By: Barry E. Haimo, Esq.
August 18, 2015
Communication Series – Failure to Communicate During Estate Planning – Part 2
In my most recent post, I shared the unfortunate experience of the Huang family, and how failure to communicate during estate planning brought them chaos, confusion, and hardship.
As promised, I’d like to use this post to share some key strategies for avoiding unwanted situations like the one the Huangs suffered through. While every family and estate is unique, there are a number of common factors that are more than likely to cause confusion and conflict.
With that in mind, here are some tips and strategies for estate planning to avoid undue hardship for your beneficiaries, and to help ensure your estate is settled smoothly and your wishes are honored.
Enlist the aid of an attorney. This is perhaps the most important step in estate planning, and one of the best ways to minimize future confusion and disputes. An attorney can help you build a powerful plan that simplifies the settling process and protects your survivors through smart strategies and expert techniques.
Your attorney can help you prepare all the necessary documents in a way that eliminates ambiguity and clearly states your wishes. Your attorney can help you anticipate complications that could arise, and facilitate conversations with you and your beneficiaries about your plans. Ultimately, working with a professional will ensure that your wishes are clarified, understood, and carried out to your desired specifications.
Communicate honestly and openly. If hiring a lawyer is the most important step, communicating with your family about your estate plan is easily a close second. As uncomfortable as it may be, it’s incredibly important to start a dialogue with your family and loved ones about your plans and wishes for after death.
The discussion will give you an opportunity to explain your choices for asset distribution, varying treatment of beneficiaries, and other important decisions, as well as your reasons behind them. This may reduce if not eliminate will or trust contests later. In addition, if you’ve allocated duties such as executor, trustee, or agent for your Durable Power of Attorney, this also gives you a chance to discuss responsibilities with the individuals you’ve chosen to ensure they are aware and up to their duties.
Create a living trust. Creating a trust is an excellent tool to accomplish a variety of objectives. They help keep your estate out of probate and guardianship proceedings. In addition to being lengthy, stressful, and expensive, the probate process also gives survivors an available and convenient forum to stir up disagreements. For the sake of your survivors’ time, finances, and peace of mind, it’s best to avoid probate if possible. Trusts are also useful to consolidate, organize, protect, and preserve assets that will ultimately be devised to your family in accordance with your specifications. Trusts provide a high degree of control over the management, and present and future disposition of your assets that make them hard to ignore in an estate plan.
Gradually transition businesses. If you plan on passing a family business down to your children or other survivors, you should take measures while you are living to make the delicate transition process go as smoothly as possible. Don’t let the transition come as a surprise. Instead, prepare your successors by steadily handing over authority and responsibility during your lifetime.
Create a durable power of attorney. This legal document puts your financial affairs into the hands of a trusted agent. It is primarily used in the event of your disability or incapacity. By including instructions on how important affairs such as bill payment and investments should be handled, and by whom, you can avoid confusion and uncertainty should illness or injury render you unable to take action or make decisions yourself.
Create an advanced health care directive. Similarly, this document includes information and instructions on your health care preferences, to be referred to in the event of your incapacity. In the document, you can detail the types of treatment and tests you would or would not like to receive, and list agents who you would want to make health care decisions on your behalf. Unlike a power of attorney, which becomes effective immediately, this document is only effective upon incapacity.
Create a pre- or postnuptial agreement. Second marriages are often the most common source of confusion and conflict in regards to inheritance and settling your estate. You may want to simplify things for your survivors and prevent dispute by creating a pre- or postnuptial agreement that clearly states the relative entitlements and appointments of your current and former spouses, children, and other beneficiaries.
Make funeral arrangements in advance. By making funeral arrangements and selecting the method of interment ahead of time, you can help to spare your survivors the disagreements and sensitive emotions that often come with such decisions. It’s a good idea to plan and include detailed instructions on these issues in advance.
Review and update your plan regularly. Throughout the course of your lifetime, you should review and update your estate plan in accordance to changes in Florida law and major life events for you and your family—such as a marriage, divorce, or birth. When reviewing and updating your plan, be sure to designate new beneficiaries and new beneficiary designations on your financial investments where appropriate.
These are but a handful of the effective strategies and estate planning tools available to help minimize confusion and conflict for your family for both during life and when settling your estate. For further guidance in creating an estate plan that ensures your estate is settled seamlessly and smoothly, get in touch with a Florida estate planning attorney. Contact us for more information.
Barry E. Haimo, Esq.
Strategic Planning With Purpose
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