It’s hard to believe summer has slipped away and most students are back in the classroom. With your kids or grandkids back in the classroom, and it still being too hot to tackle outdoor projects on your to-do list, it’s a good time to look at some indoor projects. Maybe that is why August is “Make a Will Month”, to encourage people to beat the heat with some estate planning work. If your to-do list includes creating a will or updating your will, consider this to be your reminder to check that project off your list.
If you don’t have a will, it should be a high priority to put one in place, if not for you, for those you leave behind. Whenever you leave this earth, there is always something left behind that someone must handle. A will provides helpful instructions for your executor, including practical items such as your funeral arrangements, along with details about how to distribute your assets. Even if you don’t think you have much, it is still helpful to give some guidance to the people who need to know, and want to honor, your wishes. As I have written in this article on previous occasions, if you fail to create your own plan, the State of Texas has a plan they will carry out for you. If you go the default route and just accept the State’s plan, the process to settle your estate can be longer and potentially more costly to your estate. From a charitable perspective, the State has no default plan that gives any consideration to charitable giving. So, if you want to leave a gift to charity, you must take proactive steps to put your wishes in writing.
Some people are still paralyzed by the thought of creating a lengthy legal document that will be set in stone. What contributes to this paralysis is sometimes the belief that you have to have all the answers when you begin the process. In reality, good legal advice begins when you articulate your objectives and allow a trained legal professional to offer some suggested approaches. There is often more than one way to reach your objectives. A good attorney can explain the pros and cons of various strategies and help you arrive at the best plan for your unique situation.
Another concern that can be addressed with proper estate planning is how much of your estate must pass through the probate process. Probate is the process of presenting your will to a judge for verification of its validity, and assignment of legal authority to an individual (an executor) who is responsible for following the directives described in the will. With proper advanced planning the assets included in your “last will and testament” which requires passage through the probate process, may be a relatively small piece of your overall estate. There are several techniques, some simple and some more complex, that can help you transfer assets outside of the potentially costly and time-consuming probate process.
The easiest method to transfer assets such as a retirement account, investment account and bank account is to simply name specific beneficiaries of those accounts. Beneficiary designations instruct your financial institution to make a direct gift to a person or charity after you are gone, and those assets can avoid the probate process. You should check with your account administrator to find out what information they need to complete a beneficiary designation form. You can name individuals or charities to receive a simple percentage of those accounts. Beneficiary designations can usually be updated easily and at any time so they can stay current with your family dynamics, asset values and charitable interests. In certain situations, your qualified estate planner may advise the creation of a trust and even suggest moving assets into the trust during your lifetime, to accomplish specific objectives. Assets in such trusts can often avoid the probate process.
The reason you need to involve professionals when considering your estate plan is they know the current laws and tools they can use to address your unique situation. This is particularly important when you have minor children or family members with physical or mental disabilities. Having a good plan is one of the best gifts you can leave your family. The passage of time also requires you to keep those documents updated. As your minor children grow into adulthood and become more capable of handling their own affairs, you and your spouse may be experiencing physical or cognitive declines that require more assistance than you have needed in the past. Adjusting your plan for these life changes is important. Creating a new estate plan or updating an old one is the best way to make sure the things you own are distributed efficiently, and in alignment with your wishes, to the important people and charitable causes that have been a part of your life. In certain situations, creating a fund at a community foundation can complement other elements of your estate plan. Our staff would welcome the opportunity to visit with you about your charitable interests. Avoiding the August heat and checking “estate plan” off your to-do list, may be your next best opportunity to Give Well.
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