Estate Planning: Do it early and avoid any grief


By Ron Wynn

People often try to put certain things that are not so pleasant on the back burner and say, “I will get to it.” If that is you, you are no different than anyone else. One of the things that people often put aside is estate planning. We all think that we have plenty of time to do that, and that is not our biggest priority.

And then of course, when people get unfortunately ill, it becomes a scramble. Set everything up early in advance when it comes to how you want your estate handled. It’s not a pleasant thing, but it’s something that has to be done and the sooner you do it, the better off you are.

The first thing you want to do, assuming you have assets, is to contact an estate planning attorney and listen to his/her advice. The likelihood is if you own property and other sizable assets, they will suggest you create a family trust. They will explain the kind of family trusts there are, including a revocable trust and an irrevocable trust, and they will also explain to you what the benefits of each are and how they work.

Perhaps you already have a trust. If that is the case, you should stay in touch with your estate attorney. Be sure assets are added, as you bring them in and out of your financial portfolio. People oftentimes add properties to their portfolio and forget to add them to the trust. That can be a real disaster later on.

One of the most important things to think about is, “the future.” Children will marry, and then you will have grandchildren. Unfortunately, many people get divorced, and it can get ugly. How will you want your estate handled between your son and his ex-wife, also known as your daughter-in-law? It really depends on what kind of relationship the two of them maintain after and what kind of relationship you have with the “out spouse.”

What if one of your children gets divorced and then gets remarried, and has children with the new spouse? How will you feel about the new wife/husband? What if they bring children into the marriage, but your relationship never materializes with the new children or stepchildren? How will that be handled? Or what if your child gets remarried to someone you cannot tolerate at all and do not want to have any part of? What happens if one of your children has a substance problem or cannot be trusted to make sound financial decisions? All of these things enter into your estate planning.

Because right now you cannot foresee the future, you may have to modify your estate plan from time to time. Maybe you have a great relationship with your son and daughter right now, but at some future time, that will change. Let’s hope that is not the case.

Now let’s talk about your children.

What if you have a son who is lovely, but he doesn’t get along with his sister? Or what if you have a son who used to get along with his sister, but now, because of her new marriage, he doesn’t speak with his sister anymore? Maybe he doesn’t like his new brother-in-law. Maybe your daughter doesn’t like the way your son is treating her new husband. Now you have real family conflict.

If you had both of them as your successor trustees, how will they get along if they are not even speaking between themselves? This can be a real mess and it can change from time to time.

What if you own a painting that your daughter absolutely loves, but your son would like his monetary share of that painting? What if your daughter does not plan to ever sell that painting and she feels it has sentimental value? What happens if your daughter wants to keep a property because it has sentimental value and pass it down to her children, but your son wants to cash it out so he can put his son through college next year?

These are all big problems that you want to sort out. Obviously, if everyone in the family gets along it’s a lot easier. But how many families have a perfect situation?

There may be properties that need to be sold to satisfy estate tax. To know whether or not your estate will be required to pay tax, you should speak with your financial advisor and attorney because there are new higher limits to forgive estate tax. Your estate may not require any tax at all, depending on how large of an estate it is.

Be sure if there are specific properties that you want to pass down to certain members of your family, that you have made that clear in your trust. But also know if you pass a specific property down to one of your children, that property is included in the taxable liability if the estate is sizeable.

It’s not always so easy to just separate your properties. Also, property values will change from time to time and each asset will be re-appraised at the time of death.

It’s very difficult to say you will give this property to this son, and this property to this daughter because if your plan is to be fair and give them an equal amount of value, you cannot really do that at this time.

Maybe it is not your intention to give equal value. Maybe your son has been better to you the whole way through your life, taking care of you, taking you to the doctor. Maybe you want to reward him one day by giving him a larger portion of your estate. Maybe your daughter needs the money more because your son has a great job and your daughter never had the same opportunity because she was busy taking care of you. Perhaps your daughter married rich and will never need to have any money. Is that a reason that you don’t want to give her an equal share? Your son may feel he should have more because your daughter married rich.

You may feel that has nothing to do with it and you want to award your daughter and son an equal amount. Do you see now what a big mess it could be? You really need to think about it and if possible, talk to your children. It’s better to deal with it now than to have them fighting over money and their imagined intentions later. It won’t be very comfortable, particularly if you plan to split things up in an uneven way but face up to it and speak your truth.

Most children feel they should get their equal share, but on the other hand, it’s your decision. Perhaps you want a big chunk of your estate to go to a particular charity, hospital, or university. Now is the time to specify that. We all hope you will stay healthy and happy, but we know, in reality, none of us live forever. Take the time to think this through and collaborate with the appropriate people to get your estate in order.