Wednesday, July 30, 2014

Do you need a will? The answer to that question is usually yes. Do you need other estate planning as well? The answer to that question is almost always yes.

Estate planning is more than writing a will.  A will declares your intentions at death regarding your property and family.  A will is generally not binding until the moment of death, but there are often assets to be administered outside of a will such as insurance, bank accounts, and investment accounts. 

The modern trend is to plan estates so that very little property is covered by the will and subject to the probate courts.
  Many homes and checking accounts, for instance, are "joint tenancies with rights of survivorship," that is, they are legally owned by two people, and when one of them dies, the other owner (often the widow) owns the entire asset.  Investment and retirement accounts are usually transferred at death by contract, not by will; the owner of the account by contract names a beneficiary at death.  

The purpose of most estate planning is to get the best use of assets while alive and to preserve those assets for heirs, friends, or charities at death.  For instance, a widow might sell the family home and live in a condominium rather pay taxes and maintenance costs on more space than she needs.  A grandparent may create a special-needs trust for a disabled grandchild but provide for her other grandchildren as heirs in her will.  A parent may give a certain amount in stocks to a child this year but hesitate to give more because of federal gift taxes.  All sorts of property can be placed in trust, whether to avoid taxes and probate or to create more reliable and independent control.

The traditional "triad" of estate planning consists of wills, powers of attorney, and trusts.  Insurance, retirement funds, and other financial services are usually essential to the plan as well.  Various factors in the design may include the types and risks of the family assets, whether the family needs to keep control of a company, the ages and interests of the heirs, health and disabilities, family conflicts, taxes, and the family's core values.


Developing an estate plan is not easy because it involves asking questions of ultimate value and setting priorities based upon mature reflection.  In most cases we need to be "kicked" before we become serious about estate planning, usually by the illness or death of someone we love.

Here is a nice piece called "Dying in the Digital Age", and it discusses a topic of a previous blog post: "What happens to your electronic accounts when you die?"