United States: 7 Ways You Can Prepare For Your First Estate Planning Meeting

Somewhere on every grown-up person's to-do list is an entry that reads something like "tackle estate plan". You may even find it among your New Year's resolutions. The prospect of planning your estate with an attorney can be daunting, but the process itself – once you commit to doing it – can be easier than you might imagine, especially if you go into the first meeting prepared.

If you already understand what a typical estate plan looks like, you can skip to the next paragraph. Put simply, it is more than just a will. Instead, a typical estate plan contains four documents: a will, revocable trust, health care proxy and power of attorney. The health care proxy and power of attorney are designed to operate during your lifetime, while the will and revocable trust control how your property is dealt with after your death. The will tends to be a relatively simple document by which you give away your personal belongings and name the personal representatives who are to administer your estate. The trust, on the other hand, distributes the balance of your assets among the people (and charities) you care about and names the trustees who will administer the trust property according to your wishes. The trust is necessarily more complex than the will, because it is where the tax planning provisions are found.

When you meet with your attorney, he or she will guide you through the various choices you will be called upon to make, so that you end up with a set of documents that reflects your intentions. If you want to make this time with your attorney most productive, here are 7 things you can do to prepare. If you are able to put thought into any of these 7 things beforehand, you will be way ahead of the game.

1. Assemble a list of your assets and significant liabilities. This includes your house (and mortgage), bank accounts, investment accounts, business interests, personal belongings with value (e.g., artwork or jewelry), insurance policies on your life and retirement accounts. For each asset on the list, include an estimate of its value or current balance, as well as whether you own the asset in your individual name or in joint name with another person, such as your spouse. Your attorney will want to take a look at this list at the outset of the meeting, if not before, because it is a good starting point for determining which tax strategies could offer you and your family the biggest savings.

2. Consider if there are any personal belongings you want to leave to a particular person. You should think about how you would like to dispose of your things, even if you are convinced that they are not worth much money. Oftentimes, a couple will provide that all of their household furnishings, jewelry, collections, etc., will pass to the surviving spouse when the first spouse dies, and then everything will be divided equally among their children when both of them are gone. Because the sentimental attachment to certain items can be high, consider whether you should be more specific about who should receive those items. Keep in mind that the deepest rifts among adult children can begin with a tug of war over items that have value only to them. If you cannot decide at the time or want to remain flexible to change things over time, you can have a request put in your will that your spouse and/or children deal with your belongings according to any side letter you leave with your will. For this approach to work, though, you must promise yourself you will actually write that side letter.

3. Start to think about who has the skill and willingness to be the personal representative(s). The persons that you name in your will as the personal representatives will be charged with settling the estate following your death. His, her or their duties will include collecting your assets, paying debts, expenses and any taxes that may be due and then distributing the assets as directed by the rest of your estate plan. People usually name their spouse to serve as the personal representative in the first instance. If you decide to do the same, you still need to consider who should act in this capacity if and when both spouses are deceased. You can name more than one person if you like. Whoever you choose, you should also think about a successor in case the first person(s) named cannot act for any reason.

4. Get comfortable with the idea of trusts for your children and grandchildren as an alternative worth considering. You could decide to pay out all of the trust property equally among your children when you (or both you and your spouse) have died. Many individuals and couples choose another approach, however — to divide the trust property into equal shares, with one share being held in trust for each child until the child needs or wants funds. Your estate planning attorney will explain the advantages of this. For example, one compelling advantage is that property held in trust for a beneficiary tends to be insulated from the claims of that beneficiary's creditors, including a divorcing spouse. If you choose this alternative, the trusts could last throughout your children's lifetimes. Or, you could provide instead that specific portions of the trust property be distributed outright to your children at certain points in time (e.g., 1/3 at age 30, 1/3 at 35, and the balance at 40). You must also consider how you would want your property handled if one of your children predeceases you, leaving young children of his or her own.

5. Start to think about who has the skill and judgment to be the trustees. As with the appointment of personal representatives, the person or persons that you name as trustees of your revocable trusts following your death may be family members, friends and/or professionals.  If your children are relatively young and/or you decide to provide for grandchildren, the trusts could last many, many years. You may want to consider naming an institutional trustee (such as a law firm or bank) so that you will be sure there will be continuity of management. The trustee is responsible for managing the assets and making sound distribution decisions, so there will be adequate resources to meet your spouse's and/or your children's needs after you are gone.

6. Decide who should make medical decisions for you if you are incapacitated. The health care proxy, along with the power of attorney, is an important component in planning for incapacity. In the health care proxy, you name an agent to make health care decisions for you if you are unable to do so. Give some thought to the person who should have that responsibility, along with a successor to him or her.

7. Decide who should take care of your financial affairs if you cannot. The power of attorney is similar to the health care proxy, except that you are appointing a person or persons to act as your agent with regard to your financial matters during your lifetime. The power of attorney can take effect only when you are incapacitated or it can become effective immediately after you sign it (for instance, the power of attorney may be useful if your spouse is away and you need to sign on his or her behalf).

The purpose of this list is not to overwhelm you with decisions or delay you crossing this item off your to-do list. If you get stuck on any of them, know that your estate planning attorney will explain all of these things and the different options available to you when you sit down with him or her. Instead, this list is meant to get your thinking started while you have the luxury of time – in the days and weeks before the meeting – to reflect on these issues, so the ultimate result is exactly what you set out to achieve.

Originally published on January 25, 2016

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.

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