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The Here and After – Estate Planning 101

As my law practice has developed over the years it has gotten to the point where it is 50% estate planning and 50% probate and trust administration. This means 50% of my work is planning for death and 50% is cleaning up after the fact.

Let’s back up real quick. I went to three years of law school and took classes to learn about estate planning and taxes.  Since law school I have far exceeded my minimum continuing education requirements every year. The last few years I have gone further over board, with continuing education, as a certified specialist I have to take additional hours in courses approved for certified specliasts.  I have prepared hundreds and hundreds and hundreds of estate plans.  I know estate planning backwards and forwards.

However, what is the single thing that has made me an even better estate planning attorney? It’s the 50% of my work where I clean up estates after death. I have seen the mistakes other attorneys have made. I have seen how different choices can have a great impact. I have seen that we can set up the greatest plan in the history of the world but if the assets are not properly funded it might not matter. Basically I have seen a lot since I started practicing law in 1994. I have seen a lot and it has made me a better estate planning attorney. If I didn’t do after death probate and trust administration, in the large quantity that I do, I wouldn’t have learned as much as I now know.

Let me give you a really quick example.  Let’s say you want to leave $5,000 to each grandchild after death. That’s a nice gesture and I am sure they will appreciate it.  However, there are so many ways to leave that gift and each option has pros and cons. These pros and cons are best learned by seeing what happens when a person dies with small monetary gifts in their estate plan.

For example, if your trust leaves the gift “in trust” you could be creating unnecessary trust administration after death. Possibly the need to obtain a tax ID number, create legal documentation for the “sub trust” and, in short, quickly eat up the small gift.

You could leave the gift outright and “free of trust” but what if the child is under 18? Then you could create the need for a guardian ad litem to be appointed by the Court which again will use up much of the $5,000.

You could leave it in a “pot trust” for all the grandkids but that can benefit some grandkids to a greater extent than others. Plus, you still have the trust administration costs of an on-going trust.

You could leave it straight to the parents and tell them what to do with the money. However, what if the child’s parent dies before you?

You could also leave it to Uniform Gift to Minor Act account for the benefit of the grandchild. I like this option for small gifts by the way.

Also, depending on the size of your estate we might talk about doing the small gift NOW by putting it into a 529 college savings account or other similar vehicle so the child can benefit from it while you are still alive.

The point is that even in the most inocuous idea of giving some small gifts to your grandkids when you die there can be a ton of options to discuss. If your attorney does not have experience cleaning up messes after death he or she does not know about all the options and all the ramifications. Imagine all the options for bigger issues?  Imagine all the options for who should be your trustee? Imagine all the options for distributing money to your loved ones after death? I could go on and on.

Just as I think it’s important that your attorney not practice other areas of law, as they lose focus, I think it’s equally important that your estate planning attorney has done a lot of after death work.

I have done over 500 probate and trust administration cases after death.  I know about ramifications of the choices you make when doing your planning!

Contact me to discuss your choices.

-John

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