How Do I Customize My Estate Plan?

Posted by Robert Steinberg | Jan 02, 2024 | 0 Comments

The Estate-Planning Process

For those that have a passion for investing and are willing to commit the time, it is possible to manage your own portfolio.  When it comes to completing your estate plan, you will need an attorney to prepare your documents.  While many general practitioners offer estate planning services, you will want to engage an attorney who focuses their practice on estate planning.  Your investment advisor, CPA or personal network are often good choices for identifying a qualified attorney.  

Initial Meeting

Once you have identified the attorney and scheduled your initial meeting, you should prepare a detailed family tree. This summary should include the legal names of parents, siblings, children, and grandchildren. Having similar information for any individuals or charities who will be beneficiaries or serve important roles under your plan will be extremely helpful.  Ideally, the summary should include dates of birth, and if applicable, dates of death and the legal name and location of any charitable organizations who will receive assets under your documents. Having this information prepared prior to the first meeting will make the whole estate planning process more efficient and will help you prepare for the meeting.

During the initial meeting, the attorney will build your family tree and prepare a detailed balance sheet. You will be asked many personal questions about your family including their ages, family dynamics, where they live, and maturity level to obtain an understanding of their readiness to receive assets or fulfill important roles.

An important focus of the initial meeting for the attorney will be obtaining a detailed understanding of your personal balance sheet, including:

  1. How your real estate is owned (individually, jointly or through a trust).

  2. The value of each bank and investment account and how each is titled.

  3. The value of employer retirement plans and individual retirement accounts and who is named primary and contingent beneficiaries of each.

  4. Details about any life insurance policies, including the amount of coverage, whether employer provided or privately purchased, and the named beneficiaries.

  5. Information about any other assets including business interests, valuable personal property and potential inheritances.

  6. The amount and terms of any liabilities and who is owed.

  7. The existence of any estate planning documents or other relevant legal documents (prenuptial agreements, buy/sell agreements, etc.) that may impact your estate plan.

Once the attorney has a clear understanding of your family and financial situation, the focus will turn to who you want to inherit your assets and at what age.  For many individuals, deciding who should receive your assets is the easiest part of the estate planning process. If you are married to your high school sweetheart and have adult children capable of managing their inheritance, the typical plan would be to leave 100% of assets outright to your longtime mate, but if your spouse does not survive, then the assets would pass outright to your children in equal shares. 

The situation gets more intricate if you have minor children or children who are not currently prepared to manage their inheritances. In this case, you may still leave 100% of your assets to spouse, however in the event of your spouse's passing instead of direct distribution to your children, the assets should be held in trust until your children reach an age at which you deem them capable of managing the distributions.

Things get even more complicated if a spouse has children from a prior marriage, if you have children that will never be financially independent, or you want to provide for a beloved pet. The plan also will be more complex when there are significant assets, particularly if they are illiquid investments such as business interests or investment real estate. An experienced attorney can help guide you through properly addressing these situations.



General recommendations worth considering when customizing your estate plan:

  1. Protect your Children If Remarrying. If you are getting remarried and have children from a prior marriage, it is not advisable to rely on your new spouse to leave assets to your children. Even if they are close now, over time there is a strong possibility that the relationship will weaken especially if the spouse remarries after you pass. There are different strategies that can be used to protect both, but assuming your new spouse will do the right thing is not advisable.

  2. Consider Life Insurance for Special Circumstances. In cases of second marriages or where not all children are involved in the family business purchasing additional life insurance can be a useful tool to help minimize future conflicts.  

  3. Even is Better.  While it may be tempting to allocate more assets to a financially struggling child, unequal treatment can lead to resentment and discord. Treating children equally can help maintain family harmony. 

  4. Leave a Legacy of Joy. Consider leaving a small bequest to grandchildren or others who have positively impacted your life. While the amount is not enough to change lives, it will be a heartfelt reminder of how much you cared about them. 

  5. Don't Complicate Disaster Clauses. Each living trust has a disaster clause that addresses what happens to your assets if all your named beneficiaries die. It is easy to get carried away with naming additional beneficiaries, but making this provision too complicated can add cost to your estate plan.  

  6. Keep the Original Trust Date. When you redo your trust, the original trust date should continue to be the one identified in the trust document and used for funding purposes. Technically, when you totally redo your trust, you amend and restate the original trust.  The reason for keeping the original trust date is that you will not need to update financial accounts and beneficiary designations since the original trust continues in existence.

  7. Prepare a Personal Items List. Dividing personal items such as jewelry, collections, and heirlooms can often spark conflicts among beneficiaries. You can minimize this issue by preparing a signed and dated list specifying who should receive these items. Many states allow this list to bypass the formal witness requirements of estate plans. Preparing this list allows you to direct who receives sentimental and valuable personal property and saves the beneficiaries the uncomfortable process of dividing up these items.

About the Author

Robert Steinberg

Robert is the Founder and CEO of Blue Chip Partners. He is an attorney (JD), Certified Public Accountant (CPA), and CERTIFIED FINANCIAL PLANNER™ professional. He is the visionary of the firm and also leads the team's hiring efforts taking special care to make sure that each new employee is a match for our positive culture.

Comments

There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

Comments have been disabled.

We have your whole financial picture in mind.

Call Us Today

About Us

Blue Chip Estate Planning, PLLC is part of the Blue Chip Partners' family of companies offering you the option of a one-stop solution for your estate planning, financial planning, and investment needs. Our goal is to be your All-in-One Solution. Blue Chip Partners, LLC is a wealth management firm that provides highly personalized financial planning and portfolio management services to over 800 clients. Blue Chip Partners has 31 employees, $1.5 billion in assets under management as of 9/30/2024.

Menu