Everyone needs an estate plan. Even if you do not think your estate is large enough to matter. Because without an estate plan, your State determines who your beneficiaries are and who will inherit your assets. Now these persons might be the same people you want to give your assets to upon your death, but it may not be the way you want your estate distributed upon your death. Estate Planning is the process of planning your estate and how it will be distributed and to who upon your death. In the simplest estate plan there will only be a Will along with powers of attorney for healthcare and property. For most individuals and couples their estate plan will also consist of a Revocable Trust. The Trust/Will combination will be most client’s main estate planning documents. For others, these documents will be the basic building block of a more sophisticated plan depending on the value of the client’s gross estate and how and to whom it will be distributed upon their death.
The first step in the estate planning process is to have the clients prepare an inventory of their assets, describing how their assets are titled, the named beneficiary on the asset if any and the fair market value of the asset. It is crucial to know the type and value of all the client’s assets in order to formulate the best estate plan for the clients. Next we discuss the client’s family and how the client wants their assets distributed upon their deaths. This will include discussions on whether to distribute the assets outright upon their deaths or to hold the assets in trust for the benefit of the beneficiary and for how long. Lastly we discuss who shall be named as successor trustees, executors and agents to the clients in the event of the client’s incapacity or death. We suggest clients choose at least two successors to each other to fill these roles. Sometimes a client does not have or can not name a trusted person to act as the successor and then the conversation must turn to choosing a corporate successor to fill that void.
Once the estate planning documents are signed, nothing else usually needs to be done if the client has only a Will. But, if the client has established a revocable trust, then those trusts need to be “funded”. Funding is the process where the client’s assets are re-titled into their name, as trustee of their revocable trust. We work with clients to properly re-titled their assets. We prepare the Deeds in Trust to transfer their real estate into their trusts and draft letters of authorization to the holders of financial assets to retitled those assets into the client’s revocable trusts. This process of “funding” the trusts is the most important step in the estate planning process, for if the client’s assets are not put in the trust’s name, those assets can become probate assets upon the client’s death and thus a Probate proceeding may be necessary, thereby negating the planning to avoid the costs and delays of Probate. Don’t let that happen- if you have a trust you MUST always “Fund” that trust.
Estate Planning is a dynamic process. The worst thing a client can do after setting up an estate plan is to put the documents in a safe and forget about the elements of the plan. We encourage clients to take a mental inventory of their estate plan at least every three years, or sooner if there has be a birth, death, marriage, divorce, income change or major illness of a family member and/or a beneficiary. If there has been a change in circumstance with the client, we will gladly discuss that issue with the client at the client’s request and help them decide whether they need to make any changes to their estate plan.