Guide for First Time Planners
There is no better time to start planning for your future than now. We would like to provide you a foundation for implementing a comprehensive and practical approach to the estate planning process.
1. Determine Your Goals
What are your overall goals?
- Do you have personal or professional matters that you wish to take care of in the immediate future?
- What do you hope to accomplish in the long run?
- Was there a change in your life or to your family situation that prompted you to think about planning?
These are just a few of the many important questions that need to be addressed. The simplest manner to address these questions, and more, is to consider the Three Ps: Property, People, and Planning. You will also need to think about what you want for yourself and your loved ones and who will best be suited to carry out those wishes. And finally, you will have to put that thinking into action with an estate plan.
2. Gather Documents
The second step is for you to begin accumulating relevant documents and information pertaining to the assets you own. Cataloguing personal assets to the best of your ability may prove to be one the most beneficial steps you may take in simplifying this overwhelming process. Doing so will ensure that your assets will be accurately accounted for, as well as lend towards an efficient resolution. Assets may include real estate, life insurance policies, bank accounts, retirement plan, cars, jewelry, collectibles, etc. In addition to knowing what your estate consists of, you should know the approximate value of each type of asset.
3. Know Your Options
There are numerous tools available for the planning of your estate. Some of the most common include wills, trusts, and powers of attorney (both financial and medical). A will is a document through which a person can distribute his or her estate (assets) upon death. A will is subject to probate and is considered a public record. On the other hand, a trust is a private record and mechanism for the distribution of assets, which is administered outside of the probate system. There are many different types of trusts. One of the more common types is a revocable living trust, which allows the person creating it to retain legal title to the assets during his or her lifetime. Finally, the third most common planning tool is the power of attorney, which names someone to act on your behalf in case of incapacity in both financial and medical situations.
4. Determine Who Will Be Your Decision-makers
Before finalizing your estate plan, you will need to understand what roles the persons you designate will have in carrying out your wishes.
Executor/Trustee
Whether you have a will or a trust, you will need to name someone to act on your behalf to make sure the assets are distributed per your instructions. An executor is responsible for managing the affairs of and settling the estate, including initiating court procedures and filing the deceased’s final tax returns. A trustee holds legal title to the trust assets for the benefit of someone else (a beneficiary). The trustee is responsible for handling the assets held in trust, tax filings for the trust, and distributing the assets according to the terms of the trust. Both roles involve legally-required obligations.
Picking this individual or entity is one of the most important decisions you will need to make. You can choose more than one person/entity to fulfill these roles, and if doing so, you should choose one person/entity that has the financial/legal/professional expertise and the other who is close to your family. If you choose this course, you should pick people or entities that can work together. Keep in mind that it is always a good idea to have a successor named in case your primary choice is unable or unwilling to carry out your instructions. If you feel that you do not have a person in mind that can effectively carry out these duties, some of which may be complex, you may want to consider hiring a professional fiduciary to help.
Why choose a professional fiduciary? Let’s start with what a professional fiduciary means. A fiduciary is a person who assumes responsibility for a position of trust. The fiduciary accepts the obligation for taking care of the financial needs or property of another person for the benefit of that person. Fiduciaries can serve as court-appointed guardians, conservator of the estate (for assets that require protection) and / or of the person (making sure that the conservatee’s physical health, social and personal needs are met). Fiduciaries can also serve as an executor, trustee, and as an agent under a power of attorney.
There are several reasons why you should consider hiring a licensed and bonded professional fiduciary to administer your estate or act in your best interest should you become incapacitated.
Save Time and Money
First, using a professional fiduciary can save you time and money. Most fiduciaries are familiar with the requirements of the estate administration process and can get your estate resolved quickly, accurately, and effectively. Furthermore, fiduciaries ensure that your executor and / or trustee understand the tax consequences relating to estate distributions. Many families who attempt to “save money” by designating an inexperienced sibling or beneficiary as the executor end up losing far more due to assets going through probate and / or not having the assets held in appropriate trusts to minimize heavy estate taxes.
Neutral Party Oversight
When a loved one passes away or becomes incapacitated the stress among family members is very high. Unfortunately, it is common to see the tension escalate into arguments between siblings over a variety of things, and the estate administration paperwork that is often confusing can easily overwhelm the already-stressed families. Using a professional fiduciary eliminates this unnecessary pressure and lets the family focus on their needs.
Peace of Mind
Finally, knowing that the distribution of your estate will be done according to your wishes will provide you extra peace of mind. By using a professional you have the assurance that your estate will be distributed accurately and without conflict between beneficiaries, and you ensure that your executor, trustee, or power of attorney will be in the right state of mind to handle your estate matters and important decisions.
Many people do not use professionals because they often underestimate the complexities of the estate administration process. The responsibilities of the trustee, executor, and power of attorney are time-consuming and mentally demanding. Ask yourself, “Will the person I have listed in my estate plan be able to carry out these responsibilities while mourning over my loss?” Additionally, when using a family member or friend, that person will not be required to have a bond. Fiduciaries can be bonded at the request of the client. This means that the bond will serve as an insurance policy for the professional fiduciary and your estate will be protected if there is any mismanagement of assets.
Power of Attorney
In determining who will act as your financial power of attorney or medical power of attorney or agent, you should consider the information above pertaining to professional fiduciaries. When thinking about your medical power of attorney it is important that you consider choosing someone who you know would be comfortable in carrying out your wishes.
No one wants to think about their death any sooner than they must, but planning in advance is a responsible and caring act that can reduce stress for your grieving loved ones. Remember to discuss your goals with the people you will be involving in your planning; not only your family members, but also your attorneys, accountants, financial advisors, fiduciaries, or other professionals.
If you have questions or need more information about life planning or professional fiduciaries, please contact Tarasyuk Law Offices or Exclusive Estate Administration, Inc.
Tarasyuk Law Offices Exclusive Estate Administration, Inc.
Anna Tarasyuk Bryan Fiorito
anna@tarasyuklawoffices.com bryanfiorito@eeadmin.com
818-835-1242 855-GO-EEA-TODAY
About the authors:
Anna Tarasyuk: Anna is the founder of Tarasyuk Law Offices, an estate planning firm in Torrance. Tarasyuk Law Offices works with a variety of individuals to help them create estate planning tools to effectively distribute their assets, plan for the future, and protect their loved ones. To learn more about Anna and her practice, please visit the Tarasyuk Law Offices website.
Bryan Fiorito: Bryan is the co-founder and business development for Exclusive Estate Administration Inc., an estate management and fiduciary company. EEA offers a variety of fiduciary services designed to assist families and their loved ones with personal finances upon losing capacity. Their team of licensed and bonded fiduciaries can relieve the burden of an often-complex estate and trust administration process, allowing you to focus on mourning the loss of your loved one. To learn more about Exclusive Estate Administration’s services, visit www.eeadmin.com.
***Exclusive Estate Administration, Inc. is not endorsed, sponsored by, or otherwise affiliated with Tarasyuk Law Offices.
