Getting Ready for Estate Planning

1. Getting Ready for Estate Planning Putting the Pieces Together This presentation guide is available for educational purposes. It can be used with the Getting Ready for Estate Planning web site (www.ces.purdue.edu/estateplanning) or as a general guide to getting ready for estate planning. The objectives are to: Help participants understand the steps in estate planning Help participants organize their thoughts and wishes before talking with an estate planning professional Disclaimer: This information is not intended to be a substitute for legal advice or counsel. It is designed to create an awareness of the need for estate planning and to help families become better acquainted with some of the issues involved. This presentation guide is available for educational purposes. It can be used with the Getting Ready for Estate Planning web site (www.ces.purdue.edu/estateplanning) or as a general guide to getting ready for estate planning. The objectives are to: Help participants understand the steps in estate planning Help participants organize their thoughts and wishes before talking with an estate planning professional Disclaimer: This information is not intended to be a substitute for legal advice or counsel. It is designed to create an awareness of the need for estate planning and to help families become better acquainted with some of the issues involved.

3. Estate Planning� Is making the most of what you have now and after your death Allows you to arrange your affairs according to your wishes Includes coordinating the use and distribution of your property Doesn�t have to be overwhelming These are some key thoughts in defining estate planning. Estate planning is an ongoing process that really starts when someone acquires property and continues through the distribution of that property. Part of the purpose of this presentation and the web site is to help people understand that estate planning does not have to be overwhelming. It can be broken down into 6 basic steps. These are some key thoughts in defining estate planning. Estate planning is an ongoing process that really starts when someone acquires property and continues through the distribution of that property. Part of the purpose of this presentation and the web site is to help people understand that estate planning does not have to be overwhelming. It can be broken down into 6 basic steps.

4. Step 1: Initiate the discussion No one �right� way to discuss Use someone else�s story Use web sites, books, estate planning articles to start discussion Step 1: Initiate the discussion It�s important to remember that there is no one �right� way to discuss estate planning. For many, one of the biggest challenges is just getting the discussion started. Sometimes using someone else�s story can help get a discussion started. The death of a neighbor, close friend or family member might provide an opening. One could say �do you remember what happened to so and so and what his family went through? I don�t want that to happen to us.� You may be able to use a web site like Getting Ready for Estate Planning or an extension publication or other estate planning articles to bring up the topic. Step 1: Initiate the discussion It�s important to remember that there is no one �right� way to discuss estate planning. For many, one of the biggest challenges is just getting the discussion started. Sometimes using someone else�s story can help get a discussion started. The death of a neighbor, close friend or family member might provide an opening. One could say �do you remember what happened to so and so and what his family went through? I don�t want that to happen to us.� You may be able to use a web site like Getting Ready for Estate Planning or an extension publication or other estate planning articles to bring up the topic.

5. Discuss Wishes Be clear about your concerns Be willing to listen and talk Recognize that people have different feelings and opinions. In a discussion of estate planning, it is important to be clear about your concerns and your wishes. People can not read each other�s minds. If we don�t speak up, others won�t know our opinions and feelings. We need to talk about what we�d like to see happen and why. We need to address the �what if� questions. Communicating can help reduce feelings of burden, guilt, and misunderstandings. It can also reduce the potential for conflict among family members. Everyone needs to be willing to listen. Family members may have different feelings and opinions or be at different stages of readiness to discuss estate planning. Being sensitive to other people�s feelings and needs is an important part of this communication process. In a discussion of estate planning, it is important to be clear about your concerns and your wishes. People can not read each other�s minds. If we don�t speak up, others won�t know our opinions and feelings. We need to talk about what we�d like to see happen and why. We need to address the �what if� questions. Communicating can help reduce feelings of burden, guilt, and misunderstandings. It can also reduce the potential for conflict among family members. Everyone needs to be willing to listen. Family members may have different feelings and opinions or be at different stages of readiness to discuss estate planning. Being sensitive to other people�s feelings and needs is an important part of this communication process.

6. Step 2: Take Stock Summary list of: Family members Important Papers Bank accounts and insurance information Assets Liabilities Gifts given The second step is to take stock of the present. Making a summary list of important personal and financial information will help an estate planning professional in guiding your plans. Having this information organized can help save time and money. A workbook that can be used to record this information is available on the Getting Ready for Estate Planning web site. The second step is to take stock of the present. Making a summary list of important personal and financial information will help an estate planning professional in guiding your plans. Having this information organized can help save time and money. A workbook that can be used to record this information is available on the Getting Ready for Estate Planning web site.

7. Step 3: Determine Objectives Security for spouse, other family members? Continuity of farm, business? Minimize taxes? Specific property to specific people? Paying expenses? Charitable bequests? Name guardian, personal representatives? Minimize probate & settlement costs? Remember objectives can change as your life changes A very important step is to determine your objectives. This is a list of typical estate planning objectives. You may find your objectives on the list or you may have others in mind. Take time to recognize what you want to accomplish. It may be different for different family members or for friends. Your objectives can also change with changes in your life. Your objectives will guide you through each step of the estate planning process. A very important step is to determine your objectives. This is a list of typical estate planning objectives. You may find your objectives on the list or you may have others in mind. Take time to recognize what you want to accomplish. It may be different for different family members or for friends. Your objectives can also change with changes in your life. Your objectives will guide you through each step of the estate planning process.

8. Step 4: Choose Advisors, Professional Professional Advisors Attorney Financial Planner Team to help you find ways to reach your goals Part of the process will be choosing advisors. Some will be professional and some will be personal. This is a team that will help you accomplish your objectives and goals. Your team might include: an attorney, financial planner, a trustee, an executor/personal representative, a guardian, and others. Part of the process will be choosing advisors. Some will be professional and some will be personal. This is a team that will help you accomplish your objectives and goals. Your team might include: an attorney, financial planner, a trustee, an executor/personal representative, a guardian, and others.

9. Finding Advisors Ask background/experience Discuss fees: by the hour, flat fee, % of estate? Your comfort level & that of your family in working with this person? Look for someone you can communicate with clearly. Ask your friends, family, other current advisors for suggestions or recommendations. Check on the attorney or financial planner�s background, education, and experience. Discuss fees and how they are determined. Ask yourself whether your family members would be comfortable working with this advisor. Look for someone you can communicate with clearly. Ask your friends, family, other current advisors for suggestions or recommendations. Check on the attorney or financial planner�s background, education, and experience. Discuss fees and how they are determined. Ask yourself whether your family members would be comfortable working with this advisor.

10. Choose Advisors, Personal Executor or Personal Representative Guardian Trustee Durable Power of Attorney Health Care Power of Attorney A guardian is the person who has physical custody of your children. You may also have a conservator who will handle the money for your children. Deciding on a guardian (and a conservator) is often a very big challenge for parents. Many recommend a surviving parent as the first choice followed by a loving family member or loving friend. Trustees are responsible for managing a trust�s assets. Desirable assets for a trustee are investment expertise, integrity, judgment, and ability to get along with family members. A trustee must be able to follow state and federal regulations. A durable power of attorney is a person you name to represent you if you are unable to manage your affairs. You want to choose someone you completely trust. This person could make major financial decisions on your behalf. A health care power of attorney is a person you appoint to act on your behalf in matters affecting health care, in the event of your incapacity or incompetence. These powers do not become effective until you become incapable of consenting to health care. This person needs to know your wishes. A guardian is the person who has physical custody of your children. You may also have a conservator who will handle the money for your children. Deciding on a guardian (and a conservator) is often a very big challenge for parents. Many recommend a surviving parent as the first choice followed by a loving family member or loving friend. Trustees are responsible for managing a trust�s assets. Desirable assets for a trustee are investment expertise, integrity, judgment, and ability to get along with family members. A trustee must be able to follow state and federal regulations.

11. Executor/Personal Representative Makes sure your wishes are carried out Manages property until estate is settled You need confidence in person They need common sense, knowledge of your family Entitled to fee An executor or personal representative makes sure that your wishes are carried out. You need to have confidence that this person will know your wishes and can carry them out. Two important qualities for an executor are knowledge of your family and common sense. A personal representative is entitled to a fee . You will want to discuss in advance whether your personal representative will expect to be compensated. An executor or personal representative makes sure that your wishes are carried out. You need to have confidence that this person will know your wishes and can carry them out. Two important qualities for an executor are knowledge of your family and common sense. A personal representative is entitled to a fee . You will want to discuss in advance whether your personal representative will expect to be compensated.

12. Step 5: Consider Alternatives Several ways to accomplish objectives: Property Ownership Wills Trusts Gross Estate Living Wills Power of Attorney There may be several ways to accomplish your objectives. Ask your professional advisors to explain the alternatives that could work for you. How property is owned affects how property is distributed at death. Be sure you know how your property is owned (sole ownership, joint owners with right of survivorship, tenancy in common, etc) and what happens with each type of ownership. A will is a legal document that explains how a person wants to have property distributed at his or her death. A trust is a legal document in which a person transfers ownership to a trustee to hold and manage for the benefit of named beneficiaries. Knowing what is included in your gross estate and how estate taxes are calculated can help you explore alternatives. A living will is a document in which you declare that you prefer to die a natural death. There may be several ways to accomplish your objectives. Ask your professional advisors to explain the alternatives that could work for you. How property is owned affects how property is distributed at death. Be sure you know how your property is owned (sole ownership, joint owners with right of survivorship, tenancy in common, etc) and what happens with each type of ownership. A will is a legal document that explains how a person wants to have property distributed at his or her death. A trust is a legal document in which a person transfers ownership to a trustee to hold and manage for the benefit of named beneficiaries.

13. Consider Alternatives Ask Advisors to explain alternatives that could work for you Think about pros and cons of each alternative Make a list of questions to ask about each alternative Ask your professional advisors to explain the alternatives that could work for you. Consider the consequences and benefits of each alternative. Talk over the alternatives with family members and possibly other advisors before making a decision. Consider how your plan could affect the estate plans of other family members and how your plans could affect estate taxes. Before you meet with an advisor to discuss your alternatives, you may want to prepare a list of questions. Ask your professional advisors to explain the alternatives that could work for you. Consider the consequences and benefits of each alternative. Talk over the alternatives with family members and possibly other advisors before making a decision. Consider how your plan could affect the estate plans of other family members and how your plans could affect estate taxes. Before you meet with an advisor to discuss your alternatives, you may want to prepare a list of questions.

14. Step 6: Review & Modify Have you completed items you had planned? Has it been 2 or 3 years since you made plans? Has there been a major change in Tax laws? Family situation? Step 6 is to review and modify your plans as appropriate. Our world is constantly changing so we need to regularly review our plans and modify if necessary. There may be changes in property values, objectives, family situations, or tax laws. One of your first steps in your review is to be sure you�ve completed all the steps you planned to do. You may want to use a checklist of possible steps to see if you have completed those important to you. If it has been 2 or 3 years since you reviewed your plans, it�s time to do it again. And if there are any major family or tax law changes be sure to review estate plans. Step 6 is to review and modify your plans as appropriate. Our world is constantly changing so we need to regularly review our plans and modify if necessary. There may be changes in property values, objectives, family situations, or tax laws. One of your first steps in your review is to be sure you�ve completed all the steps you planned to do. You may want to use a checklist of possible steps to see if you have completed those important to you. If it has been 2 or 3 years since you reviewed your plans, it�s time to do it again. And if there are any major family or tax law changes be sure to review estate plans.

15. Common Estate Planning Mistakes Procrastinating�failing to make initial plan or failing to update plans �Take it with me� attitude Failing to disclose location of a will Research has identified a few common estate planning mistakes. One of the most common is procrastinating, including both not making a plan and not updating plans that have been made. Neglecting to make a plan or update a plan increases the possibility that trouble will occur. Some people refuse to face their own mortality so they don�t want to discuss or plan. Remember to keep the big picture in mind and that you can�t take it with you. It does little good to spend the time and money to create a will (and estate plan) if no one knows it�s location. It takes time and effort to accumulate an estate so you want to spend time and effort planning to protect it. Research has identified a few common estate planning mistakes. One of the most common is procrastinating, including both not making a plan and not updating plans that have been made. Neglecting to make a plan or update a plan increases the possibility that trouble will occur. Some people refuse to face their own mortality so they don�t want to discuss or plan. Remember to keep the big picture in mind and that you can�t take it with you. It does little good to spend the time and money to create a will (and estate plan) if no one knows it�s location. It takes time and effort to accumulate an estate so you want to spend time and effort planning to protect it.

16. Additional Resources Getting Ready for Estate Planning http://www.ces.purdue.edu/estateplanning Who will get Grandpa�s Farm? http://www.ces.purdue.edu/farmtransfer/ Getting Motivated for Estate Planning http://www.ces.purdue.edu/getmotivated These are some web sites that can provide more information. These are some web sites that can provide more information.

17. Presentation Guide Usage All material copyright Janet C. Bechman, Extension Specialist, Purdue University. This presentation guide may be used for educational purposes, provided you give credit to the author.