Careful estate planning is important as earning a living.

Careful estate planning is as important as earning a living; it is a responsibility we have to those who survive us. It is never too early to think and plan ahead for the best interests, financial well-being, and peace of mind of your loved ones—and yourself.

To say that you are “just” going to “make a Will” is to understate the significance of the estate planning process. It is more than “just” a document.

Filling in the blanks on a store-bought or downloaded form does not do justice to what should be careful, thoughtful decision-making of both a personal and a business nature.

It is “personal” because it will have dramatic effects on your family. It is “business” because you are dealing with assets: money, real estate, “stuff.”

Wills Are Your Chance to Make Your Wishes Known     

The consequences of not properly addressing the issues involved in making a Will can be serious and damaging. For example, under state law, people could inherit from you who may not be the people you want to inherit -- if you don’t plan properly. If you do not specify the person(s) and/or entity you prefer, a person who might not be someone you would choose, could take charge of your estate. There could also be greater inheritance tax cost, and higher administration expenses. The words on the pages may not clearly reflect your wishes.

You owe it to your loved ones and yourself to do it right.

The two basic questions that need to be addressed are: (1) who gets what? and (2) who will be responsible for carrying out your wishes?

From those questions, others arise: should the people you name receive their “inheritance” outright? Are they capable of managing money and taking care of themselves? Are there issues related to Medicaid or public assistance? Who should inherit if the people (or institutions) you name don’t survive you? Who should take charge if the people (and/or institutions) you name cannot or will not serve?

Wills Are Personal, Not Fill-in-the-Blank Forms

As you can see, the relevant concerns are often not adequately addressed, or addressed at all, by office supply store forms or “ecommerce” Will forms.

You need to meet with a person who knows what questions to ask, and who knows what to do with the information you provide.

Before such meeting, you should:

1. List all of the persons and entities (e.g., family, friends, charities) whom you wish to name as beneficiaries (“heirs”),
2. Give careful thought to who should take charge of your estate.
3. Consider “what ifs:” “what if an heir doesn’t survive me?” “what if the person I name to take charge cannot or will not serve?” 
4. List your assets, what they are worth, and how they are owned (your name alone, joint, “in trust for,” “payable on death to,” tenants in common), as well as assets that have (or should have) beneficiaries named in their paperwork (such as IRAs, 40l(k)s, life insurance, annuities).
5. Write down the questions you want to ask, as well as the concerns you have, about your beneficiaries (such as an aging parent, a developmentally disabled child, a beneficiary who can’t handle money, how to deal with a “blended family,” whether in-laws married to family member are entitled) or what happens to people in your care (such as aging parents or disabled children or family members for whom you are responsible).

Don’t Be Intimidated; Your Will is Your Own

Once the information is provided and your questions asked and answered, a draft of your Will should be generated, which should accurately reflect your wishes and address your concerns. Read it carefully to be sure.

Do not sign it just because the legalese “looks official.” There is no such thing as a “standard” Will. If anything is unclear, or misstated, say so. The document should be clear enough to enable your family and other heirs to avoid confusion and hostility.

Once you sign (execute) the Will, be sure it is kept in a safe place and that someone close to you knows where it and other important papers are kept. The same applies to safe deposit boxes.

Understanding Probate

Probate is a legal process that occurs after a death. It involves acknowledging and validating the deceased person’s will, determining and appraising the assets and property of that person, paying any taxes or debts that must be satisfied, and distributing the remaining property as instructed by the will.

You may hear that “avoiding probate” is a primary goal. This type of comment usually comes from someone trying to sell a “living trust,” —  a trust set up while you are still alive in which you designate a trustee to be in charge of your assets. This is more accurately termed a “revocable trust,” because you should be able to change your mind and get back your assets anytime you wish, so long as you are alive. You would have to transfer all assets into the name of the trust (“The John Smith Revocable Trust”) in order to really avoid probate. If you forgot to include a car, or a house, or a bank or brokerage or mutual fund account, your will would likely have to “go through” probate anyway.

A revocable trust allows you to have the benefit of access to your assets during your lifetime, without restriction. Upon your death, the trust (usually) becomes irrevocable and operates much as a Will would. The assets are distributed in the manner, at the times, and to the persons/institutions you specified. And, in most cases, bills and expenses left behind or incurred in connection with your death are paid out of the assets.

Unless your state has unique tax laws which favor them, revocable trusts DO NOT SAVE TAXES. The assets are subject to applicable US Estate Tax (if it exists) and state inheritance or estate taxes, just as they would be under a Will In many cases, the trust document itself must be filed with the estate or inheritance tax return, so the hope for greater privacy will be unfulfilled.

And someone still needs to take care of administrative details, just as would be the case with an estate administered under the terms of a Will.

If your goal is to save on “probate,” it may not be worth the cost and effort. Fees payable to Registers of Wills, Surrogates or Probate Courts in connection with probating a Will—which really means only filing it—are generally modest. In most cases, the significant fees paid to prepare a Revocable Trust may far exceed whatever savings are gained by not having to probate, or file, a Will.

Very careful thought is advised before buying into someone’s ready-made trust document.

Other Key Documents To Consider

General Powers of Attorney, “Health Care Directives,” and “Living Wills” (or whatever they may be called where you live) are documents that delegate very important authority during your lifetime. Whereas a Will has no legal significance until death, these other documents are valid—and valuable—only during a person’s lifetime. They are important to the overall planning process and are worthy of a separate discussion.

Also subject to possible consideration is an Irrevocable Trust. It requires one to surrender ownership and control of assets during lifetime, with both lifetime and post-death dispositive provisions. Such a document may appeal primarily to persons with significant assets who wish to avoid substantial taxes, and who do not mind parting with ownership and control of those assets to a (presumably) independent trustee. It, too, is the subject of another discussion.