Estate planning is not just for the wealthy. Additionally, it is not sufficient to simply write a will or trust and leave the rest to chance. Estate planning is a process in which an attorney reviews the client’s assets and implements a plan to ensure the proper management and distribution of the client’s assets upon incapacity and/or death. Individuals who engage in Do-It-Yourself estate planning often neglect certain aspects of a properly coordinated estate plan. The following are some examples of the items people tend to overlook.
Reviewing and Updating Your Plan Upon a Major Life Event: People often forget to review and potentially update their estate plans after a major life event. Major life events include the birth or death of a family member or non-familial beneficiary, or a marriage or divorce of either the individual or intended beneficiaries. Another major life event that requires a careful review of one’s estate plan is the disability of a beneficiary. For example, if a child becomes disabled, parents should consider a “Special Needs Trust” in their estate plan for the disabled child so as not to affect the child’s ability to receive government benefits that he or she would otherwise be eligible to receive. A trust fund can then be made available to provide for a better quality of life for the disabled child.
Beneficiary Designations: People often have beneficiary designations completed on their accounts and then forget about them. However, it is important to review and potentially update beneficiary designations because the designation may no longer be correct or still in place. This is especially important for retirement accounts where the beneficiary designation can provide significant tax advantages to the beneficiaries. In addition, over time, retirement accounts can be moved to different institutions and the beneficiary designation forms held in the old institution may not have been transferred over.
Digital Assets: As technology advances, more and more business is conducted online. People tend to neglect to address how digital assets are to be handled. What happens to these online assets and accounts after the individual dies? One should make a list of all of one’s online accounts, including email, financial accounts, Facebook, Mint, rewards points, and any additional sites where business is conducted online. It is important to include the username and password for each account, as well as access information for digital devices, such as smartphones and computers. It is critical to make sure the agent under one’s durable power of attorney and the executor named in one’s will, have the specific authority to deal with the individual’s digital assets.
Minor Beneficiaries: Parents with minor children are strongly advised to engage in estate planning. For those who do have an estate plan, a trust for their minors is often a recommended tool to provide financial management for the children. A minor is generally someone who is under the age of eighteen. However, parents often fail to consider at what age their children may actually be mature enough to handle their inheritance. It is often recommended that a minor’s inheritance should be held in trust for his or her benefit until an age at which the parents believe the child is more likely able to manage his or her funds.
Written by Ronald A. Fatoullah, Esq., CELA, Managing Attorney of Ronald Fatoullah & Associates – A New York Law Firm. Attorney Fatoullah and his firm are Featured in ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources to help families plan for and deal with the issues of Aging.