Far too often, going to an estate planning seminar is like watching paint dry because the information is too technical and tax driven. Earlier this year, I was part of an estate planning session that focused on more unconventional estate planning advice filled with lots of common sense. Here are some great tips I got from the speaker Doris Bonora:
1. Clarity and communication should be the goal of estate planning. Far to often we get caught up in the legal and tax implications of estate planning. The whole purpose of an estate plan is to communicate detailed instructions so that your affairs are handled to your satisfaction in case of death or illness.
2. Planning is the least expensive option. When it comes to drafting a will or other estate documents, often people get turned off by the fee that lawyers charge for their services. In my experience, paying a lawyer to draft a will, an Enduring Power of Attorney and a Personal Directives is the least expensive option. I’ve seen Lawyers make a lot more money when people do not have a plan and they have to try to settle disputes that arise from poorly planned estates.
3. With a Personal Directives, appoint people who are health care advocates. A Personal Directives appoints someone to make health decisions if you are unable to make those decisions. Ideally, you want someone that is going to be your advocate and make sure you are getting good care and the right advice. You want someone that will seek more than one opinion even if it requires more effort. That’s who I would want for me.
4. Have a system in the will to deal with personal assets. When it comes to financial assets, it is very common that assets are divided equally. When it comes to personal assets, dividing the grandfather clock or the diamond ring three ways typically does not work. According to Bonora, “it is usually the dividing the personal assets that creates the most trouble with families. As a result, it is important that the will provides a set of rules or a system to deal with dispersing personal assets. In this system it is also important to outline a dispute resolution process. Something as simple as in case of a dispute put your names in a hat and draw names. Making lists of personal assets can be helpful but it is not a system. It is very likely something will be overlooked.”
5. Don’t be afraid to use a trust to manage your estate. When dealing with younger beneficiaries or families of a second marriage, using a trust is very beneficial. Studies show that when people inherit money, 70% of the time, the inheritance is gone within three years. Trusts place stipulations on how inheritances can be used and when it can be used. According to Bonora, “although some people feel it is not appropriate to control money from the grave, it may be one of the best things you can do for the beneficiaries, especially if they are young.”
6. Don’t put funeral directions as part of the will. Often people think that funeral directions should be part of a will but Bonora feels that far too often the will is read after the funeral happens. Part of this is our societal belief that a will should not be read until after a funeral. Since it is important to provide funeral guidance, do it in a separate document and make sure your loved ones know where it is.
Jim Yih is the author of Smart Tips for Estate Planning. Check out this book for more information on estate planning
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