“Estate planning is an important and everlasting gift you can give your family.”
One of the most important decisions that individuals must make is how their affairs will be handled in the event they become incapacitated during life and how their estate will be distributed following their death. For individuals who are their family’s primary source of income, a lack of proper estate planning can financially devastate loved ones following their death. According to Lexis Nexis, approximately 55% of American adults do not have a Will or other estate plan in place despite the unquestionable importance of preparing an estate plan. When preparing a Last Will and Testament, there are 7 major items to consider:
- Executor – As the Executor is the individual who will manage the administration of your Estate, the selection of the proper person to take this role is critical. You should select at least 2 alternates in case your first-choice Executor becomes unavailable or predeceases you.
- Guardian – If you have minor children, one of the foremost considerations in your estate plan will be your children’s care. Your Will should appoint one or more Guardians—with at least 2 alternates—who would take physical custody of your children in the event that you pass away.
- Legacies/Bequests – Your Will can include who will receive your tangible personal property, such as artwork, family heirlooms, or jewelry. You also may wish to name individuals and/or organizations which will either receive specific dollar amounts or a certain percentage of whatever assets of the Estate remain following any administration expenses. Your Will should include where each beneficiary’s inheritance will go in the event that an individual beneficiary predeceases you or in the event that an organization beneficiary no longer exists at your time of death.
- Testamentary Trusts – Trusts may be created within the Will to hold Estate assets in trust for one or more beneficiaries. You may decide to include a Testamentary Trust if the beneficiaries named in your Will are minors, disabled, or have poor financial habits. Testamentary Trusts can also shield a beneficiary’s inheritance from being lost to during a divorce proceeding.
- Tax Planning – If your assets are projected to be over the New York State or Federal Estate Tax thresholds, you should also seek tax planning when drafting your Will to reduce the amount of Estate Taxes which will be payable following your death.
- Disinheritance – If disinheritance of family is sought, it is suggested that specific language be included within the Will to confirm that the individual completing the Will made this decision willfully and intentionally, as such Wills are more likely to be contested.
- Preventing Litigation – To prevent estate litigation following your death, your Will can include a provision, called an “In Terrorem Clause.” This states that if a beneficiary contests your Will, sues the Estate or engages in other attacks on your estate planning and if that beneficiary is unsuccessful, he or she will be disinherited and receive nothing from your Estate.
Although there are many other things to consider when preparing a Will, giving thought to these 7 items is a good start. As recognized by finance expert Suze Orman, estate planning is truly one of the best things in life we can do for our family and loved ones.