Piercey & Associates, Ltd. Answers 6 Critical Questions About Estate Planning

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Covid, time on our hands, what if? You may strive to live a meaningful life with purpose and sustainability goals in mind. But what happens if you lose someone you love? With offices closed, travel out of the question… how can you plan an estate? Above are burial pods that transform people in trees. 

According to Piercey & Associates, Ltd., an acclaimed team of trust, tax, real estate, probate, business succession, guardianship, and elder law attorneys, here are the answers to six critical questions about estate planning:

Why is estate planning important?

There are four fundamental reasons why estate planning is important: it helps protect beneficiaries, it helps protect children, it helps avoid difficult and complex family confrontations, and depending on the size of your estate it can prevent heirs from paying a huge tax bill.

“One of the biggest mistakes that people make is believing that if they have a will, then they do not need to have a comprehensive estate plan,” commented a spokesperson from Piercey & Associates, Ltd., which has earned more than a 99 percent satisfaction rating based on over 2,700 client surveys. “Many key details that are included in estate planning are not captured by a will, including an advanced directive, a power of attorney, and instructions regarding trusts for children, grandchildren, charitable organizations, and other desired beneficiaries.”

When should one start thinking about estate planning?

Waiting until later on — typically retirement — to focus on estate planning can be a catastrophic mistake for a rather grim but nevertheless valid reason: the future is promised to no one. When that tragedy occurs, the people who suffer most are those who typically grieve the most: children, siblings, other relatives, and close friends.

“One of the issues surrounding estate planning is that the word `estate’ may imply that one needs to have a high net worth before they start thinking about allocating their assets to heirs and beneficiaries,” commented a spokesperson from Piercey & Associates, Ltd., which has reduced millions in estate tax liability down to zero, and regularly eliminates probate fees for clients. “However, every adult should have an estate plan, especially if they have minor children. If something were to render them physically or mentally incapacitated, or if they should pass away, the instructions in their estate plan help ensure that their children would be looked after in a manner that they deemed appropriate.”

What happens if someone without a will passes away? 

When an individual passes away without a will, then certain assets are passed along based on beneficiary designation or operation of law. However, all other remaining assets are distributed based on state law (which differs from state to state).

“One of the most common and also the most traumatic things that can happen when an individual passes away without a will — is that families are often torn apart by conflict,” commented Rodney H. Piercey, a partner of Piercey & Associates, Ltd.  “For example, siblings can start going to battle over who should get what heirlooms and other assets, life insurance proceeds can end up in the wrong hands, and heirs can literally spend years and massive amounts of money trying to hunt down assets or litigate every dispute. What makes this scenario even more tragic, is that all of this happens when family members should be grieving and supporting one another through a very difficult time.”

What role does a trust play in estate planning?

For some individuals, a trust is a pivotal component of their estate plan. While there are many advantages of setting up a trust, the most crucial is that it helps avoid what would otherwise be a significant inheritance tax, and ensures that the majority of a deceased’s assets (e.g. cash, shares, equity, etc.), are passed along to the appropriate beneficiaries in the most efficient way, including the avoidance of a probate court case.  In addition, a trust can protect the inheritance of a child or other dependent who has a disability, learning difficulty, or financial issue(s) that are out of their control.

While a properly structured and executed trust is rock solid when it comes to legal standing, individuals who set up trusts can, if they wish, make changes during their lifetime based on their needs or preferences.

What is a durable power of attorney? 

Like a last will and testament, a durable power of attorney is an essential component of a robust estate plan. It authorizes someone (referred to as an agent or attorney-in-fact) to act on one’s behalf, in the event that one becomes physically or mentally incapacitated. A durable power of attorney for property is related to financial matters (e.g. buying and selling property), while a durable power of attorney for health is related to medical matters (e.g. instructions for physicians, etc.).

“In scenarios where an individual becomes incapacitated and does not have durable powers of attorney for finances and healthcare, respectively, then their family members will be required to go to court in order to declare that individual incompetent in order to access the assets or make decisions for the benefit of the incapacitated person,” stated a spokesperson from Piercey & Associates, Ltd. “This can be extremely stressful and painful for family members and friends, and it is usually very costly as well.”

Who should be the executor of an estate?

Choosing the executor of one’s estate is one of the most important and difficult decisions and should not be done without careful consideration. Generally, an individual who is likely to serve as an effective and appropriate executor is someone who is trustworthy, reliable, organized, and detail oriented. They should also have the ability to allocate a significant amount of time to the process, and preferably they will be local as well. And of vital importance, they should be willing to serve as an executor and understand that it is a legal responsibility that can be met with significant challenges. 

Ideally, executors will not face any significant issues carrying out the instructions contained in an estate plan. However, when issues like childcare and asset allocation are involved, there can be objections and confrontations among family members and other beneficiaries. An executor must be willing and able to professionally and diplomatically deal with these challenges, while at the same time understand that their role is not to make all family members and other beneficiaries happy. The responsibility is to carry out the wishes and instructions of the deceased in a lawful, transparent and completely documented manner, and often there are those that simply cannot be pleased, regardless of the fact that the executor acted in good faith and in a professional and legally proper manner at all times.

Should one conduct estate planning on their own?

While technically it not against the law for individuals to conduct their own estate planning, it is neither wise nor recommended. Estate planning is complex, and there are a multitude of questions that need to be answered (and which are often iterative — i.e. the answer to one question triggers new questions that must be answered). Furthermore, estate laws are not standard, but vary from state to state. They are also constantly changing, and so what may have been correct a handful of years may not be valid today.

“Given how enormously consequential an estate plan is for the individual who creates it, as well as for his or her dependants, family members, friends, favorite charitable organizations, and even their pets, it is not something that should be approached in a do-it-yourself manner,” commented Kenneth Piercey, a partner of Piercey & Associates, Ltd. “Working with a legal professional — or a team of legal professionals —ensures that everything is done properly and in a lawful manner. The peace of mind that comes from knowing that one’s estate plan is comprehensive and secure is immense.”

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