Duane Bishoff’s 6 Steps to Estate Planning Done Right

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This is mid-term elections week, and as is my practice, I’m putting this post together on Monday morning, so we don’t yet know the results. I’m sure I’ll have a comment or two once the dust settles from that, though.

Regardless of the make-up of Congress, however, what *is* probable is that the legislators will be “very busy” again this year … and the tax code changes will come to us late, once again.

Which is why it (quite literally) pays to have someone in your corner who is watching things like a hawk, so you don’t have to.

So in between now and the end of the year, I’ll be giving you some insights into how you and your family can prepare NOW, so that your tax bill is as low as it can possibly be.

This week though, I’ll be speaking about a different kind of “planning”.

Duane Bishoff’s 6 Steps to Estate Planning Done Right
“A year from now you may wish you had started today.” – Karen Lamb

Over 50% of adults do NOT have a will or other estate planning instruments in place to protect themselves and their family. And, perhaps even worse, over 69% of parents have not yet named legal guardians who can raise their children if something happens to them.

Those are scary numbers. Estate plans provide great peace-of-mind for a family … and, of course, they can create a bunch of headaches if not handled correctly.

That’s why it always helps to have someone in your corner.

Here are some important things to keep in mind, whether starting a new plan, or working from an existing one…

1) Have an up-to-date plan. Too many people either fail to prepare an estate plan, or let their plan become outdated. Changes in the law occur frequently. As Will Rogers said, “The only difference between death and taxes is that death doesn’t get worse every time Congress meets.”

Plus, your circumstances can change. Toward the end of your life they seem to change faster. Between ages 40 and 65, have a new estate plan drawn up every decade. In your 70s and 80s, consider revisions every 12 months.

2) You have unique circumstances that your estate plan must address. Everyone does. As a result, there are very few “simple estate plans.”

For example, a friend related to me the story of a man who wanted a so-called simple estate plan drawn up for him and his wife. In the first 15 minutes, the estate planner learned that the client was a citizen of the UK, his 25-year-old son had bipolar disorder, and the son was actually not his biological or adoptive child, although he and the young man’s mother had been married for 23 years.

In another case, a very wealthy man was seeking “a simple estate plan” for him, his wife, and his family. But he was in a second marriage, had three children from his first marriage, his new wife had four children from her first marriage, and one of his daughters was in a prison for kidnapping.

You are unique. Here are some of the questions you may answer in a unique way:

* Do you donate regularly to charity?
* Or make substantial gifts to family members?
* Do you want those gifts to continue if you lose capacity?
* Do you own a business?
* Do you own property that should not be sold?
* Do you have a beneficiary who is likely to cause trouble or owes you money?
* Do you want to provide for the continuing care of a pet?
* Do you have a working farm, or farm animals?
* Do you want to be cared for at home regardless of the cost?

Your estate plan should be carefully crafted to address your specific needs and circumstances. The more tailored your plan, the less room there is for family disagreements.

3) Be careful not to change your plan inadvertently. Suppose, for example, you have a will that provides for your estate to be distributed equally among your three children, and you have named your daughter Sally as your executor.

To make it easy for Sally to access your bank accounts in the event of a medical emergency, you have added Sally’s name to all of them. What you have done without realizing it is to change your plan. Under some states’ laws, those bank accounts will belong to your daughter at your death and will not be shared by your other two children. As a result, your estate might be distributed differently than you intended. It can also result in family feuds or adverse tax consequences.

Before doing any self-help planning–even something as simple as adding a child’s name to a bank account–check with your legal advisor to see how it impacts your plan.

4) Make sure your fiduciary/executor gets adequate help. The actions of your executor, trustee or agent under a power of attorney are subject to a rigid and sometimes unforgiving legal standard. It is easy to unintentionally run afoul of those rules. If you name a child to serve in these capacities, introduce him or her to your legal adviser. Make it clear in your legal documents that your fiduciary is authorized to pay for that help from your estate.

5) Check that the person you choose is willing to act as your fiduciary before naming him or her in your legal documents. You may find an unwillingness or a reluctance related to some concerns that need to be addressed. For example, a child may never feel comfortable giving consent to take you off a ventilator, even knowing that was your wish.

6) Use your discretion, but consider telling your family in advance what arrangements you have made. Explaining your plan to your family upfront gives you the opportunity to address any concerns, answer questions and clear up misunderstandings. Once you lose capacity or die, it is too late. Many family fights could have been avoided with an open and frank discussion, so everyone is best prepared to handle a loved one’s loss of health or life. Eliminating surprises helps eliminate family fights.

In summary, most people who plan do indeed pay enough attention to concerns such as probate and estate tax avoidance. But the best estate plans are drafted with family harmony as a priority.

To more of what’s yours, in your pocket…


Duane Bishoff
(813) 356-0400

Hobson, Bishoff & Dowdy, PLLC

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