When doing proper estate planning, we want your plan to be able to handle as many of life’s twists and turns as possible. We want your plan to have the flexibility to achieve your goals without having to come back every year to make updates.
To do this, we want you to think.
I will illustrate with an example:
Joe and Mary are in their mid-60s and have been married for nearly 40 years. They have 3 children: Tom, Dick and Harriett. Each of the kids is married, with two children of their own. Joe and Mary have approximately $600,000 in assets.
When Joe and Mary met with me, they decided to move forward with the creation of their estate plan. Their goal is to avoid probate and to make things as easy as possible for their kids. They want everything to go to the surviving spouse, and then equally to the kids.
Their first decision is to name a financial decision maker if they are incapacitated and unable to make these decisions themselves. They have full trust in all three kids, and want to treat them equally, so they settle on naming each child in birth order – Tom would serve first, then Dick, and finally Harriett.
At face value, this was a simple decision, but there are factors to consider, such as the location of the decision maker – are they local, or across the country? Who has a good financial mind (or the willingness to seek guidance) is another factor. These and other factors can make a seemingly simple decision more involved.
The next decision is who gets the $600,000 after both Joe and Mary pass away – this is easy, since they had said, it is 1/3 to each of their kids. But who gets Tom’s 1/3 if he has died? His children? Joe and Mary’s other two kids? Tom’s wife? If Tom’s wife, then what happens if they are separated or divorced?
Do any of the kids have current financial or divorce concerns? Is it contemplated for the future? If so, we need to address these concerns in Joe and Mary’s estate plan.
Finally, Joe and Mary need to decide what happens to the $600,000 if all of the kids and all of the grandkids were gone. Does it go to other family members? Does it go to close friends? Or does it go to their favorite charity? As the family tree branches out, this scenario becomes less likely, but it still needs to be considered.
By focusing our practice solely on estate planning, we are able to guide our clients, like Joe and Mary, through these and other decisions, but it is up to our clients to think it through and decide how they would like things to be distributed.
Contributed by MH , Estate Planning Attorney James P. Plitz
About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.
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