Our Estate Planning Blog provides answers to some of your most difficult questions regarding wills, trusts, inheritances, aging, and the legacy you leave behind. In addition, our site features practical information on estate planning, probate, financial planning, and long-term care, including topics such as:
WHY WE FAIL TO PLAN
One of the primary reasons most Americans fail to get their affairs in order is they don’t understand the consequences of failing to make an estate plan. While most people genuinely want to protect and provide for their partners, children, pets, and other loved ones, there is a lack of understanding about the serious problems that arise when someone dies without a will or becomes disabled without having a power of attorney or living will.
Another reason most Americans don’t make an estate plan is because it is thought of as something only wealthier people do. Many Americans associate estate planning with estate taxes, complex trust agreements, disputes over inheritances, and high-priced lawyers. While families with larger estates or family-owned businesses certainly have a strong financial incentive to create a thorough succession plan, issues such as title to property, family legacies, spousal support, financial planning, end-of-life care, and last wishes are just as important to families with smaller budgets. While Americans may have the perception that making a will or power of attorney is costly, the most important estate planning documents can be created very inexpensively for someone with a smaller estate.
For some individuals, making an estate plan seems overwhelming, intimidating or just too complicated. They may want to put their affairs in order, but simply have no idea where to start. It doesn’t help that the legalese used in wills and trusts is often archaic. And if you are ambitious enough to start an estate plan, you will quickly find there are many questions to answer. The decisions people have to make when deciding how to distribute the property they have accumulated over a lifetime are not easy ones to make. For parents considering leaving unequal shares of property to their children or disinheriting a child, it can be difficult to finalize an estate plan. It can also be difficult to decide whom to trust with your children, pets or property when it comes to appointing a guardian, trustee or agent. Matters such as withdrawal of life support and where to be buried are not easy to think about either.
Despite the legitimate reasons people fail to make estate plans, many baby boomers and seniors are living through experiences right now that illustrate why estate planning is essential. Whether you have watched a parent or partner suffer a terminal illness or seen a family torn apart by siblings fighting over an inheritance, you probably already know you don’t want it to happen to you or the people you love.
Fortunately, there are many ways you can make an estate plan today and most of them are very affordable. While the preferred option for making a will or trust is still to meet with an experienced estate planning attorney, there are also books, online forms, and legal self-help services that can help you complete the more basic elements of your estate plan. Putting your intentions and wishes in writing can be very empowering. It gives you the opportunity to make charitable bequests or provide for someone that means a lot to you. After you execute your estate planning documents, you will have a great sense of satisfaction and relief in knowing you are in control of your property and your medical decision-making. For assistance getting started with your plan, check out the rest of our site.
WHAT HAPPENS IF YOU DIE WITHOUT A WILL?
If you die intestate (without a Will), the laws of your state will decide who gets your property. The result may be surprising to you or seem unfair in some instances. For example, in some states, your surviving spouse would only receive a life estate in the property you leave behind, with the children being the true owners of your property. In other states, your surviving spouse would receive one-half and your children would receive one-half. If you have no children, your surviving spouse may have to share your property with your parents or siblings. If you have no living relatives, your property passes to the state. If you die intestate, nothing is left to charity or for the care of your pets and you may be subject to more estate taxes than if you create a good estate plan. Finally, if you die without a will that leaves instructions for your final arrangements, the right to control the disposition of your remains may be given to a person you would not want to handle your funeral, cremation or burial.
REAL LIFE ESTATE PLANNING NIGHTMARES
The news headlines are replete with stories of wealthy people that clearly had the means to set up an estate plan, and had children whom would have benefited from such a plan, yet failed to do so. The recent death of NFL quarterback Steve McNair is just one example. The Associated Press reported on July 16, 2009 that McNair reportedly died without a will, and that he has two sons from his marriage to Mechelle McNair and two sons from a prior relationship. McNair's failure to have an estate plan after amassing a reported $75 million in NFL contracts makes a tragic situation even more so.
Everyone can benefit from a properly executed estate plan, but in situations such as this where minor children are involved, you want to make sure you've done everything possible to provide for your children's welfare. The Nightmare: Dying Without A Will is one woman's story of what she faced when her husband died without a will.
LIVING LONGER AND MAKING PLANS FOR A COMFORTABLE FUTURE
Ensuring you have a secure future in old age depends in large part on proper planning now. Nevertheless, it is human nature to avoid this type of planning because of the "it will never happen to me" attitude. Unfortunately, this failure to plan all too often results in seniors living in large homes they cannot maintain. By the time you realize you need to be in assisted living or a long term care facility, it is often extremely difficult to downsize, in part due to health problems some seniors face.
In addition, it is essential to accurately estimate the costs of long-term care. This is best done by working with a financial planner. Even if you don't intend to go to a nursing home, long-term care insurance can pay for you to have in-home care and help you maintain your independence.
Our site features numerous resources to assist you in long-term care planning. A few of the best books on the subject include:
YOUR PETS ARE COUNTING ON YOU
Your pet is your best friend and relies on you completely. After you are gone, what will happen to the animals that depend on you? Pets are treated as property under the law. Do you have a written agreement that specifies what will happen to your pets and animals when you die? Will your pets go to someone you trust to provide them a good home? Have you discussed it with the person you want to take your pets if this happens? If you treasure your pets, check out this eye-opening book on the possible life your pets face if you fail to include them in your estate plan: PerPETual Care: Who Will Look after Your Pets If You're Not Around?
FINANCIAL PLANNING AND YOUR ESTATE
Your financial plan should take your estate plan into consideration, and vice versa. For example, if you have accumulated significant assets, you may be concerned about estate taxes and how they could reduce the amount received by your children or other heirs. Through proper financial planning, you may be able to implement a gifting strategy to minimize estate taxes. If you own stock that has appreciated in value, a financial advisor can help you determine if the stock could be used in your annual charitable giving or as a gift to your children in a way that benefits your tax situation. You may be able to minimize estate taxes by learning more about the marital deduction, the unified credit, and certain types of trusts used in estate planning.
You may want to review the beneficiary and pay on death designations on your bank, brokerage, and retirement accounts to ensure you properly named any individuals, trusts, or organizations you want to receive these assets. A financial advisor or personal banker should be able to assist you.
Life insurance is also an important consideration in both estate and financial planning. If you are saving for a child’s college fund, you may also ask whether you have adequate life insurance for your child’s education, medical, and living expenses. Life insurance is also a key consideration in providing for a surviving spouse or dependent parent.
Life insurance trusts are sometimes used as a way to fund estate taxes. This can be especially useful where there is a desire to avoid the heirs having to sell an important asset, such as the family business or real estate, in order to pay estate taxes. Because of the important role life insurance plays in estate planning, it’s important to work with a knowledgeable financial advisor to explore your options.
If you don’t currently have a financial advisor, there are many online resources to locate one. NAPFA.org is an association of fee-only financial advisors. A “fee-only financial advisor” charges a flat fee for their services, rather than being paid from the sale of mutual funds, stocks, annuities or other financial products. If you want to begin educating yourself on some of these issues before you speak with an advisor, here are some guides to get you started:
WILL AND TRUST DISPUTES MAKING HEADLINES
Hardly a day goes by without another celebrity's estate making news. The estates of the rich and famous may be larger than those of most Americans, but the problems they face in planning their estates are often very similar to our own. As the battles over their estates make headlines, it illustrates how important it is to have a well-drafted estate plan. To read about some of the most newsworthy cases, click here and visit our Estate Planning Blog.
COMMENTS, QUESTIONS, AND FEEDBACK
We enjoy hearing from our readers and receiving your comments and suggestions. If you have comments about how our site can be improved or would like us to address a particular estate planning topic, click here to contact us.
WHY YOU NEED AN ESTATE PLAN
There are several reasons you should have a will, and in some cases, a living trust. If you have minor children and fail to make a will, they will be raised by whomever the court appoints, rather than someone you name in your will. If you have pets, but don’t make any provisions for them by creating an estate plan, your pets could go to an animal shelter and be euthanized. If you want your property to go to your spouse, children, other family members or charities in certain amounts, the only way to ensure that happens is by executing a will or trust. Finally, if you want any control over what happens to you if you become incapacitated or are in a vegetative state, you must execute a living will or health care directive to let your physicians know your wishes.
JUST A FEW DOCUMENTS CAN MAKE A BIG DIFFERENCE
By executing just a few documents, you can: (1) name a guardian for your children; (2) arrange continuing care for your pets if they survive you; (3) set aside money for your dependents; (4) provide for children from a prior relationship; (5) reduce estate taxes; (6) make a gift to a charity or college; (7) create a succession plan for your business; (8) plan for long-term care; (9) designate an agent to make medical and financial decisions for you; (10) make critical decisions regarding life-sustaining measures; (11) outline your intentions regarding organ donation, cremation, burial, funeral arrangements, and other last wishes; and (12) make things easier for your partner and other family members after your passing.
PROTECTING YOUR CHILDREN
While everyone should have an estate plan, for parents raising minor children, unmarried couples, and parents raising children in a second marriage, estate planning is even more critical. If you have children from a prior marriage, are a stepparent or part of a blended family, you need an estate plan that provides for the distribution of your property according to your wishes rather than the law of intestacy. It's also important to understand the inheritance rights of your biological children and any stepchildren.
If you are a single mother or single father responsible for minor children, it is especially important to have adequate life insurance, make a will naming a guardian for your children, create a living trust for the management of your child's property while he or she is a minor, and to designate beneficiaries on all your accounts. To learn the Top 10 Estate Planning Steps for Single Parents,click here.
IS YOUR DOMESTIC PARTNER PART OF YOUR ESTATE PLAN?
You may consider your domestic partner the same as a spouse, but in most circumstances, the law does not. Your domestic partner may be the father or mother of your child, yet he or she could lose rights to the home you share and other property held in your name, if you die intestate, meaning without a will.
If you are part of a same-sex or unmarried couple, you and your partner should take steps to protect your property and ensure you are able to make medical and/or financial decisions for each other, if you so desire, in the event one of you becomes seriously ill. Also, in the event of your death, your partner may not have the right to control your final arrangements if the right documents are not in place. Executing the right agreements and other documents is especially important if you are part of an unmarried or same-sex couple because in most states, the law simply does not provide the protection or rights you might want for each other.
If you live in a state that recognizes civil unions or registered domestic partnerships, the laws of your state may make certain legal rights and benefits available to your partner, but only if you comply with the applicable requirements of registering your domestic partnership or formalizing your civil union.
WHAT HAPPENS TO YOUR BUSINESS WITHOUT YOU?
Is your family dependent on the income from your business? Have you spent years building a company that is not set up to run without you? Do you want to leave your business to your children? Do you have a business partner with ownership rights in the company? Have you and your business partner or the co-owners of your business signed a shareholders' agreement or buy-sell agreement? If any of these issues are a concern, you may need to develop a business succession plan. Because the agreements and issues involved in estate planning for a business are complex, it’s important to consult an attorney when developing a business succession plan.
If you’d like some reference materials on business succession planning, here are a few to check out:
HOW TO START YOUR ESTATE PLAN
There are many different ways to make an estate plan. First, you must decide what type of estate plan is right for your situation. If you own a small amount of property and have a clear idea about whom you want to inherit your property, you may need only a basic estate plan. If you have a large amount of property, are concerned about estate and gift taxes, or want to exercise control over how your property is used when it passes to your heirs, you will need a more complex estate plan that requires assistance from an estate planning attorney and a tax advisor.
After you have an idea what type of estate plan you need, the next step is to decide what method you will use to create your estate plan. If you need a complex estate plan, the starting point is to make an appointment with an estate planning attorney to get advice about the documents required to carry out your estate plan.
If you need a basic estate plan, you may consider a variety of options for creating your estate planning documents. Even if you only need a basic estate plan, the recommended starting point is to meet with an estate planning attorney to learn about your options. If you cannot afford to hire an attorney, contact your local bar association or legal aid office to find out if there are any pro bono programs, free legal seminars or legal aid services to help you make a will, health care directives, and power of attorney. You can also find out about self-help legal services that allow you to create your estate planning documents online or purchase a do-it-yourself will kit from a bookstore.
If you use any method other than meeting with an estate planning attorney, it is important to understand the limitations of what you will receive. When planning your estate, there is no substitute for the advice of an experienced, licensed legal professional that has completed the education and training to become a qualified practitioner. Any estate planning method other than using an attorney will be of lesser quality and subjects you to the risk of serious errors in your estate planning documents that could cause your estate to be reduced due by estate taxes, probate costs, and attorneys’ fees, as well as the possibility your estate planning documents will be declared invalid, resulting in your property going to someone other than your intended beneficiaries.
If you attempt to create your own estate planning documents, it is also important to be realistic about your own personality and skills. If you are an extremely well-organized, detail-oriented, and disciplined person, you have a better chance of following through on the paperwork and formalities required to complete your estate plan. On the other hand, if you tend to procrastinate, have difficulty understanding legalese, or lack experience using a computer to prepare documents, your best option to complete your estate plan is to rely on a professional.
Whichever method you choose to create your estate plan, Pennyborn.com is a great resource for learning about wills, trusts, estates, probate, financial planning, long-term care, and related issues that are a part of the estate planning process, with over 130 pages of free information and forms. Our site also provides links to companies, firms, and products you can use to start your estate plan, as well as books, forms, estate planning checklists, and other planning tools. If you have questions about the meaning of words used in estate planning or probate, refer to our Glossary of Terms.
Here is a list of resources to help you get started:
EXECUTION FORMALITIES MUST BE FOLLOWED
When it comes to executing estate planning documents, the devil truly is in the details. If you have any doubt about whether you can follow the execution instructions to the letter, then you should definitely have an attorney prepare your documents and oversee their execution.
More often than not, when an individual not trained in estate planning creates his own documents or goes to a notary on his own, one or more important steps will be missed. As a layman, you may have absolutely no idea the importance of the "little detail" you overlooked, or the simple step in having a document witnessed that you failed to follow.
Many people handling the execution of their own documents will innocently miss a step and tell themselves "this will do", when unfortunately their one simple error can make the entire document unenforceable and of no effect. This occurs with great frequency in the case of codicils (known as changes to an existing Will) and amendments to living trusts.
We have many reference materials and resources on our site that address these important details, so remember this is one time when paying attention to instructions is a must. And again, if you feel all the details are just too confusing, locate a qualified estate planning attorney to make sure you get it done right.
HOW TO PROBATE AN ESTATE
If you have been named executor, administrator or personal representative of an estate, you probably have a lot of questions about the probate process and your duties in administering the estate. The first step is to learn about the probate process, become familiar with your duties, and consult the professionals you need to help you settle the estate. Check out our Executor Checklist for a list of some of the most important steps you will need to take as executor.
If you are a newly appointed trustee for a living trust, you will need to learn about trust administration. Visit our page for trustees for answers to some of the most frequently asked questions. You should also review our Trustee Checklist for a list of some of the most important matters you will need to handle as a trustee. We also offer a Successor Trustee Checklist for administering a Living Trust.
FREE ESTATE PLANNING FORMS
Go to our Free Estate Planning Forms page to download and print free documents to help with your estate plan. Our free forms include a Free Estate Planning Worksheet which helps you gather the information you need to start your estate planning documents. The Worksheet also helps you prepare for meeting with a lawyer, tax advisor or financial planner regarding your estate plan.
From our free estate planning forms page, you can download our Free Memorial Preferences Planner to let friends and family know how you want final arrangements made for services such as funerals, cremation or burial.
You can also download a Free Estate Plan Coversheet to organize important contact information and create a list of your estate planning documents for your executor and agent for power of attorney.
To receive an e-mail update when we offer new estate planning forms and guides, click here to send us your e-mail address. Note: Pennyborn.com will not sell or rent your e-mail address or contact information.
is one woman's story of what she faced when her husband died without a will.
