Estate planning is a topic that can seem intimidating to many people. But the reality is that estate planning can be as complex or simple as you want it to be. At it’s simplest definition, estate planning is:
The discussion and implementation of a plan that sets forth how your wealth will be distributed when you pass away.
For most people, estate planning will require information regarding bank accounts, retirement accounts, life insurance policies, annuities, investment accounts, etc. By its very definition, estate planning determines how one’s assets will be distributed upon their passing; therefore, a detailed asset review is absolutely critical prior to implementing a plan.
Families that do not actively engage in planning tend to have one trait in common: fear. We work our entire lives in order to ensure that we can provide for ourselves, our spouses and our families in the event of something happening to us. Although earning these assets tends to be the hardest part of the process, many family members often skip the vital last step in ensuring that these assets pass to whomever they are supposed to: planning.
Nine times out of ten, sitting down with an estate planning attorney will result in a brief 30-minute meeting where your attorney will ensure that your assets will correctly pass to your loved ones in the event that you pass away. These steps are as simple as checking beneficiaries on all life insurance policies, discussing probate vs. non-probate assets and ensuring that all of your legal documents are up to date to distribute your wealth exactly as you intend.
Although most asset reviews go extremely smoothly, there are instances where errors that are discovered could have had extremely dire consequences on the individuals’ estates. For example:
Mr. Smith has a large retirement account worth $250,000.00 that he wishes to leave to his children, Robert and Kevin. Unbeknownst to Mr. Smith, the sole beneficiary on said account is Mr. Smith’s wife, Mrs. Smith, who passed away in late 2015; there are no contingent (i.e. backup) beneficiaries on file. Because Mr. Smith believed that this account would automatically be paid to his children upon his passing, his Last Will and Testament dictates that his entire probate estate shall be bequeathed to the March of Dimes.
If Mr. Smith were to pass away tomorrow, his entire $250,000.00 account would be made payable to the Estate of Mr. Smith, which in turn would then be given to the March of Dimes pursuant to the wishes of his Last Will and Testament. Mr. Smith’s children would receive NONE of the aforementioned account.
In a situation such as Mr. Smith’s, above, a simple 30-minute meeting with an estate planning attorney would have immediately rectified this issue and ensured that his wealth was distributed exactly as he had intended.
“Do It Yourself” estate planning may offer similar shortfalls as the above example. Although you may be able to provide yourself with the physical documentation required when undergoing estate planning, the DIY portion of the process removes the knowledge and expertise of a legal professional who does more than provide you with documentation. He or she will also provide you with a bevy of knowledge regarding asset distribution and end of life decision making.
Here’s an example, did you know that a standard power of attorney that is prepared using a basic form may limit your agent’s ability to appropriately engage in long term care planning? It sure will as most standard power of attorney documents limit gifting to $500 per year, total. If you or someone you love were to require governmental assistance in regard to nursing home care, proper planning techniques would call for the gifting of funds far greater than the $500 amount that is included.
If you or a family member are interested in discussing estate planning with an attorney, please feel free to contact our office in order to schedule your initial, free consultation. We strive to provide convenient and affordable estate planning, no matter your age; because you should be busy enjoying life, not wondering about the ‘what ifs’.
Related Topics: Estate Planning