There are basic rules and guidelines that apply to every estate plan, whether it is taxable or not. Draft an effective plan by paying attention to these guidelines, regardless of what the tax law is or might become. You always can make adjustments if the tax law changes.
What’s your excuse for not having an estate plan? A recent Investing Daily article, titled “10 Basic Rules of Every Estate Plan“, notes that too many people use uncertainty as an excuse not to have a plan. Some people can’t resolve issues such as who should be the executor, trustee, or guardian of their children, or even how much to leave to charity.
Try the installment plan!
Don’t let these issues leave you with no estate plan or an out-of-date plan. If you can’t pull a complete plan together, at least do the minimum necessary, such as a basic will and powers of attorney. Assemble a simple, basic plan now that covers the essentials. Then, once the bare essentials are in place, you can work toward a more strategic plan as you learn more about the tools available, refine your goals, and resolve disagreements.
Keep track of your estate. The original article advises that you update a complete list of your assets and liabilities annually and share this with the executor of your will. And make sure your executor knows where to find all the documents to back up your financial statement. To be even better prepared, give him or her a complete list of all your key financial items, including online accounts.
Many people fail to add income and expense flow when developing an estate plan—debts must be paid, lawyers have fees, and other expenses will be incurred. The expenses of running and maintaining the estate property must be paid, and the survivors may have their regular living expenses to pay. Don’t forget taxes, which must be paid with cash!
So, who should you select as executor or trustee? Don’t automatically select the estate planning lawyer or oldest child as executor and the bank recommended by the lawyer as trustee. Unfortunately, a good estate plan can be ruined if the wrong people implement it. Give a lot of thought to whom should execute your plan. A veteran attorney practicing in the field will be able to anticipate conflicts and help you reduce them.
Don’t search for a perfect solution. An estate plan strikes a balance between your goals, the needs of your family, the tax law, and perhaps other unique factors. A qualified estate planning attorney will present you with more than one option. Each will handle the trade offs in different ways, from which you’ll choose the one that strikes the balance you prefer.
The original article says to make your general plan known, but that doesn’t mean you should circulate your will. The amount you disclose will vary depending on your family dynamics. Meet with your planner at least every two or three years to review changes in your financial picture, family, and goals as well as the tax law.
Reference: Investing Daily (April 17, 2014) “10 Basic Rules of Every Estate Plan“
