Estate Planning

An Estate Management Checklist

Do you have a will?

A will enables you to specify who you want to inherit your property and other assets. A will also enables you to name a guardian for your minor children.

Do you have financial documents in place?

Certain financial documents can outline your financial wishes. If you become unable to make decisions for yourself, these financial documents can be structured to empower a person to make decisions on your behalf. These documents may include joint ownership, durable power of attorney, and living trusts.

Have you filed beneficiary forms?

In some cases, naming a beneficiary for bank accounts and retirement plans makes these accounts “payable on death” to your beneficiaries. In other cases, you will need to fill out a “Payable on Death” form.

Do you have the right amount and type of life insurance?

When was the last time you assessed your life insurance coverage? Have you compared the life insurance benefit with your financial obligations?

Have you taken steps to manage your federal estate tax?

If you and your spouse have more than $5.43 million in assets, you may want to consider taking steps to manage federal estate tax which will be due at the second spouse’s death.

Have you taken steps to protect your business?

Do you have a succession plan? If you own a business with others, you may also want to consider a buyout agreement.

Have you created a letter of instruction?

A letter of instruction is a non-legal document that outlines your wishes. A strong, well-written letter may save your heirs time, effort, and expense as they administer your estate.

Will your heirs be able to locate your critical documents?

Your heirs will need access to the specific documents you have created to manage your estate. These documents may include:

• Your will
• Trust documents
• Life insurance policies
• Deeds to any real estate, and certificates for stocks, bonds, annuities
• Information on your bank accounts, mutual funds, and safe deposit boxes
• Information on your retirement plans, 401(k) accounts, or IRAs
• Information on any debts you have: credit cards, mortgages and loans, utilities, and unpaid taxes

Note: Power of attorney laws can vary from state to state. An estate strategy that includes trusts may involve a complex web of tax rules and regulations. Consider working with a knowledgeable estate management professional before implementing such strategies.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.

This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2013 FMG Suite.

Your Estate Planning Portfolio

What are the most critical pieces of personal information for you to compile and organize?  Jennifer Carlson, an estate planning attorney in Council Bluffs, explains that one of the most caring things you can do for your loved ones is to prepare a portfolio of your important documents.  This is an often overlooked part of estate planning.  Portfolio preparation consists of organizing all of your important documents in one location with user names, passwords, and verification information.

At the time of one’s passing, family members are grieving, and it is often difficult for them to identify the assets you own, locate passwords/keys, and retrieve necessary documents.  Because none of us knows when our portfolio will be needed, compiling your portfolio information is a task that cannot “wait until later.”

While each person’s portfolio will be different, following is a list that covers the most common documents.  This list can prompt you to consider additional items that need to be part of your personal portfolio as well.

Personal Data:

• Marriage license
• Divorce/Separation documents
• Social Security information
• Military service information
• Tax returns (including tax information to prepare current tax return)
• List of advisors
• Safety deposit box information
• Prepaid funeral arrangements/Cemetery plot documents
• User names, passwords, verification questions

Assets:

• Real estate deeds
• Vehicle/Motor home titles
• Stocks, bonds, investments
• Cyber assets (web page, domain name, blog)
• LLC, partnership, corporate documents
• Installment contract, promissory notes
• Bank and/or credit union accounts
• College savings plans
• Life insurance policies
• 401(k) and similar accounts
• Individual retirement accounts
• Pension documents
• Annuity contracts
• Job-related benefits
• Fraternal benefits

Estate Planning Documents:

• Will
• Trusts
• Letter of instructions

Medical:

• Medical history
• Health insurance information
• Long-term care insurance policy
• Medical power of attorney
• Living will/Do Not Resuscitate order

General Power of Attorney

[Thank you for your interest in this estate planning material from our client event. The information above is from the personal notes recorded by Tom Sperling, and is of a general nature. This material is not intended in any way to serve as legal advice.

If reading this material leads to further questions for you, you are encouraged to contact Jennifer Carlson or another estate planning attorney of your choice. We also invite you to attend future client events here at Dickinson Investment Advisors.

Jennifer A. Carlson is an attorney in Council Bluffs who practices primarily in estate planning, probate, wills, and trusts.]

Inheritance Choices: What Will You Leave Behind?

History is full with examples of parents taking actions they believe will improve the lives of future generations. In 1780, then President of the United States John Adams wrote to his wife:^[1]

“I must study politics and war that my sons may have liberty to study mathematics and philosophy.  My sons ought to study mathematics and philosophy, geography, natural history, naval architecture, navigation, commerce, and agriculture, in order to give their children a right to study painting, poetry, music, architecture, statuary, tapestry, and porcelaine.”

The underpinning for an improved future may be found in the bedrock of an enduring political system, a free country, a strong work ethic, a superb education, or elsewhere. The 2014 U.S. Trust Insights on Wealth and Worth^[2] report found six in 10 wealthy Americans believe it is important to leave a financial legacy for the next generation. If you intend to provide heirs with financial bequests – and you want to preserve family harmony – it’s important to clearly understand the story your inheritance choices will tell your heirs.

What is equal in the context of family?

One of the most challenging aspects of planning an inheritance is that families are complicated. American families are varied throughout the country, but their members tend to fall into one or more of a few broad categories. According to the Key Findings Report^[3] in the 2014 U.S. Trust Insights on Wealth and Worth:

• Single person: About one-fifth of wealthy participants, in a recent survey, had never married or had not remarried after being divorced, separated, or widowed (a small percentage are cohabitating).

 

• Traditional marriage: About three-fourths of affluent Americans are in their first marriage and two-thirds have children.

 

• Blended marriage: The Silent Generation (24 percent) and Baby Boomers (17 percent) are more likely than younger generations to have blended families, meaning they have remarried after being widowed or divorced and may have step-children.

 

• Multi-generational household: Generation X (11 percent) and Millennials (32 percent) are more likely to live in multi-generational households, meaning they have either live with siblings, parents, or grandparents, or have adult children, parents, or grandparents living with them.

 

In the context of family, what seems like the simplest choice – dividing assets equally among all of heirs – becomes quite tricky because equality is in the eye of the beholder. A grown son may believe he deserves a bigger slice of financial pie because his family has the most children. A daughter may believe she deserves more because she was the primary caregiver when you were ill. Mix subjective judgments about fairness with the complexities of modern American family structure and inheritance issues can become quite touchy.

 

Minimizing inheritance disputes

Determining an equitable division of assets is never easy, not even for single parents or couples in traditional families. One child may suffer a disability, have an addiction problem, run the family business, be less successful than siblings, or have made life decisions parents are uncomfortable supporting. If your family circumstances necessitate an uneven distribution of assets, there are a myriad of ways to try and minimize the conflicts that may accompany the decision. These include:^[4][5]

• Acting discretely. If you’ve decided an unequal division of assets is necessary and know your children will not be happy with your decision, consider establishing a discreet trust for each child. The advantages of discreet trusts are they can be funded unequally and each one can have completely different distribution triggers and incentives. In addition, each child will only be apprised of the provisions of his or her trust unless the information is shared. Make sure the assets that will fund each trust are properly titled.

 

• Establishing a shared trust. If you distribute the majority, but not all, of your estate equally among heirs, the remainder (perhaps one-fifth or one-quarter of the assets) can fund a shared trust to be used when an heir has an emergency need. The trust should have an objective third-party trustee who will be responsible for distributing funds fairly.

 

• Choosing your executor carefully. Some say it’s best to follow family hierarchy and make your oldest child executor. Others say it’s best to choose a family member who is organized, hardworking, honest, and a good communicator. Still others will suggest you appoint a committee of executors because of the checks and balances a group provides. No matter what you decide, make sure everyone understands your choice.

 

• Explaining your thinking. The difference between family harmony and an ongoing feud may be determined by how clearly you communicate with your family. The Wall Street Journal suggests, “Whenever possible, try to be open about your inheritance plan while you are still alive, so every family member truly understands it, minimizing the chances for suspicions to arise later. If you don’t want to have this difficult conversation while you are alive, you can write a letter or make a video elaborating on the reasons and thought process behind your plan and making it clear that these decisions are yours alone.”

 

There is no right or wrong answer when it comes to inheritance. Parents will make decisions based on their knowledge of family dynamics and individual needs. The AAII Journal^[6] suggests taking “a multi-faceted approach that combines psychology, good lawyering, a lot of self-awareness, and a good dose of common sense.” If you haven’t recently, you may want to review your will and estate plans with your financial advisor and/or attorney.^[7]

 

Sources:

[1] https://harvardmagazine.com/2011/03/quotable-harvard

[2] https://www.ustrust.com/ust/pages/insights-on-wealth-and-worth-2014.aspx (Brochure, page 8)

[3] https://www.ustrust.com/ust/pages/insights-on-wealth-and-worth-2014.aspx (Key Findings Report, pages 5-6)

[4] https://online.wsj.com/news/articles/SB10001424053111903648204576554620047917688

[5] https://www.fa-mag.com/news/playing-favorites-16512.html?section=105

[6] https://www.aaii.com/journal/article/19-recommendations-for-minimizing-inheritance-conflict?adv=yes

[7] https://www.nolo.com/legal-encyclopedia/avoiding-fights-over-your-estate.html

This information is not intended to be a substitute for specific individualized legal advice. We suggest you discuss your specific situation with a qualified legal advisor.

The above material was prepared by Peak Advisor Alliance.