Are You Ready?
 If you were
incapacitated or died today, what would happen to your loved ones and your property? Who would assume responsibility to make sure everything was okay? How would anyone know your plans for
the care of your loved ones and your property? Even if you have answered these fundamental questions through proper estate planning, it is important to review your answers periodically,
because they may change over time. To help ensure that your review is thorough, remember to cover the Three P’s of proper estate planning: People, Property and Plans.
Your People
Our life experiences are enriched by the relationships we develop with other people. Who are the important people in your life? Depending on your unique
circumstances, your list may include your spouse, children, grandchildren, parents, siblings, nephews, nieces or friends. Beyond these, your important “people” also may include worthy
causes, charities, and even pets.
Your Property
The term property includes not only real estate, but all of your assets, regardless of form. What property have you accumulated? Have you inventoried and
valued your things? Do not forget tangible personal property, such as heirlooms and antiques, for which sentimental value can far exceed appraised value.
Your Plans
At the foundation of every comprehensive estate plan is the selection and appointment of successor decision-makers to make personal, health care and financial
decisions in the event of your incapacity. Likely such successors would continue to manage your property following your death, as well. Whom have you appointed as your successor
decision-makers? Do they have the time and expertise to serve? Would it be wise to appoint professionals to help them with the details? Professionals, such as trust companies or
accountants, may be more appropriate given your unique circumstances. In addition, if you have minor children, have you appointed guardians to ensure that your children would be reared in
a loving home should they be orphaned?
Issues surrounding the division and distribution of property can shipwreck family relationships. Do you have sentimental, one-of-a-kind items? Studies show that many family
fall-outs result from failure to make legal arrangements for the distribution of these sentimental items.
Do you have a family business? Two-thirds of family businesses fail to survive the exchange from one generation to the next, largely because they have no succession plans. Who
among your children will inherit your business? Have you made arrangements in your estate plan to treat your other children fairly, if not equally? Will your plan discourage
or even prevent conflict among your heirs?
Is yours a blended family? If so, what plans have you made regarding the treatment of your property upon your death? How will you honor your vows to provide for your surviving
spouse and still fulfill your desire to leave an inheritance for your own children from a prior marriage? Does your estate plan protect any inheritance left for your surviving spouse from
a potential next spouse?
Divorces, lawsuits, bankruptcies and affluenza can wipe out an inheritance virtually overnight. Does your estate plan protect any inheritance both for and
from your children (and their possible future misfortunes)?
Given the certainty over the uncertain future of the death tax, does your estate plan contain the necessary flexibility to achieve tax minimization goals? If not, the
IRS may be one of your heirs.
Summary
Failure to make and maintain proper estate plans for the important people in your life and for your property can lead to family fall-outs, litigation and
other unpleasant consequences. Reviewing the Three P’s of your estate plan could help avoid them.
 First Things
New parents quickly learn that children’s needs come first. Adhering to that philosophy, parents of minor children should consider two key issues when preparing an estate plan. First,
who would take care of their minor children and second, who would manage their financial matters and inheritance should both parents die or become incapacitated?
Guardian Guidance
Parents have the right, and the obligation, to appoint legal guardians (or back-up parents) of their choosing to rear minor children to adulthood. (Note that even if parents are separated
or divorced, the surviving biological parent will continue to be the children’s legal guardian unless deemed unfit by a court.)
While every situation is different, here are some general guidelines to keep in mind when selecting guardians:
- Select guardians with similar faith, values and life priorities; and who already have an established positive relationship with the children;
- When selecting a married family member, appoint the family member only, not their spouse, in case the family member predeceases or the couple divorces;
- Provide for the compensation of the guardians, or at least sufficient assets from the children’s inheritance to cover all expenses incurred on their behalf; and
- Obtain permission from selected guardians before appointing them in legal documents.
Fiduciary Fulfillment
A fiduciary is a person or an institution legally responsible for the financial affairs of another. Fiduciaries are held to the highest standards of care and loyalty in this role. An
appointed fiduciary manages the financial matters of incapacitated individuals, and any inheritance left upon death.
By default, if parents make no legal plans, the selection of a fiduciary to handle the children’s financial matters will be made by a probate court judge. On the other hand, parents who
choose to make these decisions in advance have basically three legal options.
Option #1: Appoint trusted family members or friends who know the children well. Family members may not charge much, if anything, to serve as fiduciaries. But they may lack the financial
expertise to manage large sums of money, and may be busy with their own responsibilities.
Option #2: Choose a professional fiduciary, such as an institution (e.g., a corporate personal representative/trustee). While a professional may not know the children well, this could be
an advantage when it comes to protecting and managing their inheritance. Professionals also typically charge fees, but their financial savvy may prove the better value.
Option #3: Combine Options #1 and #2 for the best of both worlds. The family member can supervise, without responsibility for investments, accounting and tax details. Plus, the
professional can play the heavy, if needed, without jeopardizing family relationships.
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