Estate planning begins with your family, and what you need to do to take care of yourself, your spouse and pass your assets to your children and grandchildren. Good estate planning empowers you to provide for your family and to ensure your wishes are carried out.
Like any good plan, estate planning has to be proactive instead of responding to events after they happen, and the plan must provide sensible solutions for your family.
While it can get more complicated when you have young children, a second marriage, family members who do not get along or estate tax issues, the key to making an estate plan is to find out what the options are, and thoughtfully consider your choices. I can advise you on the options appropriate for your situation, explain to you how they work, and the advantages and disadvantages of each possibility.
Many things happen in life that can prevent you from acting for yourself. These can range from needing someone to your bills while you are on an extended trip to needing someone to make arrangements for your release from the hospital. Life may not wait for you to act. To avoid a crisis in decision-making or delay in getting necessities done, you should consider appointing a health care agent and designating an agent for your finances through a power of attorney.
A health care agent can make medical decisions for you if you are unable to do so. A health care agent designation does not allow someone to make medical decisions for you if you are competent, can understand the choices you may have, and can make a decision for yourself. Instead, they stand ready to make decisions if you cannot and to make decisions in your best interest. A power of attorney allows someone to act for you to handle your finances either because it is convenient for your, or if you are incapacitated.Without these basic tools, you leave your family without the ability to act, and without instructions about how you want your health and financial matters handled.
Without proper estate planning, the care of your minor or disabled children will be left to a court deciding what is in the best interest of your children when you die. Furthermore, any assets you may leave without explicit instructions about how they are to be used to support your children may come under their control at age 18. Such important considerations as education may not be as important to a young adult as it is to you. A will allows you to designate a guardian for your children upon your death and to provide the funds and direction needed to ensure your children are cared for as you would. While the surviving parent may be able to care for young children, you may wish to state how your money will be spent to care for them, and in the case of young adults, you may want some of your funds to go for specific purposes, such as education, a wedding or a down payment for a house. This can also be accomplished thoughtful estate planning.
A second chance, but it also means trying to make one family from two sets of children, two sets of assets, and a host of different responsibilities and goals. A thoughtfully considered estate planning can address and reconcile those different objectives in order to make sure each family member is taken care of in an appropriate manner.
No family is perfect, but the death of a loved one can add grief and anger to the situation where there are differences of opinion. Instead of ignoring family dynamics, estate planning should address and deal with family dissent before it ends up in court.
Most people have a good idea of what assets they have – property, investments, retirement accounts, and businesses. However, they do not consider where their assets are, or how they are owned, and what law or agreements may apply to them. An executor of an estate can find it difficult to have to locate, collect and properly account for assets located in different states, different countries or co-owned with others. A thorough and thoughtful estate plan must consider these differences in order to avoid unnecessary effort and cost to administer your estate.
Like death, are a fact of life. However, estate planning should never begin with the taxes – it is like having the tail wag the dog. While you must plan for them, they should not rule your planning. When they become a concern – if your estate is over $1 million in Maryland or Washington D.C. – there are options to help you minimize the cost of taxes to your estate and also to help your estate to pay those taxes. It is important to understand that most of these choices need to be made before you die, and good estate planning will always consider those options and weigh them against your other goals.
Charitable bequests, lifetime gifts or directed giving are great ways to give to the causes you support, ‘pay it forward,’ and inspire your children and grandchildren about the benefits of charitable involvement. There are possibilities through estate planning to meet all donation amounts and all levels of involvement, and there are possible tax benefits as well.