Proper estate planning is critical when trying to make sure that your assets are distributed to your beneficiaries in a timely manner and at the lowest possible cost after your passing. In order to assist with this estate planning, the following six items should be part of your New Year’s estate planning resolutions. Those estate planning resolutions are:
1. Even if you do not think of yourself as having an “estate,” appreciate that you have an estate. All of the assets that you own are part of your estate. These assets include cash, bank accounts, real estate, tangible personal property, life insurance, stocks, bonds, and business interests. If you do not plan properly, your estate may not be distributed to those individuals in accordance with your wishes. In addition, if you plan properly, you can make sure that your assets are distributed to your beneficiaries after your death much faster and less costly.
2. Make sure that you plan your estate properly for beneficiaries with special needs. In a number of families, there are individuals who have special needs. These individuals with special needs could have a physical or mental disability, have a chemical dependency problem, or be a spendthrift. If you have a beneficiary with one of these special issues, it is critical that you incorporate certain provisions into your estate planning documents which will allow those beneficiaries to still be part of your estate plan without losing any benefits. Additionally, you may wish to have assets held in trust for certain beneficiaries who may not be able to handle the funds if they receive them outright. You need to make sure that you have named the correct individual to be the trustee of a trust for these special needs recipients and give those trustees the instructions that they need to carry out your wishes after you pass away concerning these special needs beneficiaries.
3. Understand that relying on a will for estate planning purposes may not be in your best interest. Based on your personal situation, you may need a trust as well as a will. A will does not control assets that are jointly owned or have beneficiary designations, and therefore, it is important that you also review how your assets are titled. The titling of your assets needs to be coordinated with your wishes in your will and/or trust. Appreciate the complexity of developing a total estate plan, and do not simply rely on a simple will.
4. Understand that a trust may not save on taxes. A common misconception is that assets in a trust will save on all types of taxes, such as estate taxes and income taxes. However, since most trusts are revocable, assets placed in a trust will not automatically save on estate and income taxes. You need to understand the various tax issues involved when someone passes away.
5. Make sure to fund your trust. Sometimes, a trust is established but assets are not retitled in the name of the trust. As a result, those assets do not avoid probate, as was the intention of the person establishing the trust. In addition, you need to make sure that some assets, such as IRAs and other retirement types of assets, may need to remain outside of the trust ownership for income tax purposes. You need to evaluate each of your assets to determine how they should be titled.
6. Make sure that your estate plan is current. Failure to keep your estate plan up to date during your life may result in improper disposition of property to your beneficiaries, and increase taxes for your estate. Estate plans should be reviewed whenever your personal circumstances change or at least every three to five years to account for changes in the law.
Please take time to accomplish your New Year’s resolutions as it relates to planning your estate. Your family will be thankful that you did.
NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.
James F. Contini II, Esq.
Certified Specialist in Estate Planning,
Trust & Probate Law by the OSBA
Krugliak, Wilkins, Griffiths & Dougherty Co., LPA
158 North Broadway
New Philadelphia, Ohio 44663
Phone: (330) 364-3472
Fax: (330) 602-3187