No one ever likes to admit that some day they will, well, check out of this life. No matter what phase of life you find yourself in thinking about estate planning can be overwhelming and distasteful. Even thinking about a Will or a lawyer can be scary. In Estate Planning It’s difficult to know where to start, to understand what’s important and what’s not, and sometimes even beginning the discussion with family members can cause hard feelings.
There are, however, things that you can do to simplify and streamline estate planning decisions that are low cost, simple, and which will avoid problems and heartache in the future.
Here are a few simple tips:
- Start Simple. Some people will tell you that an instrument called a ‘revocable trust’ is essential for everyone. Several decades ago that may have been true, but in the last few years the estate tax exemption has dramatically increased and fewer people have estates large enough to require this kind of tax planning. Instead, start with a simple Will. Every person should have one because otherwise the laws of the state in which you live will decide how your property is divided.
- Think About Your Health. It’s important to have a document called a “living will” or “advanced health care directive”. The purpose of this document is to allow you to make in advance certain health care decisions before you become incapacitated. Not only do these documents ensure that your desires are carried out, they also relieve your family members and friends from difficult end-of-life decisions that can be emotionally troubling or even end up in the judicial system.
- A Trust – Is It For Me? A revocable trust is an instrument that avoids the need to go through the probate process involved with a Will. It simplifies and streamlines the settlement of a person’s estate, and keeps most of the persons affairs private, instead of becoming part of a court record. It can also have advantageous tax consequences if your estate is very large (in the multi-millions of dollars.) A trust also requires some on-going work throughout your life. A trust must be ‘funded’, which means you would need to transfer property into the trust (real estate, other large assets, etc.) and keep up that process as you acquire additional assets through your life. A trust is not for everyone, but it might make sense if your estate is large and you’re comfortable with the on-going requirements of making sure property is owned in the name of your trust.
- Be Specific. Estate planning is not the time for wishy-washy language – be specific. It’s always a good idea to state very clearly exactly how you want property to be divided, sold, or disbursed among your friends and family. People often forget items that might have emotional attachments for family members. Making specific bequests can avoid confusion and hard feelings after your death.
The most important part of these estate planning ideas is that you should think ahead, and communicate. Surprises are always the enemies of a good estate plan. Identifying family members who will be responsible for executing your will (or administering your trust) is essential. Communicate your desires accurately, thoroughly, and with as much specificity as possible.
Good luck!