Know who your beneficiaries are. Make sure that annuities and insurance policies pay out to the appropriate person. For example, it’s not uncommon for people to remarry and forget to change their beneficiary to the new spouse. The former spouse, or whoever is named beneficiary, is legally entitled to the death benefit, unless you change it.
Assumptions not to make:
Never assume good will among your children. Money and property do strange things to people, even people who love each other. For example, two California sisters, previously close, stopped speaking to each other because of a fight over who would inherit a cherry-wood nightstand. The death of a parent puts children, even adult children, under enough emotional stress as it is. Do not add to it with a Will that makes them solely responsible for distributing your personal effects. If you would rather not bequeath specific items, at least specify a process for dividing your things in an orderly fashion. Drawing straws and flipping coins beat the heck out of a free-for-all.
Never assume that your child’s marriage will be permanent. Because roughly half of all marriages end in divorce, it is generally unwise to appoint a son-in-law or daughter-in-law as an executor of your will. Appoint a blood relative, a trusted friend or a lawyer instead.
Never assume that your lawyer is capable of finding all your assets. Some $37 million sits in the Kentucky State Treasury’s Unclaimed Property Fund, and a good chunk of it is lost assets of the deceased. Your hard-earned money could land there, as well, unless you make a detailed list of your assets, with account numbers and everything. Don’t forget to tell your lawyer and/or children where to find the list.
- Life Insurance. Life insurance normally goes to the beneficiary of policies. To do an estate plan, policies and beneficiaries will have to be reviewed. Sometimes life insurance can be used to make estates more liquid. Life insurance owned by a decedent or payable to his or her Executor is taxable to the estate, and possibly increasing the tax burden. Insurance proceeds may pass to a beneficiary free of all income tax, but when the insured owns the policy, the proceeds are subject to federal estate tax. If your spouse is the beneficiary of your life insurance policy, the proceeds generally may not be subject to federal estate taxes. This is a result of the tax law’s unlimited marital deduction.
- Retirement Accounts. Retirement accounts will need to be reviewed. Normally, the first beneficiary should be a spouse, and the secondary beneficiary needs to be reviewed to make sure said beneficiary follows your estate plan. Note, the tax laws require individuals who participate in employer-sponsored retirement plans and those who own traditional IRAs, to begin taking “required minimum distributions from said accounts when they reach age 70 ½.
- Safety Deposit Boxes. It is probably not a good idea to put your Will and estate documents in a bank safety deposit box. It is probably a better idea to put them in a fire-proof box in your house, with instructions to your heirs where they can be found upon your death. It also probably is not a good idea to give copies of your Wills to your children or beneficiaries.
- Burial Needs. You may want to pre-arrange your burial needs, or at the very least, make sure your immediate family knows what your wishes are concerning services and burial. This can also be taken care of by separate letter with your Will, but make sure your heirs can access it soon after you depart from this world.
- Organ Donations. An organ donation is accomplished by signing a written document in front of two witnesses, or by appropriate language in your advance directive, or by the appropriate designation on the back of your driver’s license. Although Kentucky law permits it, you should not include your wishes regarding organ donation in your Will, because your Will is generally not available until it is too late to use your organs.
- Medicaid Considerations. Medicaid was established in 1965 with the worthy aim of providing medical care for the poor. Through proper planning, it may be possible to shelter some of your assets and income to qualify for Medicaid. There also are some assets that are excluded from Medicaid eligibility. This process and analysis is complicated and one which you need to discuss with an attorney who is knowledgeable in “elder law”.
As attorneys, we would be more than happy to meet with you to discuss any issues presented by the above, to discuss an estate plan, or to review your existing estate plan. While the internet promises to provide you with inexpensive “fill-in-the-blank” Wills that might be perfectly legal, these Wills are often unlikely to perfectly fit your specific situation. Also, it is very important that a lawyer assist you in making sure all documents are properly executed and signed, which is not as easy as it looks or sounds. When you hire an attorney to do this for you, you are not buying paperwork, as much as experience and expertise. Casting your lot with a cheaper, pre-fabricated Will can prove penny-wise but pound-foolish. Please give us a call if we can be of assistance.