Being efficient
When you build a house, you want to do so efficiently. Pine 2x4s are cheaper than 1½” oak floor boards, so that’s what you use to frame the house. When you’re making your estate plan, you don’t want the family farm to wind up being sold to pay a tax bill, the costs of probate, or the medical expenses of your beneficiaries. Fortunately, with a little forethought, you can avoid those kinds of problems and make a plan to pay or even avoid those costs without jeopardizing your wishes.
Taxes
- Identify what taxes, if any, will apply to your estate the way you have it planned
There are all kinds of taxes that could apply to your estate, some state-specific, some federal. Ask your estate planner about: estate taxes, inheritance taxes, gift taxes, income taxes, and generation skipping transfer taxes - List any taxable beneficiaries
After you know what taxes will apply, list the people those taxes will apply to. When you know who will be taxable and how, you can move on to #63… - If there will be taxes due, can you avoid them?
There’s a plethora of potential legal strategies available depending on which taxes will apply to your estate. - If you can’t avoid the taxes, make a plan to pay them
Unfortunately, sometimes no combination of strategies will get you out of paying taxes. When that’s the case, make a plan to pay the tax bill that ensures your other wishes will still be achievable.
Expenses
- Consider avoiding probate
Sometimes probate is the best way to distribute your estate. Most of the time, though, skipping probate simplifies the process and eases the stress. The most consistent benefit to avoiding probate is the cost savings: no probate means no court costs and lower attorney fees. - Include a stand-by supplemental needs trust
Your kids might not need it now, but circumstances can change in the blink of an eye. Putting a “just-in-case” supplemental needs trust into your will or revocable trust can protect assets for your kids by shielding them from the state or a nursing home, even after your death.
Stuff
- Consider having your valuables appraised
Do you know what your stuff is worth? Collectibles and jewelry are most common, but art, guns, antiques, and tools can all be extremely valuable in the right hands. You can make your executor’s job easier by having your valuable property valued before your death. Bonus: the appraisal can help if you ever need to make a claim under your homeowner’s insurance. - Update the appraisals periodically (as needed)
It’s not necessarily helpful to have an appraisal if it’s ten years out of date. Is your art more valuable now that the artist has died? Is your coin collection incomplete now that the US Treasury has issued new quarters or dollar coins? - Make a personal property memorandum
A personal property memorandum is a list of tangible (not money, investments, etc.) items that you want to give to specific people. Think grandma’s delft tea pot, a set of china, or the family silver. - If you aren’t using certain property, give it away during life
Things that you don’t need to use can be given away while your living. This will reduce the size of your estate resulting lower taxes and costs.
Keeping it organized
- Keep your originals safe but accessible
Without the originals, your executor and trustee can’t enforce your wishes. Make sure you keep the originals where they won’t get damaged or destroyed. - Keep the titles to your vehicles together
Missing car titles can waste time and money in the probate or trust administration process. Keeping all of your car titles in the same place will make it easy for your family to take title to them or sell them after your death. - Keep all your important personal papers together
Your executor will need to provide most of your personal information to the court, life insurance companies, and any number of other third parties in order to fully administer your estate. You can make this process easy by collecting and storing your personal information in a single location. Things to store together include your birth certificate, marriage license, Social Security papers, military records, powers of attorney, divorce papers, citizenship papers, and copies of your estate plan documents. - Inventory your safety deposit box every year
You don’t get a safety deposit box to keep it empty, so make sure there’s a list of what’s in your box. Even better, keep that list with your other important papers (see #73) - Keep your safety deposit box key(s) and your estate plan documents together
Your executor will need to get into your safety deposit box, so leave your safety deposit box keys with your will. That way, when they look for the will, they also are able to get access to your box contents. - Tell your fiduciaries where your original documents are located
Duh? See #71. - Keep copies of your estate plan documents in an easily accessible location
- Create a list of your fiduciaries and their contact information
And make sure your family has that information. - Put copies of your funding documents with your copy of the will and/or trust
Funding is the process of making sure all your stuff will flow through a trust. Your executor and trustee will need to know which assets they’re working with in order to do their job. Keeping copies of the changes you make with your estate plan copies will give them all the information they need to get things started. - Build an estate plan organizer
You can accomplish most of these hacks by putting together a book/binder to organize and store copies of all your documents.
Our estate plans include a complimentary Estate Plan Portfolio with a table of contents, tabbed dividers, and helpful organizational tools to get you started down the road to a simplified estate administration. After all, at The Huizenga Law Firm, your planning is our passion.
