The 8.5 Steps Toward Ensuring Your Estate Plan is in Order

A lot of my meetings cover the important topics investors neglect. I hear the phrase, “I didn’t know, what I didn’t know” frequently.

This means that complacency or putting important tasks off can potentially hurt your retirement, but also your life planning and legacy.

Putting together a comprehensive retirement or financial plan covers topics like “How to Understand a Tax Efficient Distribution Strategy So You Can Pay Less taxes in Retirement.”

Estate Planning is also covered in our planning process. So, for this article we bring in the “Expert Series” again and this time I brought you Carleton W. Yoder , Estate Planning Attorney from Huck Bouma to discuss “The 8.5 Steps Toward Ensuring Your Estate Plan is in Order.”

One of my primary roles as an Estate Planning Attorney is to ensure my clients have their affairs in order for their inevitable disability or death. When everything is done correctly, it is a much smoother process transitioning roles to various individuals my client has specifically named in their Estate Planning documents. However, this is not always the case. Recently we had a new client meet with us whose father had recently become incapacitated. The father had no Power of Attorney for Property, which was hindering our client’s ability to deal with his father’s financial affairs. I had to let our client know there is no “easy” way to take over someone’s finances if there is no Power of Attorney for Property. Our client had to file a petition for guardianship with the court and give notice to all interested individuals (in this case his siblings) of the petition. Once the petition for guardianship is filed, our client had a physician complete a form stating his father lacks capacity to make financial decisions. Thereafter, a hearing was held where the court determined if our client was the appropriate individual to be the guardian. After our client was appointed a guardian, he is obligated to retain an attorney throughout the process and had to post a bond for 2.5 times the value of the estate. As can be seen, this entire process could have been avoided with a simple estate planning document. Below are steps to take to make sure a crisis like this could be avoided.

1. No Estate Plan in Place. As an Estate Planning Attorney, I have noticed a persistent misnomer where people think if they do not have a sizable amount of assets, an Estate Plan is unnecessary. In reality, everyone should have some type of Estate Plan in place, whether it is a basic Will that ensures guardians and executors are named, or a basic Will coupled with a Trust to avoid probate and build in some asset protection for a spouse and/or children.

2. Protecting IRA Assets. While there are inherit protections for an individual who creates a retirement account, these protections do not get passed on to a non-spouse recipient of an inherited IRA. For example, if a child inherits an IRA from a parent and is in the middle of bankruptcy, the inherited IRA will not be protected from creditors’ claims. However, if you utilize a properly drafted “Protected” Trust that incorporates conduit language, you have a good argument that the principal of the inherited IRA is protected from creditors’ claims.

3. Record Keeping. A key component of an Estate Plan is documenting where everything is located, whether it be bank accounts, investment accounts, property (both real and personal), retirement accounts, or business interests. Having an up to date snapshot of everything in the estate helps immensely during the administration process.

Related: How to Fix a Late Start for Retirement With a Pension Plan

4. Titling and Beneficiary Designations. One of the most overlooked areas in an Estate Plan is confirming the titling and beneficiary designations on accounts are proper and current. Often times a client will review titling and beneficiary designations and come to find out they were incorrect. This may cause fighting among beneficiaries and lead to a messy administration of the estate that could have been avoided by a simple inquiry.

5. Fighting Over Personal Property. A properly drafted Will and Trust should incorporate provisions to utilize a Personal Property Memorandum which will help avoid fighting over tangible items. This Memorandum will account for personal property items such as jewelry, collections, and family heirlooms, and will specify who inherits said items.

6. Asset Protection for Spouse and Children. An Estate Plan can utilize a “Protected” Trust for a surviving spouse or other beneficiaries. Depending on how the Trust is drafted, there can be dynamite asset protection from creditors, bankruptcy, and divorce.

7. Disability Planning. It is becoming increasingly common for individuals to be on some type of government program, whether it be Medicaid, Medicare, Supplemental Security Income, or Social Security Disability Income. One can utilize various Estate Planning techniques such as drafting a Third Party Special Needs Trust or a Self-Settled OBRA Special Needs Trust to take full advantage of all available government benefits while providing security beyond those benefits.

8. Power of Attorney for Property and Health Care. Powers of Attorney are extremely important, as they are normally utilized when an individual is living but incapacitated. The Power of Attorney for Property allows a designated agent to take care of everyday financial affairs, while the Power of Attorney for Health Care allows a designated agent to make necessary medical decisions. Proactively naming agents for these two documents cuts through red tape and allows a much smoother experience if a sudden incapacity occurs.

8.5 HIPAA Authorization. While technically not an Estate Planning document, the HIPAA Authorization is used in tandem with the Power of Attorney for Health Care. An Agent named in the Power of Attorney for Health Care is able to make medical decisions; however, without the HIPAA Authorization the Agent will not have access to medical records to make informed medical decisions. An Estate Plan is not complete without a properly executed HIPAA Authorization.

Thank you, Carleton for your precise 8.5 steps to ensuring your estate plan is in order. Especially number 8.5 HIPPA Authorization which many people are not aware of and probably need a professional second opinion so they can receive a check up on their documents.

If you haven’t updated your Estate Planning documents, then now is the time for action. If you haven’t had a professional second opinion on your financial plan, retirement plan, or your current investments, then now is the time to move forward and take action.

You don’t want to be the one saying, “I didn’t know, what I didn’t know,” before it’s too late.

To schedule your complimentary phone call, click here

This is a very important message so please share this article with your family, friends, co-workers and networking contacts. Thank you for reading.