We are often asked, “Do I need an estate plan?” or “Do I need a will?” These questions are like asking if you need a 2005 Honda Accord with a satellite radio receiver. You have assumed that you need a vehicle. You have not provided any information on your circumstances or your family’s needs that are necessary to provide a meaningful answer to your question. In fact, the state legislature of Pennsylvania, and most other states, has provided a plan for the distribution of your assets at your death without consideration of your individual choices or your family’s specific situation. If you do not make your own plan the Legislature’s plan will make the decisions for your survivors.
This article will start you in the direction of a complete, personalized answer to your questions. You do need a plan that will be responsive to your family situation. You can protect your survivors by providing directions and assistance in making the difficult transition that must occur if you become disabled or pass away.
In GENERATIONS: Planning Your Legacy, leading estate planning attorneys from across the country addressed a wide range of estate and business planning issues. Dave Radcliff, J.D., now of counsel to Cipriani & Werner, P.C., was a contributor to Generations. From that volume, we offer the following and ask to you consider working with Cipriani and Werner on your personal planning.No two individuals will have the very same estate plan. But there are strategies that we might refer to as basic estate planning strategies, because those strategies are employed in most estate plans.
- Avoid intestacy (dying without a will or living trust).
- Avoid the probate process to the greatest extent possible, through use of a revocable living trust instead of a will and other techniques.
- Take advantage of basic tax code provisions that significantly defer and reduce federal estate taxes.
- Apply the annual gift tax exclusion.
- Name proper beneficiaries for bank accounts and pension and other retirement accounts.
- Include directions for handling your financial affairs in the event of your incapacity.
- Where there is a family business, include provisions to enable the business to be continued, sold, transferred, or discontinued as smoothly and efficiently as possible.
It is important to remember that an effective estate plan can be achieved only after a careful and detailed review of all of your specific circumstances and objectives. Cipriani and Werner, P.C., strongly supports the team approach to estate planning. Your legal, financial and business advisors should collaborate on the development of your personalized plan.
Life insurance is another important part of most planning strategies. The authors of GENERATIONS agree that life insurance plays three basic roles in your estate plan:
- It provides the funds to replace your income for your loved ones upon your death.
- It can provide the funds to pay for estate taxes, if necessary.
- It can replace any wealth that you might leave to a public or private charity. (Commonly referred to as redirecting your "social capital" — or redirecting the amount of your estate that is subject to estate tax.)
You must also adopt strategies that are adaptable. Change is the nature of our world. Over time, laws will change, our family situations will change, our finances will change. Flexibility in planning can mean two things. First, it means establishing a plan that does not have to be revised every time there is a change in the laws or a family situation.Second, it means establishing a plan that if the laws or a family situation change the plan can be changed to reflect the changing circumstances.
A good professional estate planning attorney will be able to help you identify your goals in such a way that future changes in your family’s situation can be addressed now in the plan. A good planner will know how to build flexibility into the plan.
At a minimum, a proper estate planning portfolio using living trust-centered documentation will often contain:
- A section for personal and family information
- A list indicating the location of original documents
- A listing of the names, addresses, and telephone numbers of professional advisors and representatives
- A list of all insurance and annuity contracts which you own so your intended beneficiaries will not overlook these assets
- A thorough and easy-to-understand revocable living trust agreement for you or, if you are married, for you and for your spouse; or a joint trust for both (appropriate only in certain circumstances and in particular states)
- An affidavit of trust which contains pertinent facts about your trust which can be used to prove the trust's existence while preserving the privacy of the detailed provisions of your trust
- Pour-over will(s)
- A memorandum of distribution to dispose of significant items of your personal and household items (what form this takes will depend upon the state in which you reside)
- Special powers of attorney which designate agents to fund your revocable living trust with any assets that you may acquire after you are disabled and are unable to fund the trust yourself
- A durable special power of attorney for health care which grants your designated agent the power to make medical decisions on your behalf
- A living will which directs your physician when to discontinue life-support systems and invasive medical procedures
- Memorial instructions which contain your burial or cremation wishes and information on the type of memorial service that you would like to have
- An anatomical gift form which allows you to make a gift of all or part of your body for medical or dental education and research, therapy, or transplant
- A property agreement which severs and terminates your joint tenancy interest to allow such interest to be properly transferred into your respective revocable living trusts
- A section for you to insert documentation of those assets which have been transferred into your revocable living trust
- A detailed letter from your attorney setting forth complete instructions for transferring assets into your trust (The Living Trust Workbook, Esperti and Peterson, Viking-Penguin, 1994, is a complete guide on the subject.)
What It Means to You
We can customize strategies for planning for married couples, single parents, and second marriages. If your situation requires it, pre-nuptial agreements can be prepared to protect the property you wish to leave to the children of a previous marriage. E-mail Dave Radcliff (email@example.com) if you would like to receive a brief summary of concerns addressed in each of the above circumstances. You may also wish to schedule a no fee consultation with one of our local attorneys by calling the Cipriani and Werner office nearest to your home. At Cipriani and Werner we welcome the opportunity to assist you with organizing a personal solution to your concerns; a solution that will guide your family through their difficult transition