7 Habits of Highly Effective Estate Planning

Estate planning is something everybody needs to do, regardless of how much money or property you have, how old you are, and whether you are married or have any children. Without an estate plan, the Commonwealth of Kentucky will decide what happens to you, your money and your possessions if you die or become incapacitated. Engaging in effective estate planning requires you to think about the future and talk about important matters with your family. With the help of an experienced estate planning attorney and your financial advisor, this process can be accomplished without too much difficulty and with the immensely satisfying result of knowing that you have taken the right steps to protect yourself and your family for whatever the future may bring.

Here are a handful of tips to help you dive in to the estate planning process.

1) Talk about your treasures

In your will, you can dispose of all your personal property. Sure, you can just make a general disposition of “all your personal property” to your heirs and let them sort out who gets what, but this can cause trouble in the family, ranging from bitter feelings to outright legal battles. If there are specific items that you want to leave to specific people, or items you know certain people would want, list them specifically in your will. Make gifts of cash or other property to others to offset the value of a particular disposition. If you can let people know ahead of time what your plans are, you can avoid disputes down the line and ensure that your wishes are met.

2) Decide on a guardian

It’s something you may not want to think about, but it is possible to die leaving minor children in need of care, and you want to make sure they are cared for by someone you trust. Use your will to appoint a guardian for any minor children you have or may have. This is also a good time to create a trust with funds to help care for those children. Even grown children may benefit from a trust established specifically to fund their education or other needs. For children or adults with special needs, a special needs trust can be established to ensure they are properly taken care of.

3) Decide on an executor

If you don’t name an executor for your estate in your will, the court will appoint one to do the job. This task frequently falls to a spouse, child or other family member, or you may want to consider appointing an attorney or financial professional, especially if your estate is large or complicated.

4) Add a living will

A highly effective estate plan needs to consider the possibility that you could become incapacitated and unable to direct your own healthcare. With a living will, you can appoint someone you trust to act as your health care surrogate and make medical decisions on your behalf when you are unable to do so. The living will can also express your desires whether to receive or not receive life-prolonging treatment, as well as your wishes on artificial feeding or hydration and organ donation. The right combination of living wills, do not resuscitate (DNR) orders, advance healthcare directives and powers of attorney will ensure that your health care is managed the way you would want it to be.

5) Fend off estate taxes with annual gifts

If you’re lucky enough to have a large enough estate (currently around $5.4 million) that it might fall prey to estate taxes, consider making annual gifts to your children or grandchildren, or others whom you intend to be the major inheritors of your estate. Currently, you and your spouse can each gift up to $13,000 per recipient without incurring any tax liability. These gifts will reduce the size of your estate that is subject to estate taxes, and you can enjoy making the gifts during your lifetime. The size of your estate and other factors can help you decide when to start gifting, how much to give and to whom.

6) Now where did I put that will?

Your will is just one of many important documents that you want to make sure you keep safe. Do you have them in a safe at your house, a safety deposit box at the bank, or in a desk drawer? One thing you don’t want to do with your will is hide it so good that no one will ever find it. Make sure trusted individuals know where you are keeping vital documents, such as your will, living will, trusts, insurance policies, and stock certificates. If your lawyer is keeping a copy of your will, make sure your heirs know who your lawyer is and how to reach him or her.

7) Keep it current

Making a will may seem like a one-time event, but it is not uncommon that other events intervene that make your will outdated and in need of revision or replacement. Births, deaths, marriages, divorces, adoptions, changing attitudes and all sorts of life events may cause you to need to revisit your will. When you do, don’t forget to also look at life insurance policies, retirement plans, and other policies or accounts with a named beneficiary. These may need to be updated as well. Unless you are an estate planning attorney, estate planning shouldn’t be always at the forefront of your mind. But it is a good idea to revisit your will and other estate planning documents every five years or so, or after a major life occurrence in your family.