Estate Planning: What to Think About Before You Meet with Your Lawyer

In my estate planning practice, it’s not uncommon to come across a new client who wants to put together an estate plan, but is a bit vague as to what should be included in that plan. Quite often, the initial conversation begins with the client saying something like, “I’d like a will…or do I need to have a trust? Do I need anything else?” Actually, those are good questions to start a discussion.

Most people recognize that your estate plan should provide for the distribution of your assets at the time of your death. That, of course, is an essential element of an estate plan, but there is more to consider in a well-designed plan. Before you meet with your attorney for the first time, you should also think about things like who you want to handle your affairs in the event you become incapacitated; if you would want your doctor to keep you alive if he was close to the point of death with little chance of recovery; who you want to have the authority to sign important legal documents on your behalf if you are not available; and, who would like to raise his children if he suddenly dies. There are a wide variety of personal circumstances that affect estate planning, but let me offer you the following items to consider before you even meet with an attorney to discuss your own estate plan.

Should I make a will or a trust?

This is often one of the first questions clients ask during an initial meeting. Many know that a trust will prevent probate, but that is true only if the trust is adequately financed, which means that all of your assets are transferred to the trust. However, not all estate plans require a trust, and you may not need to incur the additional cost of having your attorney prepare a trust, when a will is appropriate for your needs. And contrary to what some people think, having a trust is not not Avoid estate taxes.

A trust may be the right choice for you if you are unlikely to acquire more assets in the next few years. However, what can often happen is that people set up a trust and then acquire new assets that they refuse to place in the trust. Then, when they pass away, the assets outside the trust have to go through the estate, which defeats the intention of setting up a trust in the first place. So before you decide on a trust as the main element of your own estate plan, take some time to consider your future investment plans and major acquisitions.

There are some other advantages of a trust, which could make it the right option for you. For example, if you become incapacitated, your trustee will be able to step in and manage your assets without having to find a court-appointed guardian. In that sense, a trust document is more complete and flexible than an ordinary will.

What else should I consider in my estate plan?

Estate planning isn’t just about deciding who gets your wealth when you die. It’s also about making decisions about what you want to happen in the event you become seriously ill or incapacitated.

Every estate plan must include an advance directive, which used to be called a living will. This document allows you to designate a health care representative to make health care decisions for you, including end-of-life decisions, when you are unable to do so.

Similarly, we recommend that you give a durable power of attorney to a trusted family member or friend to allow your designated agent to manage your financial and business affairs when you are unavailable or incapacitated. A Durable Power of Attorney remains in effect as long as you are alive and must state that it will be effective even in the event of your incapacity.

What about my bank accounts, life insurance and investment accounts?

Careful estate planning should include a review of all your assets, including checking the beneficiary designations you’ve listed in your retirement plan and regarding your investment and bank accounts. With such beneficiary designations, these assets will be transferred out of the probate process to those persons you have previously designated as beneficiaries on these accounts. It is important that you review your beneficiary designations to ensure that your choice of beneficiaries is consistent with your current intentions regarding the disposition of your estate.

A thorough review of your portfolio and consideration of the issues outlined above before meeting with your estate planning attorney will allow you to get the most out of your meeting. It will also help your attorney focus their discussion with you on the aspects of the process that are most relevant to your goals and needs.

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