Q: What is estate planning?
A: In the US, any competent adult can decide how his assets get distributed upon the event of his or her passing. Part of a good estate plan will also include tax strategies to minimize tax burdens and settlement costs in addition to determination of what will happen with your home, your assets, life insurance, business, employee benefits and any other property included. An estate plan also includes directions for your health care in the event you are incapacitated. This would include who you would want to act as your health care proxy and what types of measures you would want taken to prolong your life and so forth. All of these factors are part of a complete estate plan, and are all designed to best protect you, your family and those you love, so that things go according to your intentions and not someone else’s.
Q: Why do I need an estate plan if I’m not wealthy?
A: A common misconception we hear from our clients is that estate planning is something to be done only by very wealthy individuals. This is definitely not the case, and if you do not make the proper legal arrangements for your assets and affairs prior to death or incapacity, the courts will take over, and decisions will be made that may or may not have been exactly what you would have wanted. This can result in the wrong people getting your assets, and the rightful ones (from your point of view) getting cheated and hurt. This is also extremely important if you have minor children. Guardianship over your children is a very important reason to do an estate plan!
If you pass away without establishing an estate plan, your estate would undergo probate, a public, court-supervised proceeding. Probate can be expensive and tie up the assets of the deceased for a prolonged period before beneficiaries can receive them. Even worse, your failure to outline your intentions through proper estate planning can tear apart your family as each person maneuvers to be appointed with the authority to manage your affairs. Further, it is not unusual for bitter family feuds to ensue over modest sums of money or a family heirloom.
Q: What does my estate include?
A: Your estate is simply everything that you own, anywhere in the world, including:
- Your home
- Any other real estate you own in full or in part such as office buildings or tenant properties
- Any interests you may have in any business
- Your share of any joint accounts
- Stocks and bonds
- The full value of your retirement accounts
- Any life insurance policies that you own
- Any property owned by a trust, over which you have a significant control
- Any other assets you have including possessions such as clothing, cars, jewelry, furniture, and household items
Q: How do I name a guardian for my children?
A: If you have children under the age of eighteen, you should designate a person or persons to be appointed guardian(s) over their person and property. Of course, if a surviving parent lives with the minor children (and has custody over them) he or she automatically continues to remain their sole guardian. This is true despite the fact that others may be named as the guardian in your estate planning documents. You should name at least one alternate guardian in case the primary guardian cannot serve or is not appointed by the court. We hear this as a barrier from couples all the time, that they do not do estate planning because they cannot think of who to appoint as guardian over their children in the event they should both pass. Not deciding is so much more damaging to your children than choosing the best you can. You and your spouse need to simply determine who you feel would be the best guardian for your children. This can be a family member such as grandparents, aunts or uncles or a close family friend.
Q: How often should my will be updated?
A: There is no hard and fast rule for how often a will needs to be updated, and there is no “expiration date”. For example, if you did your will 20 years prior to passing, your will would still be effective. However, you should update your will for major changes such as:
- Change in marital status
- Birth of a child
- Relocation to a different state
- Beneficiary changes you wish to make
- The death of any beneficiaries
- The death of any guardians, trustees or personal representatives you have designated
It is a good idea to review and update your will every 5 years, for peace of mind and to make sure everything is as it should be. Other factors such as changes to tax codes and estate tax laws and so forth may make certain adjustments beneficial.
You can either revoke a previous will completely, and do an entirely new one from scratch, or more commonly, just do an update to the will.
If you think you need to change or update your will, our office can help. Call Wayne Gardner today at 480-433-8524 or email [email protected] for a free and confidential initial consultation.
Wayne Gardner, Attorney
Buntrock & Gardner Law, PLLC
Mesa, AZ 85203