There always seems to be an excuse why we cannot sit down, organize our priorities, settle on the right set of fiduciaries and get our estate plans in order. What most people do not seem to realize, however, is that permitting the state to use its formulae to settle your affairs after your death in almost all circumstances does not produce a result that you would have wanted. More than that, it can cause heartache and pain to those you leave behind, and family disputes that many times cannot be smoothed over, even over time.
There follows a working outline of manageable steps which you can take to prepare to sit down with an estate planning attorney. If you have a good idea of the answers to these questions, the actual drafting of your will and constituent documents can be relatively painless and completed within a reasonable time at a reasonable cost.
1. Determine whom you need to protect and provide for.
For married couples with children, this generally flows naturally. Your surviving spouse is your key beneficiary with children being taken care of should you both perish in a common accident. But even with these basic tenets agreed upon, there are some ancillary decisions which need to be addressed.
In Massachusetts, 18 years of age is majority. If you and your spouse die and leave children, those children will be entitled to any assets you leave them at age 18. Is 18 the age you want your child to have unbridled use of hundreds of thousand, or even millions, of dollars? Most of the time the answer to this question is “no” although many of us have life insurance policies, or pension or profit sharing plans which provide for proceeds to pass to a spouse, or alternatively, children. The way to protect your children from themselves is to create a Trust mechanism, either in your will or by way of revocable trust, which will permit your children to have use of these assets but not be able to spend them without any controls. Only by getting your estate plan drafted and making proper beneficiary designations can you be sure that these objectives can be met.
For unmarried couples, the perils of not having wills are serious. Massachusetts intestacy laws make no provision for people who are not spouses, children, parents, siblings or blood relatives. Whatever your intentions are regarding your partner, it behooves you to make them clear through a will or revocable trust.
Further, when you are not married to your partner, issues such as health care decisions will not flow to your partner without specific designation of the person in a health care proxy or HIPPA designation. Many are the situation where the person you really want deciding important health issues for you is shunted aside in favor of family members who really are not aware of your wishes and are only involved because of blood relationship.
- Determine which individuals you wish to act as fiduciaries and obtain their consent to act in these capacities.
There are generally four (4) different roles which need to be addressed. Many times the same people can act in more than one capacity, but often there is a benefit in spreading the roles out over several people.
•(a) Executor: This person needs to be honest and organized. Choose someone who can take charge of your affairs, select appropriate professionals to act on behalf of the estate, and move on. Generally, about 18 months time is needed to complete the Executor’s tasks.
•(b) Guardian: Surviving spouse will automatically take over as your children’s guardian. With simultaneous death of spouses, care must be taken to designate someone who can shepherd your children through the years of minority. Be careful about selecting your parents. While they may be the natural choice, the burden of raising small children may be too much for them. Siblings with children are normally the best guardians, although care has to be taken when a larger than manageable family is created with the addition of your children.
•(c) Trustee: This is normally a long term person, so age considerations are important. If you will want a Trust to exist until your youngest child is 35, you should think about someone who is likely to be around through the period in question. Again, honesty and good judgment are traits which make a good Trustee. You do not need an accountant, attorney or investments advisor for a Trustee. You just need someone who can find suitable professionals to serve the Trust.
•(d) Health Care Agent: This is the person you name in your health care proxy to make medical decisions for you when you are unable. Your spouse or partner is a natural choice. Often it makes sense to make alternative selections should the person you wish to use be unavailable.
Armed with answers to the questions and issues described above, you are in a very good position to move forward with your estate plan. At Topkins & Bevans, we try to make the process efficient and manageable. Appointments to discuss estate plans are entirely free of charge, and it is only after we have agreed on a document program, that we will discuss a fee arrangement with you.