priorities You May Consider

Look at the following list and see if any of these priorities resonate.

Do I want to avoid Probate?

Many people want to help ensure their loved ones never have to file paperwork with the probate court or navigate the often-stressful probate process. Probate can be expensive, time-consuming, and public. It can also be difficult for a loved one to manage while they are grieving. On the other hand, some people appreciate having a neutral third party (like a probate judge) oversee the winding down of their affairs in the event there may is a conflict.

Do I want to avoid a conservatorship or guardianship?

Estate planning is not just about what happens when you die. There may come a time when you are alive but unable to manage your own affairs (this is commonly referred to as being incapacitated). If you have not legally appointed someone to manage your finances or make medical decisions for you, your loved ones may be forced to appear before a judge and petition to have someone appointed to take on these roles. This process can also be expensive and time-consuming and is public as well. However, if there has been a lot of familial flighting, a neutral third party may offer the consistency and oversight needed.

How can I make any post-death administration easy on my loved ones?

One of the reasons people have an estate plan is to make things easier for their loved ones. By having a clearly-designed estate plan (with legally enforceable tools such as a will, trust, or other instrument) your loved ones can follow your instructions and hopefully have a peaceful administration after you pass.

How can I ensure my loved ones have everything they need?

How much your loved ones need will depend on their unique circumstances. If you have a loved one who will require a lot of care (a minor child or family member with special needs), they may end up taking a majority of the inheritance you leave behind, which means that there may be less money for other things. An estate plan that anticipates these needs can provide a lot of value for your family.

Can I provide and protect an inheritance for my child or grandchild?

Depending on their age and needs, children and grandchildren may not be best served by receiving an inheritance outright. You can instead create a plan so that the inheritances you leave to your beneficiaries are held over time, with distributions being made at certain ages, stages in life, or at the discretion of a trusted person you designate to be in charge. There are many ways to structure these types of inheritances, and you should know the pros and cons of each.

Do I want to protect assets for a surviving spouse?

Providing for a surviving spouse may be at the top of your list of priorities. However, it is important to consider how you want to protect their inheritance. The more protections you put in place, the less flexibility and control your surviving spouse will have over the inheritance.

What if I want to disinherit a family member?

You may want to leave a family member out of your estate plan. Consider how to ensure this is done effectively and whether or not this will create additional headaches for those administering your estate (For example, if you disinherit a family member who thought they might receive something, what are the chances that family member may contest the will or trust? Is there an increased risk that your loved ones will end up in probate court to settle a dispute?). Consider discussing these issues and the best way to protect against any future problems by discussing your goals with an experienced attorney.

How can I best provide for charities?

Whether for tax or philanthropic reasons, giving money to charity can be a great way to leave a lasting legacy. With proper planning, charitable giving can be done in a way that maximizes tax benefits for your loved ones. In many cases, an estate plan can create future opportunities for children and grandchildren to be involved in the charitable giving process.

How can I reduce or avoid any estate tax liability?

Although estate tax only impacts high-net-worth individuals, potential tax liability is always something that you should consider. If you want to include estate tax planning in your estate plan, you may have to decide between saving your loved ones from estate tax liability and retaining control over some of your money and property while you are alive.

How can I limit and reduce income taxes that my trust may owe?

When a trust’s assets generate income, that income is subject to income tax. Unfortunately, a trust reaches higher tax brackets faster than an individual would, so in many instances it is preferable to distribute income to a trust’s beneficiaries. However, in many instances, distributing all of the assets to the beneficiary can frustrate some of the strategic reasons the trust was created in the first place. Careful planning can often build a level of flexibility into your trust that will allow your future trustee (and potentially our beneficiaries) to strategically plan for tax purposes.

How can I avoid fights over my estate?

If your objective is to keep family harmony, especially if you anticipate a loved one may be upset by any aspect of your estate plan, you will want to ensure that your estate planning tools are clear about your wishes. This means you need to work with an experienced estate planning attorney who can counsel you on your options and help you choose the path that will result in the smallest number of conflicts possible.

What You Need To Do to Prepare

You can take the following steps now to ensure that your wishes are reflected in your estate plan and that we can help you create a realistic plan.

Make a list of everything you own and any outstanding debts.

You can prepare a preliminary inventory of all your assets and liabilities to ensure everyone is on the same page regarding how much money may be available at your death. Although this amount may fluctuate with time, a current inventory gives you (and your advisors) a clear picture of your financial situation. Do not forget to include any life insurance death benefits in your calculation because, although you may not benefit from it during your lifetime, it will be part of the inheritances you pass on to your loved ones.

Make a list of your priorities and the people or organizations you want to leave assets to.

Make a list of the priorities that you would like addressed in your estate plan. You can take this one step further by listing the loved ones and organizations you would like to provide for at your passing, an estimate of how much you would like to provide to each, and how you would like them to receive it. We can discuss these details further, but this will help you by getting all of your thoughts on paper.

Rank your list.

Looking at the notes you made in Step 2, rank each item in order of priority. Should you run short on money, which gifts should take priority? You may be able to fund all of your wishes, but it is good to have a Plan B.

Meet with your trusted advisors. After considering your wishes, meeting with your advisor team is the next step. Each advisor will be able to offer specific insights as to how we can help you carry out your plan. A financial advisor can look at your current financial situation and make investment recommendations to support the gifts you want to make at your passing. An insurance agent can help you acquire additional liquidity to fund your gifts. Your certified public accountant or tax advisor can look at what you currently own and see what strategies can be used to make the most of your gifts. As experienced estate planning attorneys, we can help you craft the important tools in a legally enforceable way that conveys your wishes.

Creating an estate plan can be one of the greatest gifts you give to your loved ones. Schedule an appointment to learn more about how we can design a plan to meet your unique needs.