Where There's a Will, There's a Say
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Most Americans don’t have a will or trust, so if you haven’t gotten around to putting one in place, you’re not alone.   Maybe you thought you were too young to need a plan or you’ve known you needed a plan but just haven’t made it a priority.  Regardless of the reason for not having a plan, no excuse will matter if you become incapacitated or die.   You don’t want to lose control of having things done your way nor do you want your family to go to court to be able to take care of you, your finances, or your children.   So, here are the answers to some frequently asked questions to get you moving.

How bad will it be if I don’t have a plan?  If you don’t have a plan you lose control.  You don’t get to choose who receives your assets and you may not like your state’s default estate plan.  You might be surprised to learn that without a plan your spouse might have to split your assets with your children, and if you don’t have a spouse or children, then your assets will likely pass to your parents and then siblings.  Another downside to not having a plan is that handling your affairs will be more difficult and expensive than if you had a plan in place.    An estate plan prevents the court from needing to intervene to allow your family to care for you on incapacity or to distribute your property on death.

Do you have children?  Losing control is a huge issue here because it doesn’t matter if you’ve asked key people to be guardians—if you don’t have a will you don’t get to tell the court who you think would make the best guardians for your children.  Even if the right people get appointed as guardians, without a plan you’ve lost the ability to specify how assets are used for their benefit.   Even worse, once your children reach age 18 they get complete control and few parents think that’s a good idea.

What is it like to work with an estate attorney?  During your first meeting with an attorney you’ll be asked key questions such as:  Do you want your children to inherit equally?  At what age do you want your children to control their inheritance?  Do you have any concerns about how certain beneficiaries might handle an inheritance or want to treat beneficiaries differently?  Do you want an inheritance to stay protected from creditors or spouses?  You’ll also be asked who should make financial and health care decisions on your behalf if you were unable to make them yourself, be asked who you would want to serve as guardians for your children, and be asked who should administer your plan on your incapacity or death.   You’ll typically receive drafts of your documents within a few weeks and sign your documents shortly after your attorney makes any requested changes.  The last key step is to title your assets as instructed by your attorney.

Attorneys typically charge $3,500-$6,000 for an estate plan.  While this isn’t an expense anyone wants to pay, it’s far less than what your family pays to go through the courts to take care of you or distribute your assets on your incapacity or death.  Note that the $6,000 plan isn’t necessarily better but the higher priced attorney might have more experience incorporating interests in businesses or other unusual assets into the plan or creating additional trusts to transfer wealth at a reduced tax cost.

What documents make up your estate plan?   You’ll need several documents to handle issues that arise on incapacity or death which means your estate plan will likely consist of the following:

Living Trust.  The living trust lays out your wishes regarding how property should be managed by the trustees appointed to act on your death or incapacity.   Property in the trust passes outside of the court and avoids the often expensive and time consuming process of the court distributing property known as probate.  During your lifetime you transfer title to assets to your trust so that on the event of your incapacity or death your successor trustee can manage your assets according to your wishes as expressed in the trust.   The trust is amendable as long as you have capacity to make changes but becomes irrevocable upon your death.

Will.  In states like California, Arizona, and Nevada where probate is difficult and assets are primarily distributed through a trust you still need a will for other important reasons.  Your will nominates guardians for your children, an executor to pour assets left out of the trust into the trust, and a conservator to act on incapacity.

Power of Attorney for Financial Matters.  While the trustee of your living trust will be able to handle the majority of financial matters on your behalf, some actions might need to be taken that are not under the trustee’s control (e.g., signing tax returns or electing or managing retirement accounts). This document allows you to appoint agent(s) to take specified actions.

Health Care Directive.  This document allows you to appoint the individual(s) to make medical decisions on your behalf and to specify the type of care you want to receive such as pain relief administered if you are terminally ill or permanently unconscious and your preferences regarding organ donations and other final arrangements.

Who should know about my estate plan?  Unlike what we see in the movies, it’s in no one’s best interest to be surprised to learn that they’ve been named as guardian of your children or will be asked to make medical decisions on your behalf.   It’s important to ask those you want to serve as key players whether they’d be willing to take on the responsibility and if they are willing to make sure they have copies of key documents appointing them to act.  We know you will feel great about getting your affairs in order.   Please contact your Beacon Pointe advisor for any additional information you might need to get started on creating your estate plan.


Important Disclosure: This content is for informational purposes only. Opinions expressed herein are subject to change without notice. Beacon Pointe has exercised all reasonable professional care in preparing this information. Some information may have been obtained from third-party sources we believe to be reliable; however, Beacon Pointe has not independently verified, or attested to, the accuracy or authenticity of the information. Nothing contained herein should be construed or relied upon as investment, legal or tax advice. Only private legal counsel may recommend the application of this general information to any particular situation or prepare an instrument chosen to implement the design discussed herein. An investor should consult with their financial professional before making any investment decisions.

[1] In states where probate, the court supervised process of distributing wealth, is not exceedingly time consuming and expensive you may only have a will and not a trust.

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