My law partner Merritt Yoelin recently pointed out an article in the Wall Street Journal entitled The 25 Documents You Need Before You Die. In discussing the article, Merritt explained “many of our clients have asked us for this type of information so that they may organize their affairs. This is the best I have seen in my many years of practice.”
In the article, Saabira Chaudhuri discusses a number of documents that each of us should compile. The article provides an excellent framework to think about the estate planning process. The articles main points can be summarized as follows:
1. Know what your assets are and how you own them. We often discuss with our clients the importance of understanding what your assets are, what they’re worth, and how they are titled. For example, for planning purposes, the home you own with your spouse, your interests in a retirement plan or IRA, or investments you own with an unrelated business partner, will all be treated in very different ways at your death. It’s essential to understand these intricacies and possibly take appropriate actions in the estate planning process. For example, many clients with whom I meet are surprised to learn that their will or trust will generally not control what happens to their retirement accounts or IRA when they die. Rather, it’s the beneficiary designations that are typically signed when a person first opens such accounts.
2. Plan carefully, and prepare legal documents that reflect that plan. While that might sound like a platitude, many individuals simply have not prepared an estate plan that meets the specific needs of their family. Rather, they see the process as just “completing the right forms.” However, every family has a unique set of assets and family dynamics. It’s entirely common for children in a family to have very different personalities, needs, and challenges. By candidly discussing these issues with an experienced estate planning attorney, these issues can be addressed, while at the same time navigating the ever-changing tax issues that impact the estate planning process.
3. Communicate! Another key point set forth in Ms. Chaudhuri’s article is the importance of communicating information about your planning to your family, your executor, and/or your trustee. If these key people don’t have the appropriate information relating to your assets and the planning steps that you’ve taken, their job in taking care of your estate will be much more difficult. I made a similar point in my WLB article last year entitled “Estate Planning and ‘Virtual Assets’”. In that article, I discussed the “VAIL” or “Virtual Asset Instruction Letter,” which is similar a tool to list your electronic or digital assets (which we call “virtual assets). The VAIL is an instruction letter about these kinds of assets that is directed to your executor or trustee to ease the burden of administering these assets after your death.
