Make Decisions Carefully

There are many components to an estate plan and it’s important to carefully consider each one. Most estate planning tools are pretty flexible while you are alive, however there are many things that are difficult to change and even a few that can’t be at all, such as an irrevocable trust.

Most estate plans become fixed after your death, unless clauses are added to allow trustees or executors leeway to make any necessary changes resulting from evolving circumstances.

Beneficiaries and Co-owners

There are many considerations to make when you want to get your assets to the correct person, in the correct amount, in the most efficient and cost effective means possible, and in a way that is best for them.

The estate plan will be different depending on if they are your spouse, a minor child, have trouble managing money, owe a lot of debt, are planning to go to college or get married, are married and have children, etc.

While it may be easy changing beneficiaries on a will or revocable living trust from a legal point of view, the emotional toll may be quite high. 

Beneficiaries and co-owners will age over time and you may need to account for this. For example, if you want your:

  • Minor child to get your savings account, you will have to arrange for it to be set aside until they come of age; or
  • Trustee to manage your estate only until they retire, be specific in the documentation.

What is best for your beneficiaries could involve avoiding the probate process, preventing other family from contesting the inheritance, and choosing the correct tool for the asset, such as:

  • A transfer-on-death account rather than your will for your retirement plan assets;
  • An AB trust with your spouse rather than a joint ownership;
  • A discretionary trust for a child with a gambling problem; and/or
  • A notarized statement in your estate plan confirming your competence and/or specific statement about why someone is being left out of your will.

Your Agent - Personal Representative, Executor or Trustee

It is most common to name a family member or trusted friend as your agent, but it may be best in some situations to choose a more objective third party. 

While a high level of trust is the most crucial part of any trustee, there are other things to consider before finalizing your choice.

  • If they have any experience with financial matters and understanding of other estate management issues.
  • If it is possible that your agent will be in conflict with your family, they will be less effective.
  • The amount of responsibility is enormous and they need to be reliable and able to handle it. 
  • The duration of your agent’s responsibility.
    • While an executor’s role in a simple estate may only be a few months, a probate process
    • may take years with a complicated or contested estate.
    • A trustee’s role could be many years, even a lifetime, and their abilities may wane over time.
    • A professional trustee may end their professional relationship with the beneficiaries, such as when they retire or move. 
    • A corporation may be the safest option, but even they could withdraw if they go out of business or merge with or are acquired by another company.

Your Instructions for Your Estate

Assets in your will are transferred according to your wishes and you can include any level of detail in your instructions. While you can change these instructions while you are alive, they are fixed after your death. It may be important to consider the long-term effect of inheritance on your beneficiary and plan accordingly.

Even when you place your trust’s assets in the control of a trustee, you can still give explicit instructions about how the trustee manages them. Since a trust is a dynamic financial tool, providing details is a more difficult process and requires more thought and professional help.

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