This time of year, the New Year’s resolutions begin. For some people that means 2014 will be the year that they finally embark on making an estate plan. For those of you who already have your plan in place, you might suggest to your friends and relatives that they, too, get their affairs in order.
I like to tell potential new clients about some things they should bring with them to an initial consultation. It helps clients to start to think about key issues and it’s helpful to me if people come prepared for a meeting.
For starters, I ask people to bring a list of their assets so we can determine whether they need an estate plan that is trust-based or will-based. For people who own a home (even though it’s not paid off), a trust is in order.
I ask clients to bring in a copy of the Grant Deed for any piece of real property they own, partially or outright.
It amazes me that this is usually people’s largest asset and yet about half of the clients I work with do not know what a Grant Deed is, or where theirs is. I often have to order a copy of the Grant Deed from the County Recorder’s office, which costs about $10.
A Grant Deed is the two to three page document that states how title is held. It will name an individual, couple, or corporation which owned the property previously and then say that entity “grants” title to the property to the new owner: an individual or couple. Crucially, the title specifies the form of ownership. Is it brother and sister owning as joint tenants? If it’s a married couple, it should say “community property” and not “joint tenants.” Does the person own all of the property or a one-half interest as a “tenant in common” with someone else? All of these words on paper make a huge difference in terms of what one can put in one’s trust and what one can give away upon death.
I ask to see lists of bank and brokerage accounts, which will need to be listed on a last-page Schedule of a trust, and so that I’ll be able to write a guidance letter for a client to take to a bank or brokerage house to ask that the account be re-titled.
I also ask clients to think about whom they would like to nominate as the fiduciaries of their estate plan. Often it’s the same set of nominees serving under different titles for the various different documents. The person in charge of administering your trust after you are deceased or incapacitated is called a trustee. That same person likely will administer your back-up Will as your executor and may even pay your bills for you while you’re alive as the agent for your power of attorney. If you have young children, you nominate guardians in your Will. A guardian nominee would go to court and ask a judge to be appointed if a child were to lose both of her or his parents.
For each of these roles, you’d want to name a first choice and an alternate in case the first person dies before you or declines to serve.
Before coming to an initial estate planning consultation, you’d also want to contemplate how you would want your estate distributed after your death. Retirement type accounts pass to whomever you have named as designated beneficiaries with the specific institution, and you should double check to make sure you haven’t left some long lost partner on as a beneficiary rather than your current choice of loved ones.
For assets in a trust, such as a house and maybe some bank or brokerage accounts, you want to think about whether you’d like to make some specific cash gifts off the top to individuals or charities and/or whether you would like everything else, called the residue of the estate, to go by percentages to chosen beneficiaries. If the beneficiaries are young, do you want to set an age threshold at which they could inherit outright, specifying that before that age, the trustee would hold the young person’s share of trust property in the trust? Is someone among your beneficiaries a disabled person needing government, means-tested benefits, and, therefore, his or her share should be held in a “special needs trust?”
All of these are the types of questions I ask clients to think about before coming to an initial consultation. Not having all the answers is not a good reason to put off the task for another year! Often by beginning the discussion, we can prompt some thinking that would not have happened without such a jump start.
For the New Year, think about whether your estate plan is in order and whether it still reflects your wishes, and think about whether it’s time to revise it, or start it if you have not already.
