Recently one of my estate planning clients (a lady in her 40s) stated that she was concerned about whether her parents had taken care of their finanical affairs or not. She was genuinely concerned, and not for any selfish financial reasons. She was concerned about how things would be left for her mother if her father died without proper estate planning.

This issue of discussing estate planning with your parents can be difficult, emotional, and stressful. However, that discomfort pales in comparison to the financial pain family members can feel if parents die without having estate planning strategies in place. When parents do not leave a proper estate plan in place, the difficulty of dealing with the fallout, including the probate process can add to what is already an emotional situation for the surviving family members.

Initiating the discussion is possibly the most difficult task. Some may see it as the first step toward relinquishing control over personal affairs. To the contrary, estate planning is about providing more control to the estate owner, rather than less. Here are some things you may want to consider to ensure an effective discussion:

Choose a comfortable setting, arrange a time and location that are convenient, and limit distractions. You should suggest a group discussion with siblings or other family members. You should stress how important the topic is and encourage those involved to air issues and concerns honestly and openly. Concern for elderly relatives’ future well being should be expressed and you should emphasize the need to implement a plan that will effectively serve their needs and wishes.

For my client, the easiest way to broach the topic was to tell her parents about the planning she had just done and the peace of mind that it gave her. That gave her a natural opening to discuss her parents’ own situation.

So, perhaps the best way to discuss estate planning with your parents is to get your own estate plan taken care of first!

It’s never too early to being crafting your estate plan. Admittedly, planning for your own inevitable death can be an eerie feeling. However, once that feeling passes, having an estate plan in place will leave most people at ease. But when should estate planning begin?

The answer is, whenever you begin accumulating assets or have a child. Even if you are in your early 20s, you should consider creating a will or trust. If you are a home owner or contribute to a retirement fund, having an estate plan is a must. The process is not as much about staying out of probate court as it is about keeping things simple for your family.

Age isn’t much of a factor in estate planning compared to your financial and family arrangement. The questions are how do you want your assets to pass and to whom.  Are you making the proper arrangements for your minor children to be taken care of if something were top happen to you.

Additionally, through proper estate planning you will also make sure you establish a healthcare directive or a living will. This will allow you to make sure your end of life decisions are made according to your desires if, for example, you are on life support and can’t make them for yourselves.

I was recently asked the following estate planning question by a nice couple who had moved to Alabama.  I thought the question and the answer would be beneficial to my blog readers.  In this case, the information could prove helpful whether your estate plan is for Alabama or not.

Question: My son is 100 percent disabled and is currently receiving benefits for Social Security disability and Medicare. We want to leave our assets to him after our deaths. We want the funds to be administered by our daughter, whom we hope to have as his caretaker after our passing. Is there a way we can go about this so that the proceeds from our estate will not interfere with his income from disability and his Medicare benefits? We also would like for our daughter not to be required to pay income taxes on money that will go to our son.
Answer: Before doing anything about your assets, will, trusts, etc., you should seek the services of a competent estate planning attorney. It very well could be that if the money is left to your son, his benefits may be endangered. That would be tragic. There are ways to plan for this, perhaps through a Special Needs Trust.

However, you mention that you “hope” for your daughter to become his caretaker. Have you discussed the matter with her? These are all things that need to be taken into consideration. The actions you take will have some bearing on whether or not taxes will be paid. Again, this is a clear case for a competent estate planning attorney, who you should have a consultation with before making any definite decisions.

Estate planning is not just for those that are rich; it applies to the majority of us also. Simply put, there’s more to it that simply drawing up a will. It’s also a process to help make the proper arrangements for a person’s total assets to be protected for the sake of his family and loved ones. In our practice we make a point of helping our client’s also capture and transfer their intellectual, spiritual and human assets in addition to their financial assets.

Additionally, through proper estate planning, one’s estate can be protected from wasteful or irresponsible beneficiaries. These are all reasons to have an appropriate will and estate plan regardless of the amount of your wealth.

One of estate planning’s basic goals is to make sure your assets are transferred to your loved ones in the manner you wish them to be upon your death. If you do not have a proper estate plan in place, those who you wish to benefit the most could be left out, even if your wishes have been made clear during your lifetime.

Having an estate plan is the only way to have peace of mind that all of your affairs are in order and your property will be passed on to the next generation in the manner you wish.

Despite popular belief, the wealthy are not the only ones estate planning, including the creation of a will, is meant for. Many people do not have an estate plan because they believe their wealth is not great enough for one to be necessary.

However, discussing death and dying with family members can be one of the most difficult conversations to have. Many lawyers and financial planners will use estate planning checklists to help you initiate the process and know your assets.  I recently stumbled across a checklist that Huntington Bank put on the web that could help you organize your own financial planning if you are not using a lawyer.  It can be found here.

Those who will be transferring wealth should have an understanding where they currently stand in terms of net worth, what they own, how they own it, and what they wish to happen upon their passing.

If you die without having an estate plan in place, it means that no final decision on how your assets, including amounts and percentages, will be distributed. The state makes those determinations if you do not have a will.

In the case of a person dying without a will, a personal representative is appointed by the court to find the assets and heirs of a decedent, often an expensive, time-consuming process. The assets are then distributed according to state law.

According to Dan Keady, director of financial planning for TIAA-CREF, a national financial services company, without an estate plan, property and financial assets might not go to the persons you intend them to go to, since the law decides the recipient.

If it is the intent of an elderly parent for an adult child caregiver to obtain ownership and live in their house, but he or she dies without having a will in place, the court may order that the house be sold and the proceeds be equally divided among the children.

According to Patrick Kennedy, TIAA-CREF’s head of wealth management services, even if your estate is small, you have some basic things that can be done, such as being certain you have an inventory of your assets.

I am constantly surprised by the number of people that do not have a will. According to the most recent stats I have read, seven out of every 10 Americans will pass away without preparing any kind of estate planning documents. Estate planning is a necessary way to ensure that your wishes are met after your death.

By having a will, you can be certain that your assets will be distributed to the individuals you wish to receive an inheritance from you.

Second, who will receive your tangible personal property, such as family heirlooms, is addressed by a will, a crucial part of maintaining family harmony.

Third, any gifts you wish to be left to specific individuals or charities should be detailed in a will.

Finally, after debts and expenses are paid, the recipient of your remaining assets should be outlined by a will.

If you are a parent to minor children, it is even more critical that you have a will.  This allows you to name the individual you wish to serve as the guardian of your minor children, should both parents be deceased. A trust can also be established for minor children or those who have poor financial management skills to make sure the inheritance your child receives is spent the way you would want it for their benefit.

A will cannot control non-probate assets like joint bank accounts which means that upon your death, the joint owner becomes the full owner. For this reason, ensuring that all accounts and property are titled to your wishes is also very important.  Your estate planning lawyer should make sure your will, any trusts you have and your non-probate assets are all coordinated to carry out your true wishes.

In times when family members are in distress over a loved one’s death, moving on can be made easier by having a will in place.

Question: I have a will leaving everything I own, including a substantial inheritance from my mother, to my husband. However, I have two adult children from another marriage and I want to ensure that they are also provided for. I have a verbal agreement with my husband that if I am the first to pass away, he will use his judgment to distribute assets to my children and name them as beneficiaries of his own will. Is this enough to provide for them?
Answer: No! In fact, your current plan is a recipe for disaster, since your husband has no obligation to distribute anything to children from your other marriage.
Your husband could remarry after you pass away and end up leaving everything to the new wife, moving your assets out of your family. Or, he could leave more of the assets to his own children and not provide as much to your children as you would have liked. It could cause your children to feel that you didn’t care about them enough to leave part of your legacy to them.
Even if that scenario doesn’t take place, your husband’s own estate plan could be jeopardized due to the federal estate tax. After his death, if the combined value of both of your assets exceeds estate tax exclusion amounts, his estate could be subject to estate taxes (which means the assets you left to him will be taxed as  part of his estate.

This potential disaster is not difficult to avert. Here’s one possible solution:
Establish a revocable living trust that would hold the assets during your lifetime. This would remove them from probate which would simplify and expedite the transition. The language of the trust can say that after you pass on, some assets are to be left outright to your children or in a trust for their benefit.
Any remaining assets could be left in a trust for the benefit of your husband, allowing him to receive income from the trust and be given the discretion to distribute principal if necessary. Upon his death, your children would have the assets distributed to them.
Your desire to ensure your husband is provided for would be honored by this solution, but wouldn’t allow him unlimited control of the assets.