Back to Estate Planning Basics
Items To Discuss Before Meeting
With An Attorney
There are several items to discuss before meeting with the attorney who will draft a will or a trust.
Guardians For Minor Children
Who is best able to cope with the raising of your minor children? A brother, sister, or a close friend may be a better choice than a grandparent.
Factors to consider would include: ages of proposed guardians and ages of their children, ages of your children and number of them still minors, and health and financial situation of all parties. Decide on alternative choices, in the event your first choice is unwilling or unable to serve. If you name a couple as guardians and one of them dies, would you want the surviving coguardian to act as sole guardian? What if they divorce?
Executor Of The Estate
If all or part of your estate passes through probate, whom do you want to handle the details of paying you debts and death taxes and distributing the remaining assets to the beneficiaries named in your will?
Living Trust
Is it important for you to avoid probate? Make a list of your assets and approximate values, along with a list of mortgages on any property. Your attorney can give you an estimate of what it will cost your heirs to pass your estate through probate.
The living trust is frequently used to avoid or reduce probate expenses. Ask your attorney to explain the advantage and disadvantages of this type of trust.
Trustee
If you have a trust, either in your will or a separate living trust, you will need to name a trustee to manage investments, pay taxes, make distributions, etc. In the event he or she dies, you will want to provide for one or more successor trustees.
A Corporate Or Individual Fiduciary
Executors and trustees are referred to as fiduciaries because of the higher standard of care which is required of them in managing the assets of another person. Discuss the facts of your own estate relative to the following list of advantages.
A. Advantages of a corporate fiduciary
1. They don't die or become disabled - permanence.
2. They are financially accountable for their mistakes.
3. They are impartial as to the children. This may prevent the children from becoming bitter towards an individual trustee who happens to be a friend or relative, and who doesn't make distributions everytime the children ask for something.
4. They have investment expertise, tax and accounting abilities, and computer capabilities. Studies show that they save many dollars in the average estate.
5. They refuse loans to "hard-up-friends" of the trustee.
6. They keep current with the constant changes in the law.
B. Advantages of an individual fiduciary
1. A relative or friend may not charge a fee.
2. A relative or friend may have a more personal interest.
3. An individual may have special expertise (i.e.,running the family business)
Suggestion: Some people prefer to use an individual and a corporate trustee, as c0-trustees, to obtain the advantage of each.
Distributions To Children
If you do not want your assets distributed outright to your children in the event of your demise, they should probubly held in a trust. The trustee will take care of their needs as instructed in the trust. However, at some future time you will probubly want to distribute the assets to them.
Many people like to distribute a portion of the estate at several different times; e.g., 1/3 at age 21, 1/3 at age 25, 1/3 at age 30; or 1/2 at age 30 and 1/2 at age 35, etc. What is your preference? ____ at age ____; ____ at age ____; ____ at age ____.
Final Heirs
In the event your children pass away prior to inheriting your estate, to whom whould you want your estate to pass? For example, 1/2 to the husband's side of the family (e.g.; parents, brothers, sisters, etc.) and 1/2 to the wifes side.
Charitable Bequests
You would be interested in making any charitable bequests, especially if it reduced your income and death taxes?
Other Questions
Would you want your children to remain in the present house?
Is it important to reduce your death tax obligation?