In the last post, I shared 9 questions you can ask yourself to begin creating your estate plan. After you have answered these questions, here are next steps you can take to get your estate plan in writing:
The Next Step
Although the specific documents you use to create your estate plan may vary depending upon your needs and your particular situation, some of the basic documents that most people will want to create are a financial power of attorney, an advance directive, and a will.
People often start the New Year with goals for themselves for the year such as improving their health or writing a book. Making a last will and testament or other estate planning documents is also a common goal at the start of the year. How can you begin this process?
To begin, it’s important to understand what estate planning does as well as the ways it helps you and your loved ones. Estate planning is a way to protect you and those closest to you during your lifetime as well as after your death. You can be in control of much of what happens and who will be in charge of certain things if you become incapacitated or after you pass away. Expressing your wishes in legal documents can prevent conflicts between loved ones and can prevent unnecessary loss of time and money.
Here are nine questions to answer to formulate your estate plan:
Talking to your children about your estate plan
A key part of the smooth implementation of your estate plan is having a conversation with your children where you are open and transparent about your plan. Having this conversation with them can help prevent future conflicts and can give them more confidence to know what to do when needed. Although it might be much easier said than done, avoiding these difficult conversations or keeping your estate plan a secret can have major repercussions.
Here are some important topics to cover with your children when talking about your estate plan:
In the last post, I began writing about including care for your pet as part of your estate plan. One option for doing this is to establish a pet trust.
A pet trust is a type of trust established for the care of one or more animals that outlive their owners. Pet trusts are recognized in all fifty states, especially for the care of animals with longer life expectancies, such as turtles or birds, as well as for animals that are more expensive to care for.
Pet trusts will remain in effect for the duration of the pet’s life. If there are multiple pets, the pet trust will remain in effect until the passing of the last surviving pet. When establishing the trust, the owner has a number of important decisions to make, and the trust is able to be fully customized.
Often, pet owners consider their pets to not just be their most valuable possessions but to be members of their family. Those who own pets want to do all they can to care for their animals, so it is important to consider what may happen if your pet outlives you and to have a plan in place for this possibility. Here are some options for your estate plan to make sure your pet will be well cared for in the event that you pass away:
Animals in the Eyes of Law
Animals are considered personal property – like a car, jewelry, and other material possessions – under the law. If the person who owns a pet does not have an estate plan, their pet will be distributed to their “heirs-at-law” or to the people who are their closest living relatives according to a genealogical chart. If this person does have an estate plan, their pet will still be distributed to the individual set to inherit their personal property unless there is a specific provision regarding their pet in the estate plan. In cases where beneficiaries or heirs of someone’s estate do not wish to take care of the pet, people often end up surrendering the pet to a shelter.
In the last post, I shared several reasons people often have for not including a charitable bequest in their estate plan. Here are five more reasons people may have for not including this as part of their estate plan along with reasons why a charitable bequest might be a better option than one may realize:
If the organization dissolves, so will my money. Although there is no way to know where any organization or person will be in a decade or several decades, there are options if you are worried that your favorite organization may not still exist in the future. These options include directing your bequest to go to an alternate organization if your first organization is no longer around or to have your bequest go to a general cause.
My children come first. It is important to make sure your children are taken care of. If possible, consider leaving only a portion of your estate to charitable causes. Doing so ensures that your children are provided for and also communicates a powerful statement about your charitable values.
According to a number of surveys, about 60% of Americans give to charity annually. However, less than 10% of wills and estate plans include a charitable bequest. Here are some common reasons people may have for not including a charitable bequest in their estate plan as well as why making this a part of your estate plan may still be worthwhile:
I give annually. If you already give to charitable organizations annually, that is excellent. Regular giving keeps the doors of these organizations open. That being said, a charitable bequest can ensure that your support of this organization continues even after you’re gone.
I don’t want publicity. Although most nonprofits publish legacy donors to say thank you and to inspire others to do the same, you can let the charity know that you want to remain anonymous if you do not wish to draw attention to your generosity.
It is unlikely that you need to be reminded of April 15th (or the next business day if the due date falls on a weekend or holiday) being the tax filing deadline date as we are often reminded of this date every year. However, if you are the person serving as executor of your loved one’s estate, do you know the filing date of an estate tax return?
This due date varies. In general, you must file a federal estate tax return within nine months of the date of death. Filing this return in time is one of your responsibilities as executor of the estate.
If you fail to file the return on time, interest and penalties could be added on top of any federal estate tax that is due.
In the last post, I shared about specific things to keep in mind while reviewing your estate plan. Here are 10 more:
11. Charitable Contributions
If you have chosen any charitable organizations for planned donations, make sure these organizations still align with your intentions, goals, and values.
An effective estate plan is like a finely-tuned machine, and it needs regular maintenance to make sure it operates harmoniously in the face of life’s changes and challenges. An estate plan should be revisited every few years as well as after any major life change to make sure it is still aligned with your current life goals, circumstances, and wishes.
Here is a checklist to help guide you through regularly reviewing an estate plan:
1. Updated Information
Illinois Estate Planning and Elder Law Blog