Popular Estate Planning Questions
Written by Jim Yih •
Last night I was on the Alberta Primetime Monday Night Money Panel talking about Wills and Estate Planning. With three experts and only 10 minutes in total, there was not a lot of time to go in depth but we did cover a few key topics. Here’s my rendition of the top estate planning questions.
What is Estate Planning?
When people say estate planning usually what comes to mind is death, taxes and you must have a will. Although these things are important, estate planning is about more than just these things.
1. Estate planning is about people – when you have important people in your lives who love you and you love them, estate planning is crucial. Sometimes we think estate planning is something you do when you are older but I would argue at 40 years of age, estate planning is really important to me because I have a wife and 4 young children.
2. Estate Planning is not just about death. It’s also about what if you don’t die but you get hurt or disabled or becoming dependent. It’s about the power of attorney’s and personal directives just as much as it is about the Wills.
3. Estate planning to me is all about RISK management. It’s about dealing with a few KEY ‘what ifs” in your life:
· What if you die,
· What if you get really hurt
· What if you can’t work and make money
· What if you become dependent
Where can you get help?
Good estate planning comes not from one person but a team of people. In my book Smart Tips for Estate Planning, I talk about three key people to have on your estate planning team.
1. An estate planner of financial advisor. The word financial advisor is a bit of a ‘catch-all’ phrase. Today, estate planner is really a financial advisor that knows about estate planning. Be careful because sometimes estate planners are really people who try to sell you insurance. I don’t mean to so rude about it but a really good estate planner will go far beyond just selling an insurance policy to mitigate the risk.
2. A Lawyer. The foundation of an estate plan is having a will, power of attorney and personal directives. These are all things that are drafted and created by lawyers so lawyers are an integral part of a retirement plan.
3. An Accountant. As we can see, minimizing tax is a big catalyst to estate plans. Therefore and accountant can be a key part of the estate planning team. If you think about it practically, when someone dies, a final return must be filed. You can do this yourself but having a good accountant can also be invaluable.
What should you look for in a professional?
In my opinion, SPECIALIZATION is very important. There are a lot of professionals who are generalist. In other words, they do a little of everything. Just look at their brochures or websites “We specialize in . . . and then they list a thousand things” That’s not specialization.
In contrast, there are professionals who are truly specialists and the more complicated your estate planning is, the more important it is to have a specialist. Things like owning businesses, multiple properties, second marriages, dependent adult children, divorce can all complicate things.
How often should you review your estate plan?
This is one of the most popular questions I get in my workshops. Time should not necessarily trigger a review or change. Instead it should be events or circumstances. As an example, divorce, marriage or remarriage is one of those circumstances. Just remember being separated does not necessarily change marital rights. If you do not change your will, your EX can still be entitled to it especially if you do not change your will.
How do you choose a good executor?
The executor is the person that gathers up the estate assets, pays the deceased’s debts, and divides what remains of the deceased’s estate among the beneficiaries. To be honest, being an executor is one of the worst jobs in the world and we give it to the people we love the most.
The challenge lies in the fact that when someone dies, there are lots of questions that need answers and the only person with all the answers is no longer here. The best gift you can give an executor is to give them the answers to the questions. My software program MY ESTATE ORGANIZER does exactly this. It gives you a list of questions to answer so you can organize, diarize and share your estate answers with the people you love most.
When choosing an executor, it is important to look for certain qualities of an executor outlined in a previous article I wrote.
What are the costs of getting a will done?
Firstly, I would never suggest anyone just pay to get a will done. It should be done in conjunction with the power of attorney and the personal directives.
I’m not a lawyer but I get asked this all the time so here’s my answer:
A will, Power of Attorney (POA) and Personal Directives (PD) for a single will cost between $500 to $750. For a couple to get 2 sets of documents will be about $700 to $1000. You can get wills for lower cost or higher costs. Generally, the more complicated the estate and the needs, the higher the cost can be.
You can do it for cheaper by doing it yourself or with kits but I am not a fan! In my experience most of the bigger problems in the estates I have seen and worked with are a result of do-it-yourself wills or holograph wills. I’m sure Andrew will confirm that lawyers make way more money litigating estates or resolving conflict than they do preparing a Will, POA and PD.
The information in this articles was taken from Jim’s book Smart Tips for Estate Planning. For more information on this book, visit Jim’s website www.JimYih.com. Jim is also the creator of My Estate Organizer, a tool to help people organize, diarize and share their estate information with the people they love. It is a tool designed to help beneficiaries and executors.