planning: Preparing for your family’s well-being
Estate planning is a topic often avoided by individuals because it deals with attitudes and feelings about death, property ownership, business arrangements, marriage and family relationships that they or other family members may not be ready to think about.
People who have experienced the death of a family member agree it is worth investing some time and money to avoid the confusion, delay, expense and quarreling that sometimes occurs in families when an individual dies without an estate plan.
Most people, when they stop and think about it, would like to have a say about what happens to property they have worked so hard to accumulate. An estate plan is a tool that provides some aspect of control. If you don’t bother to make a plan, state and federal laws will determine what happens to your real and personal property upon your death.
What would happen if your estate had to be settled tomorrow? Would your spouse be able to maintain a satisfactory level of living? Would an adequate education for your children be assured? Who would receive your property if, after your death, your spouse remarried—your children, the second spouse, a business partner? You can determine the answers to these questions and others by enacting your own estate plan.
Your plan needs to be tailored to your resources and to your family’s needs. Unfortunately, many families cannot come to grips with these challenges because they are unaware of the cost of not planning. They are afraid of what they think is a complex subject, or are wary of outsiders who seek to help them develop a plan. Whether you realize it or not, you are unconsciously developing part of your estate plan every time you acquire property, decide how property or accounts will be titled, name beneficiaries, or purchase insurance.
The estate planning process involves six basic steps: 1) Initiate the discussion; 2) Take stock of the present; 3) Develop objectives; 4) Choose professional advisers and discuss objectives; 5) Consider alternatives and implement the plan; and 6) Review and modify.
As you begin forming an estate plan, establish your objectives in creating the plan. What do you want to accomplish? Objectives vary from family to family
because of differences in assets and liabilities, aptitudes and ages of survivors, special needs children, number of children, and values that are important to the person making the estate plan.
Some common estate planning objectives include: provide security for surviving spouse; provide security for both spouses after retirement; provide security for an incapacitated or special needs family member; assure continuity of farm or other business; provide educational opportunities for children or grandchildren; name guardians, conservators, or trustees for minor children; provide means for paying expenses of funeral, estate settlement, taxes and other debts; transfer specific property to specific people; provide for charitable bequests to favorite charities or organizations; and arrange for healthcare power of attorney and healthcare directive in case of incapacity.
Even if you have made estate plan arrangements, you need to review these plans periodically. For example, changes in federal law (Health Insurance Portability and Accountability Act of 1996, or HIPAA) now require a privacy waiver in the healthcare power of attorney to allow the attorney in fact access to medical records of the incapacitated person that may be needed to make medical decisions.
If your power of attorney for healthcare was created more than two years ago, you may need a privacy waiver addendum to your healthcare power of attorney. (See www.mobar.org for the form.) Many professional advisers suggest a review of your estate plan every three to five years or whenever there is a major change in your situation or in related state or federal laws.
(Watch for more estate planning information by Suzanne Zemelman Gellman soon at http://extension.missouri.edu/stcharles).
Estate Planning in Montana: Getting Started. (August 1995, reviewed June 2005). Marsha A. Goetting, PhD, CFP®, CFCS, Extension Family Economics
Specialist and Professor, Montana State University-Bozeman. http://www.montana.edu/wwwpb/pubs/mt9508.html
Estate Planning Considerations for Ohio Families. (November 2003). Jim Polson, CPA (inactive), District Specialist, Farm Management, Ohio State University
Extension, and others. http://ohioline.osu.edu/estate/
Suzanne Zemelman Gellman, MS, JD
Financial Education Specialist