Where There's a Will, There's a Say

Most Americans don’t have an estate plan (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, it will not matter if you become incapacitated or pass away. Assuming you don’t want to lose control of having things done your way nor want your family to go to court to be able to take care of you, your finances, or your children, it is time to speak with a qualified estate planning attorney. In the meantime, here are 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 inheritance laws. 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 likely be more difficult and expensive than having a plan in place. An estate plan also prevents the court from needing to intervene to allow your family to care for you upon your incapacity or to distribute your assets upon your death.

Do you have minor children?

If your answer is yes, it doesn’t matter if you’ve asked key people to be guardians of your minor children if something happens to you because, if you don’t have a will, the court will decide whom they think would make the best guardian(s) 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 children’s benefit. Even worse, once your children reach the age of 18, your children will likely gain full access and control of the assets left to them, which few parents think is a good idea at such a young age.

What is it like to work with an estate attorney?

During your first meeting, you will likely be asked to fill out some initial information about yourself and your family. Also, the attorney will likely ask 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 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 could not make them yourself, who you would want to serve as guardians of your children, and who should administer your plan upon 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.

Attorney’s fees will vary based on certain factors, including geographical area, the complexity of your estate plan, and the attorney’s knowledge/experience. Attorneys typically charge an average of $3,500-$6,000 for a married couple’s estate plan. While this isn’t an expense anyone wants to pay, it is typically far less than what your family would pay to go through the court system upon 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 standard documents. Note that based on your state of residence and estate planning attorney, you may need more documents than listed below or different variations of the documents. Also, the documents may contain a different name variation, but the documents’ ideas and purposes should be the same.

Living Trust. A 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 the court and avoids the often expensive and time-consuming probate process. During your lifetime, you transfer title to assets to your trust so that, upon your incapacity or death, your successor trustee can manage your assets according to your wishes as expressed in the trust. The trust is typically amendable if you have the capacity to make changes but becomes irrevocable upon your death. The assets in your living trust pass to your beneficiaries without being included in the probate court process.

Will. Whether you have a living trust or not, you still should have a will. If you do not have a living trust, a will is utilized to, at a minimum, appoint an executor/personal representative to handle your assets when you pass away, determine your beneficiaries and how they will receive their inheritance, nominate a conservator if you become incapacitated, and nominate guardians for any minor children. However, when you have a living trust, your will (sometimes referred to as a pour-over will) usually will name your living trust as the beneficiary of your assets in case any assets are accidentally left out of your living trust. But, you will still appoint an executor/personal representative and nominate a conservator and guardian(s) for any minor children.

Power of Attorney for Financial Matters. While the successor trustee of your living trust will be able to handle the majority of financial matters on your behalf regarding the assets titled in your living trust, the trustee will not be able to handle your financial matters should you have assets that are not titled in the trust or need assistance with other actions 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 an agent to take specified actions with regard to such non-trust assets.

Health Care Directive. This document allows you to appoint an agent to make medical decisions on your behalf if you are unable to make them on your own 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 guardians of your children or will be asked to make medical decisions on your behalf. It’s important to discuss with those you want to serve as key players/agents if they are willing to take on the responsibility and duties that may come with being nominated in your documents. Further, as long as you are comfortable, it is usually recommended that your key players/agents have copies of your documents should they need them to assist you. We are confident you will feel great about getting your affairs in order. Please contact your Beacon Pointe advisor for any additional information you might need to start creating your estate plan.

While not always the easiest task to answer these hard questions and get these pertinent documents in place, we know you will feel relieved about getting your affairs in order. If you’d like to speak to an estate planning specialist, click here – we are more than happy to help.

Important Disclosure: Beacon Pointe Advisors does not offer legal or tax advice. Please consult with the appropriate tax or legal professional regarding your circumstances. This information is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice. Only a tax or legal professional may recommend the application of this general information to any particular situation or prepare an instrument chosen to implement any design discussed herein. Nothing herein should be relied upon as personalized investment advice, nor should it be considered an individualized recommendation, offer, or solicitation for the purchase or sale of any security or to adopt a specific investment strategy. An investor should consult with their financial professional before making any investment decisions. Beacon Pointe is not responsible for errors or omissions in the material on third-party websites and does not necessarily approve or endorse the information provided.

[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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