Take the Edge off Estate Planning
Jim Audet, LIVING WELL Magazine
I recently read that there are three common reasons that discourage meeting with an attorney to discuss your estate plan. First, it forces us to think about our own death. Secondly, most of us are disorganized in our business affairs and we don’t want others to see this. Finally, some of us do not feel comfortable going to talk to an attorney about anything!
If you plan out and address some basic issues prior to the meeting, I promise it will be a lot less painful than a visit to your banker, doctor, or CPA. The benefits of a well thought out and executed plan will provide a peace of mind for you and your loved ones, avoid estate disputes, minimize family disputes, force you to become better organized, and provide benefits for your potential beneficiaries for future generations.
First, gather information about your financial accounts. How are they titled? Who are the owners and signers on the accounts? There is a difference in an “owner” on an account and a “signer.” Typically accounts that are set up as “payable upon death” or “joint tenant with right of survivorship” pass outside of probate. Therefore, the “owner” of the account immediately has ownership of the funds upon your death. This also applies for beneficiaries on any policies, retirement plans, IRA’s, CD’s…any account that has a beneficiary designation. Payments are made to the designated beneficiary upon your death, outside of probate and independent of your will. You can see these beneficiary designations are important and it is essential to make sure you currently have the correct beneficiaries.
Secondly, you know you need a will, but few understand the importance of selecting the right “executor.” The “executor” is the person designated with the task of administering the will’s instructions. The responsibilities include making sure all assets are accounted for, all existing debts and tax obligations are paid, and that remaining assets are distributed to the correct parties in accordance with your wishes. Choosing the correct executor could mean that your beneficiaries will receive their inheritance in a timely manner while the incorrect choice could mean lengthy delays, tax problems and possibly even a will contest.
Your executor can be a beneficiary, family member, friend, or professional with expertise concerning your particular assets. Who you choose must be trustworthy and able to handle the task. Select someone who knows your beneficiaries and can maintain a healthy working relationship with them. This position has a business, organizational and administrative component as well as a personal component. Your executor will go through your personal things and distribute (to those whom you desire) or sell or give them away. Efficiency, organization, patience and diplomacy are important characteristics of this position.
A third issue to consider is who should be your agent on a power of attorney. Not only do you want someone you can trust to pay your bills, but also you may want them to have the flexibility to handle other financial matters. Many financial matters such as selling real estate or stock or investing cash or other assets would have to be handled by someone specifically authorized by you. You are the principal, and you choose the agent to handle any matter that you could have handled. Your agent can transfer title, collect money, sue, spend money, reinvest, etc. However, the agent can only do these things for your benefit.
These are very broad powers, which not only open the door to possible abuse, but also create potential family resentment and suspicion towards this individual’s position. Most frequently problems occur not from abuse yet from poor communication between the agent and the principal’s other family members. The person you choose must be trusted absolutely and must communicate openly and effectively with your family.
Finally, your meeting will also involve a discussion concerning who will make decisions concerning your health care in the event of your disability. First you will want to appoint someone to make decisions on your behalf concerning the type of medical or surgical procedures to be done. Second, if you are diagnosed with a terminal illness, you need to stipulate what extraordinary procedures you would authorize to be performed. Your agent should be a strong person capable of making emotional decisions and be a consensus builder amongst family members.
By taking time to think through these decisions and discussing these with family members prior to meeting with your attorney, you can guarantee a more productive and pleasant estate planning experience.
Jim Audet may be reached at 817-292-2000, or firstname.lastname@example.org.