2021 Guide to Family Estate Planning: Tips, Advice and Checklists

Updated: July 19, 2017

What is an Estate Plan?

An estate plan is a collection of documents that describe how your assets are to pass to your heirs, who gets what and when and how your estate is managed in the event of incapacity. In the estate planning process, you determine how those close to you should handle your affairs when you no longer can.

Why Do Young Families Need Estate Planning Assistance?

About three or four years ago, I had a family event that resulted in my awareness that perhaps 30 something-year-olds have a much greater need for an estate plan than they realize.

Video: Why Young Families Need An Estate Plan

With older people, they often have many things already in place. They will have arrangements made for themselves, their heirs and any elder member of the family that still needs care. They have been putting planning strategies in place for how to allocate any wealth, property, trusts, and jointly held assets.

“Fifty-eight percent of American adults have not written a will, giving them little control or input into issues such as what will happen to their assets and any minor children after they die.” – Findlaw Estate Planning Survey

They’ll have a great deal of estate planning in place which acknowledges each of the heirs, and any legacy giving that needs to take place, whereas, with younger families, they assume that nothing is going to happen and that it will be fine. Unfortunately, I have found that this is not the case.

We talk to many groups about planning who are in this age range and said, “Why do you think people don’t cover the basics such as having wills or have someone help with estate planning?”

The answers are typically the, “I just don’t have the time” or “not that I don’t want to pay for it but I just don’t understand, is it going to cost me this black hole of cash because everybody has this fantastic idea that an estate planning lawyer charge lots of money and it’s not good.”

Tips To Reduce Legal Costs

Tip: Complete this personal data form and Goals and Objectives form (PDF download) to help you articulate your thoughts and questions before meeting with an attorney. It captures the basics and will serve as a quick reference for the plan.

The Challenge with Online Wills

Younger families, in general, are also very accustomed to doing their research, learning, and planning on their own, inventing on their own. They assume a great deal of information about wills and trusts based on what they have found on the internet.

What is often the case is that conclusions that they may have reached are inconsistent with the law where they live and out of alignment with a statement of goals and objectives which they should complete. Goals and objectives provide a more robust picture of planning considerations that form the basis of an estate plan.

Careful consideration is needed for tax strategies, guardianship, and appointing trustees not to mention making sure that wills and trusts are consistent with the laws of the state where they live. The goal is to provide planning advice that protects the each member of the family.

Tip: Learn more about wills in the articles on what is a will and what makes a will valid.

Wealth Doesn’t Automatically Pass To Your Spouse

The other thing that they assume is that I don’t have to do it because everything just goes to my wife or everything just goes to my child. They then often will go online, do some research and decide, “Well, I have a simple situation. I don’t need to have a lawyer do this. I can do this by myself.”

The other thing that they assume is that I don’t have to do it because everything just goes to my wife or everything just goes to my child. They then will go online, get a do it yourself will and decide, “Well, I had a simple situation. I don’t need to have a lawyer do this. I can do this by myself.”

There are so many other things that they do online that are self-creating that are very DIY. The internet is where they learn. It then becomes problematic to inform them that when it comes to preparing wills, simple doesn’t mean what they think it means.

Unintended Consequences of Not Preparing A Will

One of the things that we have found to be very helpful when planning is explaining or sharing cases of unintended consequences where the family thought that having the will didn’t matter and what the outcome was because they didn’t realize it (See Forbes for more stories.) One of our recent unfortunate stories is a New York City family where the individual who passed was 37 years old, and he had a new baby. The death was sudden and accidental.

Video: Why Young Families Need A Will

In that case, in New York, essentially half of the estate goes to the mom, and the other half goes into a protective guardianship arrangement for the benefit of the child, requiring the mom to go to court annually to ask for money from the account. I know from the beneficiary designations that the dad did prepare when living, that he intended that his wife would be in charge of all property. This was evident in assets such as life insurance where he named his wife as a beneficiary.

We can only imagine how shocking it would be to him, to see that this is not the arrangement that’s going to happen and the incredible cost that’s going to be involved when this mom needs to go to court annually.

Next, consider the invasion of privacy that occurs when the mom has to go to court and explain the reasons why she needs money from the baby’s funds. Number three, the uncertainty and the overall feeling of lack of control about the fact that when her child reaches age 18, she’ll no longer have control over his money. If at that time, he’s in a difficult marriage or he has creditor problems, or he has other issues, perhaps he has drug or other issues, there’ll be nothing she can say about it. The law is, he’s 18, the money is his. Whereas if the dad had prepared a will, he likely would have said I’m going to not have that money go out to my child until he’s quite a bit older.

In this case failing to plan certainly stunned the mom that was left behind. We are certain it would have also stunned and be opposite of any goals that would have been left by the Dad.

Planning for Incapacity

What happens if you become unable to handle your financial affairs or you’re unable to make medical decisions? In most states when it comes to financial assets, the process is that the individual who no longer is capable must be declared incapacitated or incompetent depending on the state’s laws. Pursuant to a proceeding, the court usually requires that two physicians are brought in to examine the individual, and they must report to the court.

Video: Planning For Incapacity

The court then also appoints an independent attorney (varies state by state). The attorney visits the person being evaluated for incompetence and says to him or her, “Do you know why I’m here?” Do you know that your sister or your child is working to have you declared incapacitated and declared incompetent?” We can tell you first hand that even a person who is incapacitated often has enough acuity to understand that this feels threatening. Attorneys also deal with a number of different topics including estate litigation, will disputes and probate proceedings.

What Is a Power of Attorney?

If instead, the person prepared and signed a power of attorney, which is the document where one person gives another person or series of people, the power to act in the event of a life disability the court proceeding would have been avoided. Likewise, in health decisions, failing to plan means that the people who you might not want to make a decision will make a decision that might be inconsistent with your goals.

The case of Terri Schiavo springs to mind or Karen Quinlan where the family didn’t know what they thought about these issues. In certain extreme medical conditions, what would you want? If you don’t express that intention in writing then you lead yourself open to having someone else make the decision.

It might not be who you want it to be, and the people who you want to make the decision for you may not agree. Everything is better when families create a plan and have something they care about and find to be important in place.

Types of Power of Attorney

Financial for brokerage or bank accounts
Medical to make medical decisions when you aren’t able
Medical directives (different than a power of attorney) to indicate the type of medical care you would want

Planning for Disability or Incapacity

The attorney’s job in having these conversations with young families is to share with them the difficult reality that people are far more likely to become incapacitated while employed than they are to pass away. Even if the documents they think they need are the ones where they appoint a guardian, they forget, they neglect to know that the bigger issue is the possibility of incapacity and the impact that it will have for their family.

Passing Without a Will

What happens to your assets if you pass without a will? This area of law is referred to as intestate because the document that you leave, that is your last statement when living before you die is your last testament of what you intend to have happened to your property.

Video: What Happens If You Die Without a Will

Wha does Intestate Mean?

Intestate refers to the lack of having a will. First of all, wills cover only probate assets and so intestate laws, also cover only probate assets.

Tip: See our guide to what makes a will valid and does a will have to be probated.

What Do Intestate Laws Cover?

An estate plan with a will provides for the allocation of assets, among beneficiaries. The intestate laws, in other words, the laws in states such as New Jersey, New York, and California, tell the court the beneficiaries who inherit and in what percentages. Every state has different rules on who inherits, and people are often surprised by who the beneficiary will be.

The intestate laws also cover who is the serve as a fiduciary.

What is a Fiduciary

A fiduciary is someone who is handling money or property for someone else. In an estate context, if there is a will, the person in charge is called an executor, or in some states, they’re known as a personal representative or a specialized kind of administrator (sometimes called a personal representative).

Appointment of Guardians

Intestate laws also provide for the appointment of guardians for your children based on who applies. The state looks at the application made by the various people who want to apply and says we have to decide based on what we see at that time, perhaps without your input because you didn’t leave a will, would be the best person to take care of a child.

“A legal guardian has the same power as a parent to make decisions for a child.
Guardianship usually lasts until 18 years of age”
– NYCourts.gov

As an attorney, our wills and estate planning goal is to in fact pick a guardian, someone who we can choose to the best one to care for our children. Also, the intestate laws cover rules on how to invest your assets. The overall rule that the state has is you’ve got to act prudently, but maybe prudent is a little bit different in your circumstance.

What is Probate?

Probate is the legal proceeding whereby a court accepts or determines that a will written by the decedent is proven to be valid. It is not automatic that a will that’s signed and submitted to the court is valid, but as long as it meets certain criteria the presumption is it is valid, and so the court has the opportunity to approve it and sign off on it.

probate courthouse — Not Having a Will Creates Uncertainty Regarding How Assets Are Passed to Heirs

If instead, you die without planning for a will, the proceeding is that the person appointed on your behalf which is covered by state law is authorized to transfer your assets.

If you have assets with named beneficiaries, these are not covered by intestate laws (unless you failed to name a beneficiary. Assets exempt from intestate law where there is a named beneficiary include:

401K account
IRA
403B
Annuity programs
Joint accounts
Life insurance

What’s the alternative to having an intestate estate? In the trusts and estate planning world, it means having an estate plan.

Tip: Learn more in our guide to understanding probate law.

Writing a Will and Children

A will is a document that can be changed at any time as long as the person who’s writing it is competent to make a will. It allows people to identify family members. It might seem obvious that your family members are your spouse and your children but what about later born children? Do you intend to include them? What about earlier born children from a prior relationship? Do you intend to add them?

For example, there was a case where the individual passed, leaving no will. He had three children from a first marriage who are still minors. Under his property settlement agreement with his former wife, those children have a share of the life insurance for their benefit.

His spouse and children in the second marriage now share assets with children from the first marriage, even though those children were otherwise provided for. If that individual had made an estate plan, he likely would have treated the children of his second marriage more richly in his estate knowing that he otherwise provided for them the other children with life insurance, number one.

Number two, while still minors they were quite a bit older. Some of the expense of years of their lives were already paid for, and there had been other arrangements made for their college expenses but again, no will, no flexibility, no ability to define who I mean to treat as children for this purpose or for that purpose.

“Nearly half of all respondents believe that estate planning is only for the ultra-rich and most people don’t need it. While this view is common among Americans, it couldn’t be further from the truth. Proper estate planning can help people across the wealth spectrum to achieve numerous goals.”
– Wealth Counsel Survey

It also allows you to specifically include adopted children and children who are in utero. Most states now have laws that describe whether those children are deemed to be children, but you can go wrong. You can be in a state where that’s not the case when you pass. You can be a resident of a different state. Those are issues to be considered and addressed in a document. You also could address what happens in a simultaneous death plan. Young families are very often traveling together, what if the worse happens? What happens if both parents are deceased, then who does it go to? Then, who’s in charge of the money in that case?

Also, what if the worse of all, the entire family is lost? The best thing about having a plan is you can plan for the worst and the best parts of life.

Picking an Executor of a Will

One of the things that I try to do with young families is to encourage people to name a string of successors. Let’s say you want to name your spouse as the primary executor. When the time comes the spouse might feel it’s just too much, they’re not able to handle both the grief of the loss and the job of doing the executor’s role. What do they do? If we have a second in command which they felt would be appropriate for the situation, they can simply resign.

They can say, I won’t take on the job, I’ll renounce the role of executorship and then you already set it up, so there is a document that says this is who’s in charge and it’s easy, it also avoids the obligation that the state will generally require, the posting of an insurance policy called a surety bond to protect that the executor doesn’t run off with the money.

What do they do? If we have a second in command which they felt would be appropriate for the job, they can simply resign. They can say, I won’t take on the job, I’ll renounce the role of executorship, and then you already set it up, so there is a document that says this is who’s in charge. It also avoids the obligation that the state will generally require, such as the posting of an insurance policy called a surety bond to protect that the executor doesn’t run off with the money.

Tip: Learn more from our article on being an executor.

Executor Responsibilities

Part of the job of an attorney is to explain the nature of the executor job. They need to know that it is a short-lived job relatively speaking. It means I take on the assets of the decedent and the obligation of bringing things together, paying bills, filing tax returns, getting businesses into shape and then transitioning the estate when all is done over to the beneficiaries in the most advantageous way possible.

When somebody imagines understands the nature of that job, they can better plan for or think of who would be the best person for the job.

Again, these are things to consider and to plan for.

Tax Planning

One goal of any estate plan is to transfer wealth to your loved ones by following your wishes. Tax considerations can reduce an estate by as much as 50%, making sheltering assets and gifts an important part of the planning process. Learn about opportunities such as:

Gift-tax exemptions
Custodial accounts when gifting minor children. Use a trust for higher amounts.

Ask your attorney or tax planning professional for advice.

Asset and Preparation Checklists

When visiting an estate planning attorney be sure to ask about the following:

Creation of a Will: who will care for your young children
Benefits of a living trust: to avoid expensive probate and other issues
Health care directives: when you can no longer make decisions for yourself
Financial Power of Attorney: name a trusted person to manage financial affairs
Name someone to look after the children’s financial affairs
File forms that name a beneficiary for retirement, bank, stock and insurance accounts
Buy life insurance to cover any debts
Review estate tax plan
Establish what happens if you own a business
Arrange for safekeeping of documents

Before visiting the attorney put together an asset inventory including:

Home value and real estate
Jewelry and any expensive assets such as artwork
Brokerage Accounts
Retirement Accounts
Location of assets such as safe deposit boxes
List insurance policies
List liabilities such as your mortgage or large debts

Questions to Answer in the Estate Plan:

Who will inherit any assets?
Who will be the Guardian of any minor children?
How much should be set aside for the education and care of children?
If incapacitated, who will manage your finances and act as your Power of Attorney?

Forms and Checklists To Collect Estate Related Information

Contact Our Attorneys For More Help

These are just some of the steps and financial planning considerations for young families. At Howard Law, you work with an experienced attorney who provides a checklist of all of these considerations, who will outline the process and provide advice on how to cover all of the estate planning basics. We will work with you on any required documents such as wills and trusts that anticipate everything that living can bring. Let’s discuss your hopes and dreams for the health and well-being of your heirs.

Just give us a call at (201) 488-4644 or contact us using the form below. We offer a free initial consultation to ensure that all of your questions are answered prior to taking any action.