Ditch the excuses and start the estate-planning process

Estate planning is about ensuring that your legacy is directed to the right place — that your assets and belongings are distributed to individuals or organizations in accordance with your stated wishes. Estate planning remains critical even if reducing the tax burden is not your main concern.

Many people hesitate to do an estate plan properly. Here are some of the objections people raise and the reasons to push through those objections to get this item off your to-do list:

It costs too much

Often, the hesitation to move forward is cost. However, trying to save on estate planning through a “do-it-yourself” will is the true embodiment of “penny wise, pound foolish.” You may save yourself the legal fee on the front end, but your heirs will almost certainly pay for it on the back end.

For example, there are specific formalities to executing a will that could render it invalid and not admitted to probate by the court. A beneficiary who is also a witness would have to forfeit his or her inheritance in order for the will to be valid. Removing the staples means that someone will need to attest to how those staples were removed. Handwritten material on the will might not be viewed as part of the testamentary instrument.

When you pay a legal fee for estate-planning documents, you are not so much paying for the drafting of a document (the “it’s just a form” statement I hear from many potential clients) but rather for the knowledge and experience of the attorney whose guidance helps minimize problems.

The laws keep changing

Another objection is that the tax laws keep changing. The tax laws have changed since 2001, but the key is to have a document that is flexible enough to allow for the change in the law. It is also important to review your documents every so often to ensure that they still meet your objectives.

Distribution dilemmas

If you’re married, many people leave their spouse their assets. Yet, many wonder what will happen to those assets if the spouse is remarried. Others would prefer to not leave their spouse assets, and pass the assets on to their children. This can be the case where the spouse has his or her own assets sufficient to fund their care and lifestyle, or in a second marriage scenario.

You should also keep in mind that state law dictates whether there is a minimum that you must leave your spouse. In New York, for example, a spouse is entitled to a minimum of one-third unless he or she has waived their “right of election” — their right to elect to take one-third of the estate if the testamentary plan leaves them less than one-third. Once you’ve decided how much to leave your spouse, if you have children, the next questions you should ask are:

• Do I want to leave money equally to all of my children?

• Do I want to include my grandchildren in my beneficiaries, or should they wait to take from their parents?

• Am I charitably inclined and do I want to leave assets to charitable organizations, either outright when I die or in a charitable remainder trust?

The answers to these questions will depend on your wishes as well as the extent and nature of your assets. For example, the answer for a person whose primary asset is her or his business may have a very different plan than a couple with a house and the predominant amount of liquid assets in an IRA.

Guardian disagreement

This is one of the most common barriers I hear for couples hesitating on moving forward. My advice is for the couple to at least make the appointment with the estate-planning attorney to get an overview and move forward with the drafting of the documents, even if they have not finalized the decision to name a guardian for your children in the terrible, but yet, unlikely event that both parents have died.

However, the decision is not irrevocable. The person you name as guardian for your 18 month old is going to change when that baby is a tween or teenager. Once you have the foundation set by doing your estate-planning documents and having it in place, the change of guardian is an easy fix — my clients will often come in to execute a short “codicil,” basically an addendum to the will, to update the nomination of guardian. In this way, you don’t have to reinvent the wheel, you’re just doing a “refresh” that does not take a lot of time or incur a massive cost.

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In January, many people call me, because their New Year’s resolution is to take estate planning off their to-do list. There is a similar influx of calls on the other end of the calendar in December from people who had estate planning on their January to-do list and are determined to finish it before the year’s end, and avoid it rolling over to the next year’s list of resolutions. We find ourselves at the mid-point of the calendar, so despite the carefree days of summer, if you have had this on your list for a while, there is no time like the present to start the process!

Alison Arden Besunder is the founding attorney of the law firm of Arden Besunder P.C.. Find her on Twitter @estatetrustplan and on her website at www.besunderlaw.com. If you have a question that you would like to see answered in this column, please e-mail aliso[email protected]underlaw.com.