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Wednesday December 17, 2014

posted by Thomas J. Banaszynski
Tags: Events 

Estate planning can seem like an overwhelming task, but it does not have to be.  Each of us has an estate for which we need to make some plans.  We all have loved ones who need to be part of that estate.  We all have special interests which we may want to address as part of that estate plan.

Here are some basic ideas and guidelines that should apply to every estate plan.  You might use them as a guide, whatever makes up your estate; however, the tax laws might affect your estate.  You can always make changes when the law is changed, or your circumstances change.

Get started and do something.  Too many people do little or nothing because they think estate planning can be overwhelming.  At a minimum, make sure you have a Will, so you are the one to make the decisions on how your estate will be passed down to your heirs or special interests.  Have a Durable Power of Attorney that will let you decide who would be the individual who will make decisions on your behalf, should you become unable to make those decisions.  You do not want to have people fighting over the decision making process; having to involve the court system in that process.  Have a Living Will Directive prepared.  Hospitals and surgeons always ask for one if you are going to have surgery.  Be specific in your directives for end of life medical care.  Be specific in identifying whom you want to make decisions in that regard, if you are not able to make that decision.

Know what is in your estate.  Neither you, nor an estate planner, can make realistic plans if you do not know your assets and liabilities.  It would be a good plan to keep, and update, a complete list of one’s assets and liabilities on an annual basis.  Keep this in a secure a place, maybe even share a copy with the Executor or the Executrix of your Will.  You can update your list at the same time that you might review and rebalance a stock portfolio.

Have a clear idea of cash flow.  List all sources of income, money which will come to your estate.  Remember that debts must be paid.  Lawyer’s fees and other expenses will occur.  Taxes will need to be paid.  Survivors will need money to live on.  Estimate how much money will be available to your estate, before the estate is finally settled, and from where it will come.  Review your assets and life insurance.  Finally, leave clear instructions for the Executor of your estate. 

Choose Executors and Trustees carefully.  All good estate planning strategies can be for naught if the wrong person is implementing those strategies.  Who is the best person to implement your estate plan?  Who is the best person to serve as Executor or Trustee of the estate?  Who would be the best person or persons to serve as a Guardian or Guardians of minor children or a disabled child? 

Try to minimize conflicts.  Sometimes a little planning can minimize conflicts, or significantly reduce them, if they cannot be eliminated.  Clear instructions and clear planning can reduce disputes in the managing of your estate, and its assets and liabilities.  Heirs or beneficiaries of the estate may have very different ideas.  The clearer you make your directives, the easier it will be to avoid conflicts in the administration of the estate. 

There is no perfect solution.  Estate planning is something of a balancing act.  A person needs to decide which asset will be left to what heirs; will they be left to that heir with or without restrictions; what are the needs of the family.  Sometimes there are going to be tradeoffs.  Remember, though, an estate plan is an evolving process. 

Don’t try to micromanage your estate.  It can be tempting to be overly constraining when an individual does not think a beneficiary has good judgment or lacks experience in managing money.  Don’t be so specific in managing the estate that the heirs are overly constrained in benefiting from the estate.   Do, however, provide clear directions to Executors or Trustees.  A beneficiary might not seem too responsible today; however, with a little maturity, he or she can become quite responsible.  Leave room for that evolution. 

Make your general plans known but not the specifics.  It should generally be known how you plan to dispose of your estate.  However, the specifics of that plan, including your Will and any gifts which might be made, should not be generally shared.  Estate plans need to be changed over time.  What might seem appropriate today, may not be appropriate in three or five years.

Change is inevitable.  Estate planning is never really final.  It can even change after you have died.  While you are alive, the property you own, the valuables you have, may change.  Members of your family change—birth, death, marriage, divorce.  Every few years, one needs to review changes in his or her financial picture, family, goals and objectives, and make appropriate changes in the estate plan. 

These are basic and simple.  Don’t get so wrapped up in complex and counterproductive planning strategies.  Simple planning would serve you better than some complex methodology. 

Always remember that your estate plan can be changed and modified, as things change and evolve.  Get started and do something by calling or sending us an e-mail today.