I often sit down to meet with people who want me to do absolutely everything for them, and they are somewhat shocked that I do not tell them everything to do with their estate plan. Sometimes I have to explain that I cannot decide who should get their assets, as I do not know their family situation, nor do I know who they think deserves assets, or who does not. If someone cannot tell me who they want to get assets when they die, I will often suggest my children as potential recipients, as I know they could use the money!
I quickly identify this as a bad idea, as I don’t really think that my children should get money from potential clients, but my answer does get people to think about who they want to receive their assets. Of course, if you want to leave all of your assets to my children, I will not stop you, but that may not be exactly what you want to do.
I do think that people believe there are specific rules or a rigid structure to how assets may be distributed, so they are asking me to tell them the specific rules, but there is not necessarily a rigid structure or an overly specific set of rules. Instead, you are able to choose who you want to receive assets, and you can choose how the designated recipients will receive assets after you are gone.
Your designated recipients are called beneficiaries in a will or a trust. You can pick who you want your beneficiaries to be, whether it be your spouse, your children, other relatives, a charity or organization, or whomever you pick to receive assets when you pass away. Choosing who you want to leave assets to is a very important thing to consider before you meet with your estate planning attorney.
In addition, you want to think about, and probably list out your assets, and the approximate value of the assets. Having a list of assets can be quite helpful in determining how to structure your estate plan, and can help drive the decision on whether you need a will or a trust in your estate plan. You also need to think about who you want to put in charge of distributing assets. Who you leave in charge is an important decision, as they will be carrying out your estate plan after you are gone. You will want to choose carefully, as they have an important job!
1. You Need to Think About Who You Want to Receive Your Assets When You Pass Away
While it may seem like there is an obvious choice of who should receive assets when you pass away, the answer is not always as obvious as it seems. For those who are married, your spouse is likely an obvious choice to receive assets, and all of your assets for that matter! However, if your current spouse is not your only spouse you have had, then leaving everything to your spouse may not be the way you want to do things. You may have children from a previous marriage that you want to give assets to, instead of your spouse, and you may have certain assets that need to go to your children instead of your spouse. You may also not have a spouse, so a spouse may not be an option.
You also may want to think about what happens if your spouse were to predecease you. If your spouse has passed away, do you want assets to go to your children? Should there be any restrictions on giving assets to your children? For instance, if you have minor children, do you want assets distributed to them over time, or to be distributed to the children at a certain age? Do you even want your children to inherit all of your assets? Do you even have children to take your assets, or do you need to leave assets to someone else, like other family members, or to a charity or an organization?
Children are only legally entitled to assets if you neglect to make a will or a trust, or if you unintentionally omit them from a will or a trust. Once you create a will or a trust, you can dictate the terms of who gets assets through the will or the trust after you pass away. Who gets assets when you pass away, and the terms and conditions of such distributions, are things that you want to think about before you meet with your estate planning attorney.
Certainly you can discuss the exact details of how to set up distributions from a will or a trust with your estate planning attorney, as your estate planning attorney may have suggestions for you on how to set up your will or trust to accomplish what you want. But, the estate planning attorney does not know your family situation or who you want to leave assets to until you tell the estate planning attorney. The final decision on who gets what is up to you – not the estate planning attorney. You need to be able to tell your estate planning attorney who gets what, and how you want that to happen.
2. You Need to Think About (and probably list out) What Assets You Have and How Much They Are Worth
An estate plan usually does not need to contain a list of all of your assets. If you put a list of all of your assets into the will of the trust, then every time you bought a new asset, or sold an asset, you would need to update the will or trust. That would be time consuming, cumbersome, and could be expensive, so the list of assets doesn’t need to become part of the will or trust.
Instead, a list of assets and their approximate value can help determine what type of an estate planning document you need. Different types of assets, and the location of those assets can impact whether a will itself will be sufficient, or if a trust would be a good idea. For instance, if you hold real estate in multiple states, then a trust may be quite useful and helpful in avoiding the probate process in multiple states. Also, if you have significant assets, then you may not want to leave everything to your beneficiaries outright at the time of your death, so a trust can dictate when and how distributions of assets should be made.
Providing your estate planning attorney with a list of assets and their approximate value will help your estate planning attorney to know which options to discuss with you and what suggestions to make to address your situation.
3. You Need to Think About Who You Want to Leave In Charge
Who you pick to carry out your estate plan is vital to consider. This person is called a personal representative and is tasked with carrying out the instructions in your estate plan. The person will need to deal with the beneficiaires, family members, financial institutions, real estate professionals, and potentially the probate court. You want to pick someone able to help carry out those instructions and someone who is able to deal with all of the aspects involved with such a job.
Many times, people will pick a child, or other family member, who can handle such duties. Other times, there may not be a family member able to handle the job. In that case, you may pick a professional fiduciary to act on your behalf. There are some attorneys that take on this responsibility, but I do not, as acting as a personal representative is not part of my practice. I do have a couple of professional fiduciary groups in Colorado that I work with that I can refer someone to, or banks and some investment companies may also offer these services. Banks, investment companies, and professional fiduciaries do charge for their services, but if you don’t have a family member who can handle carrying out your estate plan, then you can choose one of these types of groups. You may pick whomever you like, but you want to carefully choose who you trust.
The same goes for whomever you choose to serve as an agent to make financial decisions for you under a Financial Power of Attorney, or a Medical Power of Attorney. You want to choose someone you trust and someone capable of carrying out your estate plan. Your estate planning attorney just needs to know who that will be, and should also get contact information for that person, like an address and phone number. You definitely want to think about who you want to use before you talk to an estate planning attorney and give them that information.
You Can Find The Type of Information You Need to Provide From the Estate Planning Attorney
Many estate planning attorneys have questionnaires, or a webpage, that they provide to potential clients to let potential clients know what information they might need. My webpage to collect such information can be found on my website by clicking here. I also have a more detailed intake worksheet that I provide to potential clients, which you can find by clicking here. I do ask similar questions when we meet, so if you would prefer to simply think about what you want to do and schedule a meeting, you can schedule a meeting by going here. You can also call me to discuss your situation and what you might need. Just keep in mind that if you think about what you want to do, and consider the information shown in this blog, our conversation will be much smoother and more productive!