King & Wood, P.A.

Millennials and Gen Z Need Estate Plans Now

“Though ‘estate planning’ may bring to mind visions of rich families squabbling over the ancestral silver, it isn't just for the wealthy or older people, financial planners say.”

People with modest assets, young adults and parents should all have estate plans to protect themselves while they’re living, protect their children and provide a means for transferring assets of any size to heirs of their choosing. This is estate planning in a nutshell, with details furnished in a recent article from yahoo! finance, “Why millennials and Gen Z should have a basic estate plan.”

Most people first think about estate planning when they have children. It’s a good reason, as a will is used to name a guardian who will raise the children if both parents should die. Otherwise, a court will decide who should raise the children, and it isn’t always a family member. However, this is far from the only reason to have a will.

All adults should have two essential documents: a durable power of attorney and a healthcare power of attorney, also known as a healthcare proxy. These documents give other people, referred to as “agents” or “representatives,” the legal power to act on behalf of the adult if they cannot do so. We don’t like to think about becoming incapacitated. Nevertheless, it happens, and when it does, having these estate planning documents makes it possible for another person to act on your behalf.

If there is no power of attorney, the family will need to go to court to have someone named as a guardian of the incapacitated person. The process is both stressful and costly. Having a POA is far easier. When you have an estate planning attorney create a POA, you also get to name the person you want to be in charge. The court may not choose the person you would have wanted.

Wise parents have their children sign a healthcare power of attorney when they turn 18. Unless this happens, the parent may no longer be part of the newly-minted adult’s healthcare, including talking to doctors, discussing health insurance issues and being involved with decision-making.

If it seems unnecessary for an 18-year-old to have a last will and testament, there are more than a few reasons for doing so. First, an 18-year-old who has been accumulating cryptocurrency might have assets to protect. In the same way, parents don’t have the right to make medical decisions for an 18-year-old; they don’t have any say over their property. If the young adult has bank accounts, digital assets, car loans, or student loans, the parent will be better protected if there is a simple will. If there is no will, the grieving family will have to go through probate, the court process of determining who will receive the young person’s assets.

Having a young adult think about having a will is a good life lesson. As they age, they must update their plan to reflect life’s milestones. Estate planning is an evolving process similar to owning and maintaining a home.

Young adults working and with retirement accounts should be mindful of who they name as their beneficiary on retirement accounts, insurance policies and any other financial account allowing a beneficiary to be named. These assets don’t pass through probate but go directly to the designated beneficiary. Keeping a list of these accounts and who was named as a beneficiary is also good practice for young adults.

Younger adults who tackle estate planning early on are setting themselves and their families up for success in the future. Many estate planning attorneys start working with one generation and are happy to advise their children as they grow into adulthood.

Reference: yahoo! finance (Nov. 18, 2024) “Why millennials and Gen Z should have a basic estate plan”

How to Include Digital Life in Your Estate Plan

“The shift to a digital world has made life easier in many ways, allowing people to eschew physical photo albums, file cabinets, taking checks to the bank and waiting for the mail carrier.”

The same conveniences of digital life, from making bank deposits on the phone, posting photos instantly and accessing investment accounts wherever you are in the world, create headaches for executors and heirs if no plans are made for a “digital afterlife.” A recent article from The Minnesota Star Tribune, “When death planning, don’t forget to account for your digital life,” explains how to plan ahead.

In the past, when someone died, their executor and family members would work together to go through paper financial statements, bills and property ownership documents. There would usually be a shoebox or a cabinet somewhere in the house with relevant documents. The search is far more complex today, with information locked inside a computer or cell phone.

The right kind of authorizations are needed for each platform. You can create directives for Google, Yahoo!, Apple and Facebook to request a copy of the account contents. This way, the executor doesn’t have to deal with passwords, encryptions, or data privacy laws.

• Google has an Inactive Account Manager, which notifies someone else if you stop using Google products for a designated period of time. You choose which data you want to share, and the contact receives a link for a download.
• Apple has Legacy Contacts, allowing you to add a contact for your Apple ID who will have access to your Apple account.
• Facebook also has a legacy contact who can manage your main profile if it is memorialized after your death. Friends and family members can leave memories and comments on your page. Another option is to allow the legacy contact to delete your account.

Most states today have laws concerning digital assets. Your estate planning attorney will be able to help you plan for what you want to happen to your digital assets and how to make this task easier for your digital executor.

A federal data privacy law known as the Stored Communication Act protects the disclosure of a person’s digital communications without their consent. You’ll want to have a consent form created by an experienced estate planning attorney to allow online platforms to disclose your digital assets. Think of it as a HIPAA form for digital assets.

Create a complete inventory of all digital property and online accounts and how to access them. Use an electronic list, an encrypted secure list, or a notebook, whatever method works best for you. Make sure to tell your digital executor how your information is stored.

Some platforms will not release data unless family members pursue the matter in court if no legacy contact was named and no consent form has been completed. Don’t count on calling the company out on social media or contacting the press to take up the fight on your behalf as a solution.

If you have data stored only in the cloud, consider backing up your data (content) on a local computer, external hard drive, or a memory stick. Accessing this will be easier than taking Microsoft to court.

While preparing for your digital afterlife, ensure that your will, power of attorney, trust documents and authorizations are current. Have an estate planning attorney create authorization paperwork; if you don’t already have a digital consent form, create one.

Reference: The Minnesota Star Tribune (Nov. 11, 2024) “When death planning, don’t forget to account for your digital life”

Three Key Steps for Estate Planning When You Don't Have Children

“It gets a lot more complicated if you can’t count on a child to be a caregiver, or to make major decisions.”

In many ways, estate planning is relatively simple for people who have children. They expect their adult children to be involved in their care as they age and are usually named beneficiaries of their wills. For those who don’t have children, according to a recent article from The Wall Street Journal, “Estate-Planning Priorities for People Without Children,” estate planning becomes a bit more complicated.

When there are no children, seniors need to face serious questions to prepare for aging, from who will be in charge if I become sick to who is going to be in charge of my funeral. There are three essential matters that single people without children need to address.

Plan for Long-Term Care. One study determined that the average 65-year-old will need about $150,000 for healthcare during retirement. For people with no children, long-term care insurance is something to purchase in mid-life, starting around 40 years old. If no next of kin is available to provide care, the policy can cover some of the costs of home care or care in a nursing facility.

Fewer companies sell long-term insurance today than in the past. However, policies are still available. Many are sold as hybrid policies, incorporating life insurance and long-term care coverage. Others allow policy owners to take out at least part of the money contributed as cash. Some even have a death benefit. Others have an inflation rider to protect against rising costs.

Determine who you can count on for help. Without children, people generally turn to their spouses if they have one, siblings, nieces, or nephews to take on roles like Health Care Proxy or Durable Financial Power of Attorney. The people chosen for these roles can also be friends as long as they are reliable and trustworthy.

If no family members are available, consider a friend or neighbor, preferably someone younger. Often single agers name other single agers for important roles, which leaves them all vulnerable to the possibility of disability or death of their trusted decision makers. Other options include doctors, estate planning attorneys, financial advisers, or a social worker to serve as healthcare proxies. A bill-paying service might be in an excellent position to serve as a Durable POA as long as the relationship is established before it’s needed and the service is ethical.

Power of Attorney and many similar estate planning documents are state-specific, so meet with an estate planning attorney in your state to be sure you have the documents you need and that they are valid. Discuss the roles of the people you pick to eliminate any surprises. A secondary person should consistently be named if the primary POA is unavailable or chooses not to take on the role when the time comes.

Make the executor’s life easier with detailed preparations. This applies to people with children, as well as childless people. Check your beneficiary designations on financial accounts, including life insurance, investments and retirement funds. Write down your wishes for funerals or other types of memorial services. Have an estate planning attorney create a will and a trust, if appropriate, and tell the person you’ve chosen as executor where these documents can be found. Don’t make a difficult job harder by making them search through paper files and your computer to figure out your estate.

Your estate planning attorney will be able to provide guidance about how to address the issues accompanying a child-free life. These extra steps will give you considerable peace of mind.

Reference: The Wall Street Journal (Nov. 12, 2024) “Estate-Planning Priorities for People Without Children”

How Estate Planning Cares for Future Generations

“Sound estate planning can help minimize tax liabilities, protect assets from creditors and maintain family harmony by reducing conflicts among heirs.”

Building and owning a business or saving prudently can lead to more than a comfortable life—it can create a legacy to be passed on to family members and charitable groups. Estate planning for a legacy takes many forms, explains an article from Cincinnati Business Courier, “Taking Care of Future Generations: Estate Planning Strategies and Trends.”

The primary purpose of estate planning is to transfer assets smoothly and when possible, without court involvement. High net-worth families use estate planning to use existing tax opportunities to structure their assets, so they may be passed to the next generation in a tax-efficient manner.

Estate planning is also necessary to allow assets to pass without turmoil and stress. Having a detailed estate planning, where wishes are clear and assets are carefully inventoried, prevents heirs from having to undergo legal and logistical contortions to receive an inheritance.

The planning process varies from state to state. However, the general process is the same. An estate planning attorney discusses the family, the business or other assets and the wishes to be achieved. Some states, like Kentucky and Pennsylvania, still have inheritance taxes in addition to state estate taxes. As of this writing, few families are impacted by federal estate taxes, although this may change in the future.

Wills may be the best known part of estate planning. However, the will is only part of an estate plan. If prepared properly, most property passes without a will and, therefore, without probate. Trusts are the most commonly used tool in estate planning. Trusts are created to serve as separate legal entities which distribute assets upon the death of the grantor (the person who created the trust). Assets distributed by a trust don’t go through probate and are distributed according to the language of a trust. This level of control, in addition to taking out any court involvement, are one reason why trusts are so popular in estate planning.

A Power of Attorney is very important in estate planning. The person who has been named the POA steps in to handle general financial matters and helps maintain the normal course of life—paying bills and maintaining a home—if someone becomes incapacitated. A Medical Power of Attorney gives the power to talk with treating physicians and make decisions.

An estate plan also includes naming an executor, the person in charge of administering the estate. You’ll want to select a person who is, above all, trustworthy. They will also need to be organize, financially savvy and able to manage the beneficiaries and the family’s dynamics.

Estate planning often involves lifetime gifts, also known as planned giving. Giving to charities while living allows the donor to see the impact of their generosity, which can be very rewarding. The same can be said about giving to loved ones. The benefit of taking assets out of the taxable estate is a motivating factor for some, but not all, lifetime giving.

Giving is also done through family foundations and donor advised funds (DAFs). The DAF is becoming more popular because the charitable deduction is created when the fund is created, while there is still access to the funds. Foundations are typically created only by extremely high net worth families, as there are extensive costs involved in creating a foundation. However, a family foundation is an excellent way to bring younger generations into the tradition of philanthropy.

An estate planning attorney will walk you through the necessary steps, explore options and help outline your wishes for the legacy you wish to leave to loved ones. It is a gift to the family, providing peace of mind for you and a plan for the future.

Reference: Cincinnati Business Courier (Nov. 15, 2024) “Taking Care of Future Generations: Estate Planning Strategies and Trends”

How Does a Guardianship Work?

“A person requesting to be appointed guardian must present adequate evidence to the court to prove incapacity of the subject.”

Planning for incapacity is part of an estate plan and like many things in life, planning in advance is better for both the individual and their family. A recent article, “Guardianship—What is sufficient incapacity?” from Pauls Valley Democrat, explains the basics concerning guardianship.

When an estate plan has been properly prepared, it includes a Power of Attorney created to give another person, known as the agent (representing the incapacitated person), the ability to make financial and legal decisions for an incapacitated person. A POA may be general, allowing for everything from managing investment accounts and paying bills to selling the incapacitated person’s home. However, an estate planning attorney can create a customized POA to give specific permissions for what the agent can and cannot do.

A guardianship requires going to court and having a formal proceeding to determine whether or not a person is incapacitated. While there are some minor differences from state to state, generally speaking, a person is deemed incapacitated if they are age 18 or older and impaired because of mental illness, physical illness, or disability, intellectual or developmental disability, or drug or alcohol dependency.

The court reviews the person’s ability to maintain their own health, safety and financial resources.

If a POA has been created and executed, another person will be able to manage the incapacitated person’s financial matters. However, a POA does not address health care and safety issues.

The interested party requesting to be appointed guardian does not have to be a spouse or blood relative. This is one of many reasons why an estate planning attorney should be consulted long before a guardianship becomes absolutely necessary. A family member is almost always preferable to being named a guardian.

Evidence for the court proceeding includes professional opinions of doctors, psychologists, or administrative bodies to demonstrate the person’s lack of capacity. In some instances, the court may conduct an investigation of its own, relying on medical experts.

The person selected to provide an expert opinion should be matched to the reasons for the person’s incapacity. A geriatric specialist should evaluate an elderly person; financial capability should be assessed by someone who focuses on financial cognition, etc. The court reviews evidence to make its determination. In some cases, the experts making the evaluations are also called upon to provide a plan for the person.

A guardianship is very restrictive. If estate planning is done in advance, the family will be in a better position to help their loved one, determine their needs and act in their best interest without court intervention. Speak with an experienced estate planning attorney to plan for the future when more options may be available.

Reference: Pauls Valley Democrat (Nov. 8, 2024) “Guardianship—What is sufficient incapacity?”

Can Unmarried Couples Plan for Aging Together?

“Eventually, most older couples will face health crises and the need for caregiving. If they haven’t vowed their mutual marital commitment ‘til death us do part,’ their roles and responsibilities can be murky.”

Choosing to marry or not marry in one’s later years has implications beyond whether the couple should send out holiday cards together. For older unmarried couples, navigating health care needs becomes a serious issue, as explained in a recent article from The New York Times, “For Older Unmarried Couples, Caregiving Obligations Can Be Murky.”

The article begins with the example of a couple who have been together for nearly two decades, maintaining separate residences but mainly living in the woman’s home. She began developing memory loss and fell several times. One family member finds the presence of her partner comforting. However, her partner acknowledges concerns about problems in their future. He spoke with her family and suggested they move into a continuing care retirement community where care is adjusted as needs change.

The woman’s daughter objected. She holds power of attorney and makes many decisions for her mother, which doesn’t bode well for their future together. For now, the couple remains in their homes and relies on home care aides. However, this may not last long.

There’s no road map for the aging process for unmarried couples or couples who maintain separate residences. However, as the number of unmarried partners among older Americans grows, this may change. Census data from 2023 shows nearly 400,000 Americans over age 75 are living together without the legal protection of marriage.

Remaining single has its advantages. Passing along an estate to children is far easier if the couple doesn’t combine their finances through marriage. They don’t risk losing pensions or Social Security benefits if they marry, nor do they need to take on the other person’s debts. For seniors in America, medical debt and the cost of long-term health care are financial risks.

Unmarried partners need to be proactive about estate planning to protect themselves and prepare for the future. Each should have an estate planning attorney prepare advance directives, health care proxies, durable powers of attorney and wills. Having these documents prepared will help the individuals clarify their wishes in terms of medical care in the event of serious illness or incapacity.

The potential conflict between unmarried partners and biological children should be treated with great seriousness. A beloved partner will not have any say in their loved one’s medical care, unless they are named as the health care proxy. An adult child who resents an unmarried partner could keep the couple apart if one were hospitalized or moved to a nursing facility.

Older unmarried adults need to embrace estate planning and not put off taking care of this task. A tendency to procrastinate could leave their long-term loved partner out of any aspect of their lives if this is not addressed.

Caregiving responsibilities often drive decisions in a crisis if no advance planning has been done. If the couple is living in the home owned by one member of the couple and the owner has to go into a nursing care facility, the healthy partner could be evicted.

Having an experienced estate planning attorney create an estate plan, including the power of attorney, healthcare proxies and other important documents, protects couples so they can help each other and make decisions before a crisis strikes.

Reference: The New York Times (Nov. 10, 2024) “For Older Unmarried Couples, Caregiving Obligations Can Be Murky”

Make Life Easier for Heirs: Get Your Estate Organized

“It’s easy to put off doing many of these things. However, get them done, and your heirs will be thankful you did.”

The holiday season is not when most of us think about death and dying. However, we do think about gift-giving. Estate planning is a gift for your family. Wouldn’t you prefer a package wrapped in festive paper and decorated with ribbons than an unwrapped item hastily stuffed into a shopping bag? The article “5 Things to Do Now to Make Your Estate Simpler for Your Heirs” from The Wall Street Journal offers a starting point.

Update all estate planning documents. Failing to update estate planning documents, including finalizing new documents, can wreak havoc on families. One example is a woman who took about two decades to update her will and then died before signing the papers. Her will included giving assets to stepchildren she hadn’t seen in more than twenty years. Her adult children are spending thousands to have the new will enforced by a judge, even though it’s unsigned.

When did you last examine the beneficiary designations for all your financial accounts? Life insurance, retirement accounts, bank and investment accounts, pensions and other financial accounts provide an opportunity to name a person or people to receive the assets directly upon your death. If your old college pal is the person you thought of when you started your 401(k) with your first job, your wife may not appreciate his receiving hundreds of thousands of dollars upon your death.

Named beneficiaries receive assets directly from the financial institution and do not go through probate. No matter what language is in a will or even a living trust, these assets belong to the people you named to receive them. You should have a list of all of these accounts and know who the beneficiaries are.

Digital assets are now part of estate plans. There are very few people today who don’t have digital assets. These include the content in your emails, photos stored on the cloud, websites, content on social media platforms, online businesses and anything you’ve created online. Most people don’t understand the Terms of Service Agreement they make between the service provider and themselves when they click on the link to approve the TOSA. However, this is a legally binding contract delineating what the platform owns and what the user owns. You may not own books, movies, or other digital assets; you might have rented them unknowingly.

Digital assets need to be organized for heirs, since there isn’t a paper trail for them to follow like in previous decades. You can create a spreadsheet, use a password manager or a pad of paper.  However, there should be a means for your digital executor to identify and access your digital assets.

Some digital platforms allow you to name a “legacy” contact who can take care of your digital assets after you’ve passed. You’ll need to go through each of your digital assets to find out which platform has this or related features. If it seems annoying, imagine how your heirs will feel trying to untangle your digital assets.

If your estate includes cryptocurrency, this is especially important. Millions of dollars of crypto have been lost because people have failed to secure their pass keys or digital wallets.

Deal with personal property now. Especially if you have multiple heirs, hoping the kids “work things out” could be a recipe for disaster. Make a list of your personal items and who you want to receive what. In some families, this is relatively straightforward. However, your adult children will be grieving after your passing and vulnerable to disputes. Another tactic: give items while you’re living.

Get your estate planning documents organized. Create a three-ring binder with all essential documents. Contact information for your estate planning attorney, CPA and financial advisor should be provided. Include a list of bills paid online, like utility, mortgage, taxes, health insurance, car insurance, etc. Also included are Power of Attorney, Health Care Power of Attorney, Living Will, Trusts and other estate planning documents. Tell your executor and adult children where the folder is.

An organized estate plan helps avoid family conflict. Having documents prepared, property assigned and accounts recorded all takes time. However, by doing so, you’ve minimized the work for loved ones and minimized reasons for quarrels during what will already be a difficult time.

Reference: The Wall Street Journal (Nov. 14, 2024) “5 Things to Do Now to Make Your Estate Simpler for Your Heirs”

How Does a Trust Work in an Inheritance?

Trusts should be in your estate plan if privacy is important to you. Most people don’t know their wills become public documents as part of probate.

It’s not easy to create an estate plan without the guidance of an experienced estate planning attorney. They can help work through the many moving parts and address concerns about how family members will respond to your plan to pass on assets. A recent article from msn, “3 Reasons to Seriously Consider Using a Living Trust to Pass an Inheritance to Your Family,” says. At the same time, you may think keeping things simple with a last will and testament may be sufficient, but there are also good reasons to use a living trust.

If you have many beneficiaries, a living trust allows you to control assets while living and after you’ve passed. If you have a large family and want to include grandchildren, nieces and nephews in your estate plan, the living trust is easier than a will. Beneficiaries can be easily added or removed, as events like marriage, birth and divorce occur within the family.

The living trust allows you to get very specific about exactly how much of which asset you want to pass to each beneficiary. If your heirs include minors, a living trust consists of a trustee who can manage their assets until they reach a certain age. You can also determine at what age you want beneficiaries to receive your wealth. You might, for instance, decide to give a grandchild their inheritance not when they reach the age of majority (legal age) but when they turn 30.

Do you own real estate property? This asset can be tricky to bequeath in a will, especially if you own property in multiple states. Your estate would have to go through probate in each state, which all have their own rules and laws. This becomes expensive and time-consuming. Retitling real estate property into a living trust means the properties don’t need to go through probate. Your estate planning attorney will help make this an efficient process.

Trusts should be in your estate plan if privacy is important to you. Most people don’t know their wills become public documents as part of probate. This means anyone who is interested can read your will. This could be an estranged family member who feels they were wrongfully left out of the will, an ex-spouse, creditors, salespeople and thieves.

The public nature of probate is another reason why wills should not contain any specific account information, like account names, numbers, or the amount of money in the accounts. For the same reason, the names of digital assets, including user names and passwords, should never be included in a will.

Trusts are one of many means of passing assets to heirs without anyone except the grantor (the person creating the trust), the trustee (the person in charge of managing the trust), and the beneficiaries knowing about the trust’s existence and what it contains. This is especially important if your situation includes someone you wish to keep in the dark about your assets or your intentions.

Meet with an experienced estate planning attorney to discuss the different ways to pass wealth to loved ones, including a will and trusts. Learning what options are available will allow you to make an informed choice.

Reference: msn (Nov. 2, 2024) “3 Reasons to Seriously Consider Using a Living Trust to Pass an Inheritance to Your Family”

What Should You Do If Your Estate Plan is Out of Date?

“A farm couple spent a lot of money on their estate plan years ago. However, now it’s outdated.”

Keeping up with life's changes is part of estate planning. For those who own farms, ranches, or other family businesses, trusts and estate plans created years ago are unlikely to serve the family today, says a recent article from Successful Farming, “How to Handle an Outdated Estate Plan.” Adding to the issue, adult children may not always agree with the plan their parents created.

The solution begins with a consultation with an estate planning attorney experienced with farms, ranches, or family businesses. They can see the whole picture in a way owners often cannot. The process begins, as it does for non-business owners, with an inventory of the family’s assets. The nextstep is to determine the family’s goal: keep the farm in the family and sell it to fund the owner’s retirement or another option. Review the old estate plan to see if it’s relevant. It’s better to address the issue and create a new estate plan.

Depending upon what kind of trusts were created in the past, they may still work with the updated estate plan. An estate planning attorney can help restate the trust's provisions if it’s a revocable trust. If it’s an irrevocable trust, it may need to be decanted and “poured” into a new trust if your state’s laws permit this.

What ownership entities were created by the original estate plan? If the parents hold controlling interests, they can modify operating agreements to update the plan. A centralized management system and exit strategy can be created as long as the numbers work.

Life insurance policies’ expiration dates need to be reviewed in case something can be done with them before they expire. If there is a cash value, it might be used to purchase a better policy. Cash benefits from life insurance are a means of expanding operations, funding buyouts, or equalizing assets between heirs.

Fluctuations in land value mean that farmers, ranchers and real estate owners need to change their purchase prices. Review the numbers periodically to ensure that the valuation model and funding strategies still work. It may be wise to set a fixed or maximum price, depending on the situation.

Getting children to agree with their parents’ plan for the future takes more than parents explaining the plan. Schedule a family meeting with advisors, including an estate planning attorney, accountant and financial advisor, to review the reasoning behind your decisions and how they will benefit. Having non-family members present for the discussion can often take the emotions out of the discussion, changing the dynamic and allowing the next generation to feel empowered for the future.

The worst option is not to act on an outdated estate plan. The cost and stress of leaving a thriving enterprise to the next generation without an estate plan or a succession plan could leave the family with no choice but to sell the business.

Reference: Successful Farming (Nov. 7, 2024) “How to Handle an Outdated Estate Plan”

What are the Top Estate Planning Mistakes?

“Estate planning is essential for families who want to secure financial stability and build generational wealth.”

A cornerstone of creating family success is proactive planning for the future. This includes working with experienced advisors, including estate planning attorneys, who can guide the family to making informed decisions. A recent article, “Top Estate Planning Mistakes Families Make—And How To Avoid Them,” from Forbes, advises readers to include thoughtful planning, organized financial records and estate planning to create a legacy to span generations.

The biggest mistake families make is not having an estate plan. The second biggest mistake is trying to create an estate plan without the help of an experienced estate planning attorney. Families often turn to an attorney who has helped with transactions, like buying a house or settling a homeowner’s insurance claim. However, this is a costly mistake. It’s like asking a podiatrist to perform brain surgery—they may be well-meaning. However, they don’t have the necessary experience and knowledge.

Disorganized financial and legal record-keeping leads to unnecessary estate planning and administration complications. Good record-keeping helps families make good decisions regarding spending and saving and makes estate planning more effective. For example, creating a budget for retirement without accurate information could lead a couple to overspend and run out of money or live so frugally that they don’t enjoy their retirement.

Financial records must be organized, so real estate, investment accounts, savings accounts, pensions, credit card debt, mortgages and personal property can be accurately valued. Creating a successful estate plan needs to include information on cash flow and spending to guide decisions on how assets will be distributed and what liquidity is needed.

Family wealth is not created by passing large assets to the next generation without restrictions. Long-term estate planning is needed to retain wealth. When large inheritances are passed on without planning or education, most of the money disappears by the second generation, and whatever’s left is usually gone by the third generation. The family’s wealth shouldn’t be viewed as a bank account to be depleted.

Trusts are often used in estate planning. However, a common mistake is to create a trust and then neglect to fund it. Funding a trust involves moving assets into the trust’s ownership. Deeds, titles and financial accounts must be changed to identify the trust as the owner rather than the person who used to own the asset. Some estate planning attorneys will have their office manage this process, while others require clients to do this themselves. Either way, funding the trust must be completed to perform as desired.

Maintaining an estate plan is just as important as creating one. Financial records and documents in the estate plan need to be kept up to date. If the estate executor dies, the will needs to be updated. If a guardian is named to raise minor children, which is done through a will, and the person moves away, a new guardian needs to be named in a revised will.

Estate plans also involve documents to protect the living. A Power of Attorney assigns another person the ability to manage financial and legal matters if a person is incapacitated by injury or illness. A Healthcare Power of Attorney is needed to have another person manage medical decisions. The name of this document varies by jurisdiction. However, without it, a family will need to go to court to be involved with a loved one’s medical care.

Estate planning can be viewed as organizing one’s life and planning for the future. It is a gift to loved ones and establishes a legacy of caring.

Reference: Forbes (Nov. 7, 2024) “Top Estate Planning Mistakes Families Make—And How To Avoid Them”