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3 Tips to Improve Your Estate Plan

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I recently attended a day of continuing education conducted by the National Association of Personal Financial Advisers or NAPFA. About one-half of the day was dedicated to the review of an actual estate settlement and several examples of what is called “Post-Mortem Planning”. To be honest, the scenario probably doesn’t apply to most of us. It involved a family with an extremely valuable piece of property (>$10M) and the mysterious deaths, even though the deaths were separated by 2 years, of the two of the owners of the property (husband and wife). But, with that said, during the presentation I picked up three things that could improve your estate plan.

  1. Don’t Use a Generalist When a Specialist is Required. Even though this family had substantial assets and a very unique form of property ownership, they elected to use a “generalist” attorney. This resulted in several statements in the wills that were unclear and had potentially harmful consequences and the same could potentially happen to you. While the lawyers at the base legal office are all good folks and great Americans, they may not be equipped or have the time to take on a complicated situation. What makes a situation complicated? It’s not just having a lot of money. Some situations that come to mind are blended families, families with special needs children, or families with real property (houses) in several states or in a different state than where they are residents. If a complex situation applies to you, you might want to consider spending the money to get an estate planning attorney to draw up your documents. And if you have potential estate tax liability make sure the attorney has knowledge of estate taxes or bring in an Enrolled Agent or CPA to assist.
  2. Your Spouse May Not Be the Best Choice to Be Your Executor. A lot of people name their spouse as the executor for their will. This may not be the best choice. In the case we reviewed the husband (the executor of his wife’s will) took ill shortly after the wife died. He was unable to complete any of the actions required to close the estate and pay the estate taxes due. This resulted in a huge amount of interest and penalties due from the husband’s estate when he died. But, if you don’t name your spouse as the executor, who should you name? An option worth considering is “joint executors”. Name your spouse as one of the executors and a professional as another. Choices for the professional would include the attorney that drafted the estate documents, your financial planner, or a CPA or Enrolled Agent. If a professional isn’t available, then a trusted family friend could fit the bill as well. If the will is drafted properly your spouse can still maintain the desired control of the estate.
  3. Keep Your Will Up to Date. Even if nothing has changed in your life, almost certainly something has changed in the administration of estates that could change the outcome from your will. In the case we reviewed, the husband had designated that a certain amount from his estate go to a trust. The beneficiaries of the trust would then receive income from the trust and at some point in the future receive the money inside the trust. Everything left over was to go to his wife. The lawyer tied the amount to go into the trust to the Unified Credit which at the time was $675K. At the time of the husbands death the amount that would go into the trust was now $5M. If the estate had less than $5M the spouse would receive nothing (unless she is one of the beneficiaries of the trust). This was probably not the intent. Bottom line for you…update your will every few years or so.

Nobody likes to do estate planning. But, you owe it to your survivors to make the transfer of your estate as smooth as possible. Maybe these three tips will help you out.


Curt Sheldon, EA is a Fee-Only Financial Planner and Enrolled Agent based in Northern Virginia.  He can be contacted at (703)542-4000, (800)928-1820 or Curt@CLSheldon.com

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The information contained in this blog is for general financial education and should not be construed as individual financial advice.  Please consult your own financial, tax or legal advisor prior to applying any principles discussed here to your own financial situation.