What are the Elements of a Well-Crafted Estate Plan?
The specific elements of a well–drafted estate plan will vary depending upon the needs of a particular individual. Common components of a well-crafted estate plan include:
- A properly drawn will.
A will needs to comply with Texas law. This means a will that states your wishes as to how your assets are to be distributed to those you care about. It also means a will that is signed with certain legal formalities that include appropriate witnesses and a notary and that identifies the person responsible for ensuring your wishes are followed. Other considerations may be providing for family members that need special protection, underage children, or children from a prior marriage.
- Tax planning.
Tax planning is another important element of a properly drawn will. If appropriate, a will should address your current financial situation, as well as anticipate, to the extent practical, financial changes in the future. The goal with large estates is to minimize federal estate taxes as well as capital gains taxes on appreciated assets or assets with a potential to appreciate.
- Assets not covered by the will.
Bank accounts, stocks and bonds, automobiles and boats, brokerage accounts, life insurance proceeds, and retirement accounts including IRAs and 401Ks, are usually distributed at death not by what your will provides, but by how the accounts were established or by a selection on a form completed when the accounts were opened. A properly devised estate plan will identify these assets and ensure that they are distributed in coordination with the other assets being distributed under the terms of the will.
- Retirement accounts.
IRAs and 401Ks can be particularly important to address because for many these are, next to their home, the most significant assets they own. Carefully designating how those funds are passed on to your beneficiaries can avoid significant tax consequences.
- Minor children.
It is a great tragedy whenever death leaves a child without a surviving parent. Ensuring that your minor children are raised by those close friends or family members you have selected helps ensure a continuity and well-being that provides great peace of mind. Informing a judge in a will or in a special form of who you want (and who you do not want) to care for your children is essential to an estate plan when you have minor children or an adult child with special needs.
- Living trusts.
An alternative to a will is the creation of a living trust. With a living trust, all or a portion of a person’s assets are placed in a trust that sets out how the assets are to be distributed on the person’s death. There are a number of good reasons for establishing this kind of a trust. The most frequently stated reasons are to “avoid probate” or “save taxes.” Often these reasons are either overstated or not correct. Once I understand your situation, I can advise you as to whether a living trust is appropriate for you. See Trusts for more information.
- Special issues/Special circumstances.
There are a number of special circumstances that need to be identified in the estate planning process. These include:
- Family owned businesses which raise estate planning issues that should be addressed.
- Property owned in other states which can cause additional time and expense to probate.
- Concerns about an adult child’s ability to handle money due to possible substance abuse, or a desire to provide for the costs of higher education for children and grandchildren, which may support creation of a trust. A spouse or partner with a family history of dementia, which may necessitate a discussion of additional estate planning options.
- A child or other intended beneficiary that is intellectually challenged, which may call for a Special Needs Trust that not only ensures that funds are available and properly managed, but which also minimizes the impact of the trust on that person’s access to essential government benefits.
- Digital assets.
So much of our lives involve the internet and computers. Digital photographs and video, records and passwords associated with bank and investment accounts, e-mail records, and social media accounts such as Facebook make up our digital estate. A complete estate plan should include a document that lists all the on-line accounts, passwords, security questions with answers, and whether the accounts have monetary value or not. In addition, special instructions should be given for locating specific digital assets or information, as well as which assets should be deleted versus those that should be passed on to family members.
- Unanticipated medical events.
There is the possibility that at some point in our life we may no longer be able to make decisions for ourselves about our affairs or healthcare. It’s important for each of us and our loved ones to anticipate this.
The following documents allow you to make important life decisions and provide instructions now while you are able to decide. Just as importantly, these documents let you select someone you trust to make decisions on your behalf. The alternative is letting Texas law (along with sometimes expensive legal proceedings) or someone you did not select make those decisions for you.
- Written Will
- Financial Power of Attorney
- Medical Power of Attorney
- Directive to Physicians or Surrogates (also known as a Living Will) for end-of-life medical treatment
- Declaration of Guardian in the Event of Later Incapacity
- Declaration of Guardianship for Children
- Burial Agent and Funeral Instructions
For more information or to schedule an appointment, contact me here.
Easy to talk to, very through, very conscientious, he helped us recognize and address important issues of estate planning that we had never considered. Always personable and pleasant, he answers every question as a conversation between equals, no lecturing or talking down. After working through the estate planning process with Joe, we feel our bases are covered. A great lawyer!
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