I am often asked “What do I need to bring to my first estate planning meeting?” Although clients don’t “need” anything, I often explain that certain decisions need to be made –decisions that I can’t help them make before the first meeting. I can help them decide which estate plan is best for them or which provision may be necessary or not advised; however, who will be in charge of their estate or children and whom they wish to leave their assets to, is entirely up to the them.
The first step in estate planning is making these crucial decisions. First, you should consider who will be in charge of your estate when you can longer do it yourself. Many people make comments like, “It won’t matter, I’ll be dead” or “That will be my kids’ problem”. Wrong. Many estate planning documents take effect while you are alive but unable to make your own decisions. Do I have your attention now?
The decision about who should be your successor is an important one. This is especially true if they take over while you’re alive and/or will serve as a successor for an extended period of time. The person should be trusted and if possible, have some sort of connection to the persons they are serving as beneficiaries. This may be a family member or longtime trusted friends.
Business acumen is not necessary but can be very helpful. Successors always have the option to hire or consult with professionals such as attorneys, CPAs, financial advisors and realtors. Having a base level of knowledge in these subjects is helpful to making sound decisions but not necessary. There seems to be a common misconception that you need Warren Buffet or Donald Trump as your successor – not true.
When deciding on guardians for minor children, parents should take special care to think about the best person for the job. They should consider how long until their children reaches majority (age 18 in California). Do their children have special needs? Do the proposed guardians have other children of their own? Will placing your children with them cause the proposed guardian to make a drastic life-style change? (i.e. single bachelor turning into Mr. Mom overnight) Although you can work out some of these questions with an attorney, some forethought must be had before your meeting.
Who receives your assets is another matter all together. For many people, naming the beneficiaries is easy — it is their children. For many others, the answer is not so easy. You may want to provide for brothers, sisters, nephews, nieces or other family members… but what if you don’t?
Those who have no heirs still have options. They can leave their assets to friends or acquaintances, but many find this challenging. What many people find to be rewarding is charitable giving. If you are having difficulty determining who should take your assets then looking to charities or organizations that share your core values may be a good option.
The final issue to think about is how your beneficiaries will take their inheritance. Outright? At a specific age? In small portions over time? Or just the income for life with the rest to someone else. There are many options for how someone receives their inheritance and you must consider the person receiving the inheritance so you can best decide how they should be provided for. If you are concerned that giving your childred their inheritance outright at a young age will be detrimental to their well-being, then restricting the manner in which they receive it is a wise decision. An estate planning attorney can help you work through these issues.
A wise man said. “The fastest way to walk around the world is to put one foot in front of the othe,” by that they meant the first step to a long journey is often a simple and manageable step. Take the first step towards estate planning and begin considering your options today.