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Common Questions with Estate Planning Documents

Common Questions with Estate Planning Documents

May 17, 2016

First, a disclaimer. 

I did not go to law school. I'm not an Attorney, nor have I ever played one on television. The information below should be used as information only and to ask an Attorney before taking action on anything and everything that I share below.  Now, back to our scheduled programing...

Over the past 15-years, I’ve participated in countless interviews with clients and their Estate Planning attorneys. My role in these meetings is to help the attorney understand all of the clients’ financial instruments and to help the client coordinate their financial instruments with their new Estate Planning documents. Below are five of the most common questions I hear with respect to Estate Planning documents.

Getting legal documents done through an attorney sounds expensive. Can’t I just get mine done through the legal document software I found on the Internet for $50?

The price of getting your legal documents through a quality attorney can certainly catch your attention, but what isn’t always clear is the cost of a mistake. Mistakes can potentially be far more expensive than the cost of Estate Planning Attorney produced documents. Not all family dynamics fit into a simple easy-to-use-done-in-five-minutes form in a software package. I’m sure the software may work for some people, but if you want to be sure and you want to have a live person that will stand behind the document – then use an Estate Planning attorney.

Right now my family doesn’t have much in the way of a net worth to leave to our children in the event both my spouse and I pass away. Do we even need to have Estate Planning Documents?

The attorney will be the best judge of that, but the likely answer is yes. You may have other important decisions to communicate and document. For example: Who do you want to serve as Guardian for your children? If you are in a coma and your spouse isn’t available, who do you want making decisions on your behalf? With respect to the small net worth, depending on the amount of life insurance that you own, your Estate may be large enough where the executors, trustees and ultimately your children will need guidance (ex. education funding, general health and well being for your children, etc). This is a good question to ask the Estate Attorney on the phone before the initial interview.

My family is small, we don’t have a lot of close friends in the area and my parents are getting on in years. Since we don’t have a good solution for the Guardian, shouldn’t we wait to get our Estate Planning documents completed?

Guardian selection is just one of many desires that you will express through your Estate Planning documents. An attorney will be the best person to give you guidance on this question. Please keep in mind that you can set-up your documents to be revocable and changeable at any time. Some people with similar concerns will go with their gut, get their documents implemented such that the majority of their wishes are documented and then circle back to the one issue that they weren’t 100% on later. God forbid the documents are needed, your survivors will be grateful you did.

Should the Guardian of my children and the Trustee of the Money be the same person?

The Estate Attorney can help walk you through the pros/cons of this question. The positive view is that you are trusting them with your child which is worth far more than money. The opposite view is that with both the money and the child, there isn’t much in the way of checks and balances. If you find yourself vacillating between the two, then the Estate Attorney may be able to help you find a middle ground or build-in safeguards through the language in your documents.

Assuming both my spouse and I are gone, at what age should my children receive the Estate Assets without any restriction?

This is a common question and your attorney can walk you through the pros/cons of the different ages. Without legal documents, you’re looking at age 18 as the default option. Personally, I’m sure I would have made some poor decisions had I received a large sum of money at age 18.

Some attorneys will recommend age 21 or age 25. It really depends on the child as to what they can handle. If you have small children, you can ask the attorney about leaning towards older (you can go as old as you want) versus younger. Or, another common practice by attorneys working with large sums and small children is to distribute in phases (ex. distribute 1/3, five years later distribute another 1/3 and then five-years later distribute the balance).

If you have small children, please remember that as long as you have revocable documents that you can change them later.

One last thing….

A number of years ago I worked with a client to help him organize his finances. He already had his Estate Planning documents complete. His Living Will document stated that in the event he was in a coma and not getting better that he wanted ‘the plug pulled’. It also stated that if there was a plug that needed to be pulled that a Jeff Smith was to be the one to pull it. Through my financial interview and through all his documents there was no other mention of Jeff Smith – just in this one place. At the next meeting, I asked the client who Jeff Smith was in his Living Will.

“Jeff Smith is my accountant,” he said proudly.

“Your accountant? You want your accountant to pull the plug,” I asked with a puzzled look on my face.

“Absolutely. I can’t have my wife or kids do that – that would be horrible! Jeff Smith doesn’t care about me, so it will be easy for him. Heck, he might even enjoy it!”

That isn’t a recommendation. Just a morbidly true (hopefully amusing) story so I can end this piece on a high note!

Thank you for reading.