Get Your Estate Planning House in Order

Thanks to Randy Coleman of The Coleman Law Firm in Jacksonville, FL, for reminding us that National Estate Planning Awareness Week starts today. The following post is courtesy of the National Association of Estate Planners & Councils (NAEPC) Education Foundation. Get more info at its Estate Planning Answers website.

Estate planning is a very important component of everyone's financial plans, regardless of the size of the estate. It's the only way to control what happens to your assets when you become disabled or pass away.

Estate planning is one of the most overlooked areas of personal financial management. It is estimated that over 120,000,000 Americans do not have up-to-date estate plans to protect themselves and their families in the event of sickness, accidents, or untimely death. This costs the affluent and middle classes wasted dollars and hours of emotional hardship each year that that can be minimized with proper advanced planning and action.

The NAEPC Education Foundation, the American Institute of CPAs, the Planned Giving Design Center, and many other professional organizations representing over 800,000 attorneys, accountants, trust officers, life insurance, financial planning professionals and nonprofits, have made an ongoing commitment to promote National Estate Planning Awareness Week, the third week in October (This year October 17-23). 

You can't just talk about estate planning because verbal agreements aren't legal. You and or your attorney need to put your wishes in writing and follow the proper formalities or your documents may not be accepted.

Here's how to save time and money on legal fees to get your estate planning house in order now and keep it there over your lifetime.

1. GATHER YOUR PERSONAL & FINANCIAL INFORMATION

List full names, addresses and Social Security numbers for you and your family members.

List your current financial advisers.

List your assets & liabilities at current values.

Gather retirement plans beneficiaries' statements.

Identify how you hold title to each asset.

Summarize your cash flow.

Gather employment benefits statements, life insurance policies, deeds to real property, partnership and business agreements and the last two years of income tax returns.

Include divorce papers, premarital agreements, existing estate plan documents & any other such documents.

List any questions, concerns and ideas.

2. WRITE OUT YOUR PERSONAL GOALS

Identify beneficiaries who you want to inherit something from you when you die. Specify how much, what percentage or which specific assets go to each person or charity. Take note of the special needs of any beneficiary, such as a disability preventing work or an inability to manage money, and identify backup beneficiaries in case your first choices do not survive you.

If you don't have strong feelings about individuals, consider selecting a favorite charity or "cause" to be your primary or secondary beneficiary.

Also consider the timing for distributions to designated recipients. Some beneficiaries can handle a large, lump-sum distribution. Others, such as children, benefit from distributions that are spread out over time.

Identify guardians of the person to raise your minor children should both you and your spouse die or become incapacitated. Also, select guardians of the property to handle your children's inherited assets. Identify backups, too.

Identify executor(s) and trustee(s) to carry out your wishes after death. You'll need an executor to administer your will, and if you have trusts, you need to name trustees to manage them.

For each position, come up with several choices because you don't know who will be willing and able to serve when the time comes. Consider selecting two or, in larger estates, three trustees as a check-and-balance system.

Identify other decision makers to carry out your health & money choices for you if you're incapacitated.

For special needs and concerns, list any sensitive family circumstances or concerns you have that may affect your planning, such as prior marriages, ill parents, troubled kids.

If you are not sure about your plans, talk them over with a professional financial advisor who specializes in estate planning. This could be an AEP^®, CPA, CFP^®, ChFC^®, CLU^®, or trust officer.

3. SEEK OUT THE RIGHT ATTORNEY

An attorney or you are the only ones who can draft the legal documents necessary to put your estate plan in effect. Due to the complexity and importance of these documents it is highly advised that you retain a qualified attorney to draft them for you. Identify several attorneys who specialize in estate planning by getting referrals from your AEP, CPA, CFP, ChFC, CLU, trust officer, banker, financial adviser and/or friends. Call the attorneys and ask how many wills and trusts they have prepared this year and in the last 10 years. Ask whether they also handle estate administration after someone dies to see if they're familiar with issues following a death.

Ask how they charge. Estate-planning attorneys are specialists. They can charge hourly rates of $100 to $500 or more, or charge a flat fee for document preparation. Ask if they will provide an introductory meeting with you at no charge. Make sure you are comfortable with your attorney as he or she will be asking you thought-provoking questions and you will be discussing your personal affairs together.

4. MAKE THE MOST OF YOUR MEETING

Bring your notes and the information from above when you meet with an attorney. This could save one to five hours (or more) of billable time. Discuss your overall goals and see how they can be met.

Ask the attorney about the main documents that need to be prepared:

Will

Living Trust

Durable Power of Attorney for Asset Management

Advanced Health Care Directive or a Durable Power of Attorney for Health Care

Before leaving the attorney's office, if you are satisfied, request an engagement letter quoting the fee for services and a brief summary of your estate plan – written in terms you can understand – to serve as a record of the decisions made. Confirm that you're taking advantage of all tax-saving possibilities and, when desirable, avoiding probate.

5. REVIEW & SIGN DOCUMENTS

Have copies of draft documents sent to you for review and approval. Note questions and changes in red ink in the margins. Be specific. If you have an estate worth more than $1 million or a complex family situation, have a copy of your documents sent to your AEP, CPA, CFP, ChFC, CLU, trust officer or financial adviser for a second opinion. Discuss questions and possible changes with your attorney.

After you sign the documents, ask your attorney where they should be kept and what should be provided to family members, executors and trustees.

6. TAKE CARE OF TITLE AND BENEFICIARY DESIGNATIONS

Have your attorney make sure that titles on all your assets and your beneficiary designations, such as life insurance and retirement plans are coordinated with your will and/or living trust.

7. UNFORTUNATELY, ESTATE PLANNING IS FOREVER...

Call your attorney about updating your plan at least every three years or any time you have major changes in your personal situation due to births, deaths, marriage or divorce, as well as significant increases or decreases in the size of your estate.

Estate plan documents are technical and very dry; they do not communicate personal feelings. Consider drafting a personal letter to your spouse and family expressing your final thoughts and feelings to them.

It’s also important to keep your key financial paperwork readily accessible, for those who will be dealing with your affairs when something happens to you. For a complimentary copy of the YOUR financial PARTNER Location worksheet in Excel format, visit www.estateplanninganswers.org/is-it-time-to-get-your-estate-planning-house-in-order/.

© Copyright 2011 - The NAEPC Education Foundation & Valentino Sabuco, CFP^®, AEP^®

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