Brown & Associates - Attorneys & Counselors at Law, P.L.L.C.

ESTATE PLANNING IS MORE THAN A WILL
(11/17/02)

Many people think that once they have a Will in place, their estate planning is finished. While this is the most important document for you to complete, there are many more steps you should take before you consider your estate planning finished.

Where's the Stuff?

A Will isn't any good unless your personal representative knows where it is and has access to it. Even though you only can have one original signed Will, you can make a copy of it for your personal representative and write on it where the original is located. If you keep the original in your safety deposit box, tell your personal representative the safety deposit box number and the bank in which it is located. Be sure your representative has access to the key so he or she can get into the box if something happens to you. Even better, have your personal representative keep your original Will in his or her safety deposit box, rather than in yours, so it will be readily available. No formal action can be taken until the original, signed Will is filed with the court during probate.

Your personal representative also needs to know about your bank accounts, insurance policies, high value collectibles, and retirement accounts. Also, if you have any special instructions in your Will, such as your desire to give family heirlooms to particular family members, let your personal representative know in advance. This way, your representative can safeguard these items and make sure they don't "disappear" before anyone thinks about them.

By the same token, if, for example, you want the insurance proceeds to be used in a particular way, spell this out to both your representative and the beneficiary. This may protect your spouse or children from an unscrupulous advisor after you are gone.

These Simple Steps Make Everything Easier

If you take a little time now, you can make things much easier for your personal representative. Inventory your property. List your bank accounts, investment accounts, annuities, pension plans and certificates of deposit by account number and institution. Assign each an approximate value for planning purposes.

Next, decide who needs to be notified if something happens to you? Are you a single parent? If so, who will care for your child? Who is your employer? Who are your professional advisors, such as your CPA or attorney? All of them need to be notified.

What about special instructions? Where is the key to your safety deposit box, spare keys to your automobiles, extra house keys, the title to your car, the deed to your house, and so forth? Be sure you make extra copies of all important documents, such as your Will, birth certificate, powers of attorney, advance directives for health care, deeds or automobile titles, put the originals in your safety deposit box or other safe location, and keep copies at home where they can be easily located.

Review your life insurance policies, retirement plans and other accounts. Do they list the right beneficiaries or is it time for a change? If you're recently married or divorced or have a newborn child, you may want to rethink your beneficiary designations.

If something happens to you, will your family have sufficient money to meet their short-term needs? If not, you may want to consider adding additional life insurance coverage to make up for any shortfall.

Retirement and Tax Planning

If you have an IRA or retirement plan, sit down with your spouse and brainstorm what should happen to these accounts. Account custodians can be quick to pay out the proceeds in a lump sum when this might not be the best plan for your family. Find out your options. If your current account custodian is not willing to do what is best for your family, move your account. It may be better for your spouse to roll your IRA over into his or hers to stretch out the payment of proceeds and minimize taxes. If you are not sure of your options, seek professional advice.

The same holds true for tax planning. Figure out if your estate plan is the right one for you and that it will minimize the taxes due at your death. In Oklahoma, collateral heirs (brothers, sisters, niece, nephews etc.) are taxed at a much higher rate than lineal heirs. If you want small sums of money to go to collateral heirs, it may be better to leave everything to your lineal heirs (parents, children, grandchildren etc. ) and let them make the gifts for you. Again, if you have any questions about the best way to proceed, consult with a professional advisor.

Funeral Arrangements

One of the biggest things you can do is pre-plan your funeral arrangements and pre-pay these expenses. This is often the hardest thing for your survivors to do. They are already emotionally distraught and now they are being asked to select a funeral plan, a coffin and headstone, and so on. They may feel overwhelmed and not make the best possible decisions. If you know what you want, make the arrangements now. This way, all your bereaved spouse and children need do is follow your plan.

If you have a taxable estate, you can reduce it by making annual exclusion gifts of up to $11,000 per person per year. I've discussed this in detail in other articles so I won't labor the point. Just remember that each gift you make of $11,000 will reduce your estate tax by some $4,000-$5,000. If your spouse joins you in making the gift, you can save twice as much.

"Living" Will

One of the hardest things for people to talk about is discontinuation of medical care. Most of us never want to find ourselves in a position where we have to tell a doctor to discontinue life support. The decision is a lot easier to make if we know it is what our loved one would have wanted us to do. By executing a "living" Will or advance directive for health care, you are telling your health care proxy (normally your spouse) that it is all right to discontinue care if the circumstances warrant it.

The other difficult decision is whether or not to donate body organs. By taking a few minutes to indicate your preferences now, your spouse or other health care proxy will know what to do.

Conclusion

Estate planning isn't difficult, it just takes time. If you have been putting it off, please do it now. There are some decisions only you can make. Much of your tax planning can only be done while you are alive. Finally, just think how much more difficult it will be for your spouse or children to have to try and make these decisions while they are still grieving your loss.

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