Ahhh, that fresh newborn baby smell. There’s nothing like it in the whole world. It
makes you forget the sleepless nights, the thousandth diaper you’ve changed today, the crying that rattled your heart as you attempted to inhale that plate of food you called “lunch.” In the midst of caring for your newborn or young child, estate planning may be far down on your list of priorities. You may not even fully understand what estate planning is and that’s OK. We’re here to help you consider the key aspects of estate planning, including:
- Drawing up a will that names a guardian for your child.
- Setting up a Trust.
- Naming the Personal Representative of your Estate.
- Designating beneficiaries for your assets
- Setting up a Durable Power of Attorney and Healthcare Surrogate
- Making funeral arrangements
- Investing in Life Insurance and Long Term Care
Yes, I know you’re busy and that this isn’t a pleasant conversation. For these reasons and others. many of us overlook or postpone estate planning. But making a plan for your assets during your possible incapacity and for after your death will spare your loved ones from courtroom proceedings, high attorneys’ fees and costs, or an unnecessarily large tax bill. Individuals and families who wish to go beyond the basics with estate planning often work with an estate planning lawyer to craft a well-thought-out strategy.
Your Last Will and Testament
Your Will will (there’s just no way around “will will” is there?) handle the distribution of assets. Although choosing the distribution in your Will is a big portion of estate planning, the process doesn’t end there. Estate planning also includes:
Naming a Guardian for your minor children so the Courts don’t have to.
Setting up Trusts for your children or adult relatives who depend on your care.
Establishing Trust accounts in the names of the beneficiaries you named in your will.
Preparing a Wealth and Asset Inventory and analyzing the best way to manage the assets for your beneficiaries’ benefit.
Placing your assets in Trust, which allows your heirs to skip the expensive and time-consuming probate court process.
Naming the Personal Representative of your estate. This person oversees the process of carrying out your will, including the probate process; pays off your creditors and any tax obligations; and represents you in potential estate tax audits or legal disputes among your heirs. You should pick a trusted, responsible person who is close to you.
Beneficiaries for Other Assets
Naming primary and contingent beneficiaries for assets such as 401(k)s, IRAs and life insurance policies is imperative. These kinds of assets require special attention because they’re generally subject to ordinary income tax, rather than the estate tax paid on cash or other inherited assets. As an estate planning attorney, I often work with financial advisors to figure out the tax consequences of your current (and future) investments and how to best structure these investments to minimize taxes and fees for your beneficiaries. For those clients who have already renamed beneficiaries, let this serve as a reminder to check who your beneficiaries are now, and periodically review them. As your life and those in it change, so will your estate plan.
A Durable Power of Attorney allows you to choose someone to act as your agent if you become incapacitated; he or she will pay bills, make transfers and interact with official agencies on your behalf. A Healthcare Surrogate specifically relates to health care decisions. Both are important parts of a solid estate plan.
Drawing up a plan for your assets may not be the most fun of tasks, but your family and loved ones will greatly appreciate it. Many individuals prefer to “DIY” these legal documents using online legal tools. Would you DIY your baby’s medical care? Probably not (unless you’re a doctor, and in that case, you know about specialties in terms of areas of medicine). It is always a good idea to get the help of an estate planning lawyer.
I know it’s a lot to take in. Move forward knowing that, with our hands-on approach, you’re ensuring your loved ones will be best cared for.