Counselor Cobbler, Do Your Children Have Shoes?
There is an old (very old, I think) saying that goes something like this… “the cobbler’s children have no shoes.” The idea, of course, is that the cobbler is so busy making shoes for other people that he doesn’t take time to make sure his children have shoes. In my experience, lawyers can quite often suffer from this same syndrome. Lawyers are all about service to their clients. They spend all their time focused on fixing other people’s legal problems and often don’t take time to make sure their own legal issues are well-covered. Nowhere is that more true than in the area of estate planning.
Let’s start with the basics. Which documents do you need to make sure you have in place and updated?
- Will – No mystery here. I think we all know what a Last Will and Testament are. This document spells out the “who’s who” in your estate plan – in other words, who will do what when you’re gone (i.e., guardians for your children and the executor of your estate). Your Will also enables you to make specific bequests where you can ensure that a certain person gets a particular possession (i.e., your daughter gets the pearl necklace given to you by your great-grandmother, and so on).
- Revocable Living Trust – If you put a Revocable Living Trust in place, this will become your primary estate planning document. Your Will, in this case, would be a “Pour-Over Will” where any of your remaining assets that your Trust does not already own are “poured over” into your Trust upon your passing. The Trust will enable you to dictate what you want to happen to your assets when you are gone. Among the many benefits of a Trust is that it allows you great flexibility and enables you to provide some safeguards as to how your assets are inherited. For example, you can dictate at what ages your children have access to the Trust assets. Trusts also have the benefit of keeping your assets out of the probate process and keeping your assets private.
- Power of Attorney for Healthcare – This document allows you to name your agent who will make healthcare decisions for you if you become incapable of doing so for yourself. Not exactly a pleasant topic, but incredibly important to have this document updated and to spell out what you want done if you are unable to make your own decisions.
- Power of Attorney for Property – As the name indicates, this document allows you to name your agent, who will be empowered to make financial decisions on your behalf if you are incapacitated.
Unfortunately, getting your estate plan updated and in good order is never convenient. You’re busy and have plenty of other things to occupy your time. However, given the likelihood of tax law changes in 2022, now is a very good time to be proactive and either update your existing plan or put a new plan in place. Most legal and tax pundits predict that the federal estate tax exemption amount will be reduced whenever tax law changes are implemented. Use this as motivation to contact your estate planning attorney and make sure that your plan is well-built for both current and potential future estate tax laws. It’s an investment in time and some attorney fee dollars, but well worth it for the peace of mind that comes knowing that your plan is in good shape.
No representation is being made that any strategy shown will or is likely to achieve results similar to those shown in this presentation. BDF does not provide legal, tax, insurance, social security, or accounting advice. Clients of BDF should obtain their own independent tax, insurance, and legal advice based on their particular circumstances. The information herein is provided solely to educate on a variety of topics, including wealth planning, tax considerations, insurance, estate, gift, and philanthropic planning.
Justin works closely with clients to design wealth management plans that take into account the full spectrum of their career and personal concerns with a specialization in advising law firm partners. Justin earned his MBA from Northwestern University’s J.L. Kellogg School of Business.