Preparing for a Smooth and Easy Estate Settlement After You’re Gone
by Eric Harris, Attorney
Most of us don’t like thinking about our eventual death. Yet, almost
all of us want to be remembered for a positive legacy. A good, solid estate
plan is an important start to a positive legacy. Lack of planning or improper
or unrealistic planning can cause the estate settlement process to be
messy, stressful, time-consuming and can often create permanent rifts
among heirs.
The following tips are intended as conversation starters, regardless of
whether you intend to pass your estate to your heirs via your living trust,
beneficiary designation, survivorship, court-supervised probate or any
combination of those.
1. SET UP A GREAT ESTATE PLAN
Your chances of success utilizing a do-it-yourself kit, an Internet-based
solution or estate plans purchased through seminars at a heavy discount
are limited and will likely create more problems and expense for your
heirs after your death, despite the heavy marketing campaigns and testimonials
designed to cleverly persuade you to avoid the expense of utilizing professional
services. Even utilizing an expensive law firm may not give you your desired
result if the law firm commoditizes your estate plan, treats you as just
another transaction or doesn’t spend sufficient time interviewing
you, gathering family and estate information with specificity and provide
you with education to get you up and running. Software and law firm support
staff can help greatly, but there is no substitute for spending quality
time with an experienced estate attorney who can thoughtfully analyze
your specific situation and guide you through the process.
Few people actually enjoy spending money on estate planning. Yet, it is
a wise investment and the price we pay to live in a society wherein we
have the freedom to leave what we want to whomever we want and with reasonable
strings attached. The cost of estate planning is greatly reduced in several
developed nations utilizing forced heirship laws. In other words, in many
of those countries you CANNOT disinherit your relatives or determine how
much they get, even if you happen to be stridently opposed. Here in the
U.S. we live in a legal system that values your freedom to choose who
gets your estate and how much they get. As a result, the cost of estate
planning is significantly higher. Part of that cost involves gathering
together a team of trusted estate planning professionals who can guide
you throughout your lifetime and possibly also assist your heirs after
you’re gone.
2. CONSIDER SELECTING A PROFESSIONAL EXECUTOR
Most people assume one or more of their children can handle running the
estate during an incapacity event or settling an estate at death. The
truth is, some can handle it and some cannot, and many who CAN handle
it perform poorly and find the experience to be stressful and divisive
among heirs. An estate settlement process, even for those who have been
through it a time or two, carries a steep learning curve because every
estate settlement is unique. If the executor (or successor trustee, as
the case may be) is extremely organized, knows how to follow instructions
perfectly, and the heirs are all easy-going and peaceable type of persons,
a non-professional executor utilizing the assistance of an experienced
estate attorney, CPA/EA and fiduciary accountant can get the job done
well. In almost all other situations, the non-professional executor will
be in over his/her head, and problems will more than likely arise.
Sometimes the best thing you can do for your family is enlist the services
of a professional executor (e.g. a corporate trustee, professional fiduciary,
CPA, EA or attorney). Professional fiduciaries, insured and licensed by
the state, are a particularly cost-effective approach. The executor fee
may be higher, but the attorney fee will be lower, because the professional
is already familiar with the process. In the end the total estate settlement
cost may be a wash, and the end-result is usually a quickly-settled estate,
complete financial transparency and peace among your family. For an incapacity
event during your lifetime, you may choose a family member as your agent
under power of attorney or trustee, and still appoint a professional executor/trustee
at your demise. One person can serve for both incapacity and death, or
you can use a combination of these options that best fits your specific
situation. You should thoughtfully explore these issues with your estate
planning attorney.
3. GET ORGANIZED
- Do you have an excessive amount of small financial accounts as a holdover
from the time when FDIC limits were much lower?
- Is your home full of “stuff” that can be sorted through, disposed
of or given to charity?
-
Do you have a current “balance sheet” showing:
a) description of what you own (i.e., financial account, real property);
b) how title to that item is held (i.e., in trust, in joint tenancy, etc.);
c) who the designated beneficiary is (if applicable);
d) the market value of the item?
Now is the time to organize your life. If you are already facing an avalanche
of work in this area, think about professionals who can help. For example,
your estate attorney likely knows of professional estate sale companies
or personal assistant services that may be willing to assist you with
your organizational and down-sizing projects. Leaving a mountain of work
for your executor may overwhelm that person leading to inaction, delays
or a complete shut-down which in turn usually leads to disgruntled heirs.
To download a helpful free estate planning kit,
click here.
Eric Harris is an attorney with Hofer & Harris, APC in Redondo Beach.
He is a member and Co-Chair of Torrance Memorial’s Professional
Advisory Council. www.hoferandharris.com. (310) 540-6877