After handling hundreds of estate administrations over the years, I can assure you the best legal problems are the ones which never happen. The tips in this third and final column on the subject should help you take the best planning steps to avoid common problems in the administration of an estate.
1. Should you set up a trust simply to avoid probate fees and simplify the estate administration process? What is a trust?
Best Practice. Think of a trust as a box, or as a separate account. If you own a deeded interest in real estate in another state, you plan for your adult heirs to get their inheritance over a period of time, you have a beneficiary who has special needs, the beneficiary needs asset protection, or you do not want the public (assets in a probate estate are a matter of public record) to know the nature of your assets, consider a separate stand-alone trust that works with your will to provide a solid plan. But unless one or more of these circumstances exist, consider the larger costs of setting up and maintaining a stand-alone trust. With the ability to transfer so many financial assets by way of beneficiary designations at the time of your death (brokerage accounts were added to the list a few years ago), you may be able to achieve the same result of bypassing a probate estate and its related expenses.
Best Practice. Consult your lawyer and financial advisor to weigh the options.
2. Do your old wills have tax-saving trusts in them that are no longer necessary, and which create real estate administration issues and extra expenses if they are not removed? Estate taxes were reduced significantly for calendar year 2013 and following. These trusts are now more of an expensive estate administrative and planning hindrance.
Best Practice. If your will was signed before 2013 and you have a so-called by-pass estate tax saving trust that is no longer necessary, you really should update and simplify your will.
3. What about real estate you inherited with your siblings that was your share of the homeplace/family land when your parents passed away?
Best Practice. You owe it to yourself to address the disposition of the real estate when the major players (adult children, others) are alive and well. Otherwise, it will become much more complicated when family members die or move away from the area.
4. Has your durable power of attorney been updated since 2018? It should be. If you are not competent later when critical steps need to be taken to plan for your long-term care, your agents, without the necessary protections provided by the 2018 changes in the law, are going to be limited as to options. Without these options, circumstances can quickly dissipate the assets in your estate. (Your agent always has a strict fiduciary duty to use your assets appropriately, however.)
Best Practice. Update your financial power of attorney to take advantage of the new provisions in post-2017 durable (financial) powers of attorney.
5. Coronavirus Update. I have received many inquiries in recent weeks about the possible impact of the Coronavirus on your choices in long-term planning documents, and whether somewhat dated documents provide all necessary options. While these recent columns have focused on probate issues, many authoritative publications emphasize the importance of having all your planning documents in order.
Best Practice. Consult your attorney and financial advisor and be sure your overall financial and planning house is in order, including beneficiary designations.
Remember: An informed choice is a smart choice.