Congratulations! You made an appointment with an estate planning attorney. You are ahead of 73 percent of people who have not put together a legally sound strategy for their future. But, before you head to the first meeting with your attorney, review this list of important items so you can get the most of your time together.
Ten Things Your Estate Planning Attorney Wants You to Know
- The State Your Documents Were Drafted In. Even though we live in the United States of America, each of state has different laws. It’s wise to update your estate plan any time you move from one state to another. In Ohio, the types of estates, inheritance and probate laws may differ from another state in which a previous plan was drafted. If you require an amendment or change to your plan, be sure to tell your attorney where your documents were originally drafted.
- When Your Estate Plan Was Last Reviewed. The tax and trust laws change quite regularly, as do your personal financial and family circumstances. That’s why it’s important to review your estate plan at least every couple of years, even if you haven’t moved to another state. It is unwise to create an estate plan and leave it in a drawer for many years, as that can lead to unintended consequences.
- Don’t Leave Anything Out. It’s important to tell your attorney EVERYTHING-and I mean EVERYTHING-even though such disclosures might be embarrassing. Remember that your conversations are governed by attorney/client privilege. If you conceal something materially important, such as an illegitimate child, it could open your estate to challenges after your death. Complete honesty with your attorney is in your own best interest.
- Life Insurance Can Be Taxed. Life insurance is not totally tax-free. While in most circumstances life insurance is INCOME tax-free, unless more sophisticated estate planning is put into place, it is NOT ESTATE tax-free. The value of the life insurance might be included, for example, in the surviving spouse’s estate, which may trigger estate tax upon the surviving spouse’s death. Worse, if there is no surviving spouse and the life insurance is paid to children, there could be an immediate estate tax liability. An irrevocable life insurance trust is one way to get around that problem.
- Your Power of Attorney Does Not Have Power After Your Death. Durable Powers of Attorney cease at death. Many people wrongfully believe that a Durable Power of Attorney allows the designated holder of the power to write checks and to pay bills after the grantor of the power has died. Once the person has died, their will (or trust) takes over. The holder of the Powers of Attorney should no longer write checks or otherwise act for the deceased. A Durable Power of Attorney is primarily useful during periods of incapacity.
- Your Named Representative Should Be Responsible. You shouldn’t name your oldest child as your Durable Power of Attorney, personal representative (executor) or successor trustee of your estate simply because they are the eldest of your children. You should, instead, look for the most trustworthy and responsible person to fill those roles. If that is your oldest child, then so be it. But if your youngest child is the most responsible, or if someone else is better qualified to fill that role, then you should name that person.
- Being a Representative Comes With Legal Duties. The offices of successor trustee of a trust and personal representative of a will are filled with obligations, responsibility and liability. In other words, they are more of a job than they are an honor. Many people name one of their children or a family member to fill this role, because that person might be offended if they weren’t named. What most people don’t realize is that the law imposes all sorts of duties and obligations on a trustee and a personal representative, and if they don’t fulfill all the legal requirements, that person might be held personally liable to the other beneficiaries of the estate, to creditors or to taxing authorities-including the IRS.
- Sign That Living Will and Prevent Future Conflict. Not signing a living will is more dangerous than signing one-even if you believe that the doctors will pull the plug to free up the hospital bed for the next patient. The living will is your direction of what you want to have happen if you are deemed to be in an end-stage terminal condition or in a persistent vegetative state with no hope of recovery. You can direct, for example, that food and water tubes shall never be removed. Without a living will, there is no direction from you at all. That’s how you end up like Terri Schiavo. She never signed a living will. The result was her husband and parents fought in court over what her wishes would have been. You may recall even the United States Congress got involved in her case. No one wants that kind of political circus over their final affairs. Sign a living will and tell the world what you want if you find yourself in a condition where you can’t speak for yourself.
- Executing a Trust is Only Step One to Avoiding Probate. A revocable living trust does not always avoid the probate process. The only way to avoid the probate process is to retitle your assets and accounts into your revocable living trust. Attaching a schedule of your assets to the trust is not enough. You have to sign deeds transferring the property into your trust and retitle your bank and brokerage accounts into the trust.
- Creditors Still Have a Claim on Your Trust Assets When You’re Living. Revocable trusts do not offer any creditor protection during your lifetime, because you have complete and free access to your trust assets-that means that they are your assets and you can do with them as you please. So, if you have a creditor who is trying to get to those assets, that creditor can get to your assets because you can get to them. If you want to protect assets from predators and creditors, you have to engage in more sophisticated planning.
Knowing these things before you walk in the door of your estate planning session will help you understand your attorney’s job and will help your attorney execute your wishes to the best of their ability.
If you want to discuss estate planning with someone, contact the Probate and Estate team at Gertsburg Licata. We’re happy to help you with your questions and concerns.
Connie Powall, Esq. is a Partner at Gertsburg Licata and the head of the Estate and Probate Practice Group. Ms. Powall owns and operates several businesses, including two catering businesses and a restaurant. With over 30 years of legal experience in Ohio and Michigan, Connie specializes in succession planning, gifting strategies, and business interest disposition. She actively contributes to the Probate and Estate Planning Section of the State Bar of Michigan and the Estate Planning, Trust, and Probate Section of the State Bar of Ohio, aiming to make estate planning accessible to all. She can be reached at [email protected] or by phone at (216) 573-6000 x.7036.
Disclaimer: The information provided in this article is intended for general informational purposes only and should not be construed as legal advice. It does not establish an attorney-client relationship, and any reliance on the information contained herein is done at your own risk. For specific legal guidance tailored to your business and jurisdiction, it is recommended to consult with a qualified attorney who can provide professional advice based on your unique circumstances.
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