Will and Estate Planning

A dog’s life, consisting mostly of eating and sleeping, is sweet. But, it’s all the sweeter if the pooch has pesos. By now, you've had a chance to fantasize what life would be like as Trouble, the Maltese that inherited $12 million from recently-departed Leona Helmsley, who, with an estate worth an estimated $4 billion, was one of the world’s richest women.

Helmsley, also known as the Queen of Mean, reportedly left two of her four grandchildren $10 million each on the condition they visit their father’s grave. She disowned the other two, making it clear in her will that she was leaving them nothing. Most grandparents would never choose a dog over flesh-and-blood. Trouble, in fact, is exactly what you'd like to avoid when planning your estates.

No one likes to think about death. But, you can make the inevitable easier on your family by thinking about the future now. If you do not leave any instructions when you depart, the state will decide how to dole out your life’s earnings and assets. No one wants the government's nose in his or her business. Grandparents.com has gathered these tips to put the reigns of control in your hands so you can care for your loved ones even after you are gone.

Get Expert Advice

Devising a will is one of those obligations people avoid because it can be both morbid... and boring. That is why you should do everything in your power to make the process smooth and speedy. Simplify things for yourself by turning to professionals. Do some research on the Internet and at free seminars. Then, determine what path is best for you.

For those with a substantial estate — one that includes hefty savings and assets — hiring a lawyer who specializes in estate planning, and, wills and trusts is a must. Costs vary from state-to-state and firm-to-firm and depend largely on the amount and type of service you require.

“This is not like buying an RCA television,” says Leonard Furman, partner at Levine, Furman & Smeltzer, LLC, in East Brunswick, N.J. “If you had to go to the doctor, you wouldn’t pick the cheapest one.” Look for someone who can handle your unique needs and will help you make the most appropriate decisions for your family, suggests Furman. He adds that most estate planning attorneys offer a free consultation, so you don't have to commit to paying anything right away.

Ask the lawyer about his or her level of experience with wills and trusts in your state. And, it's important to find someone who specializes in estate planning. You’ll want to ask about the estimated total fee and how much you’ll be charged if and when you update or change the documents. Typically, lawyers suggest updating your will every three to five years as your family and finances change.

Those who fall into lower tax brackets may find online Web services more affordable, and helpful enough, for their situation. LegalZoom.com has created more than 100,000 wills for its more than 500,000 clients, says Brian Liu, chairman and co-founder of the Los Angeles-based site. For $69, visitors log on to the site and respond to questions in an online interview. The answers are used to create a will, which is then proofed by legal document assistants, printed, and mailed to the customer.

Liu warns, however, that those who have complicated requests or conditions — little Joey can only get his $5,000 if he becomes a doctor and marries someone of the same religion by the time he is 30 — require a lawyer. There is one other customer that LegalZoom would rather not have. “If you think someone will contest your will, don’t come to us,” says Liu. This is when you need a professional to step in and explain to you the consequences of your decisions.

Decide Who Gets What

Take a lesson from the Queen of Mean here on what not to do. Alan L. Augulis, Esq., LL M, of Augulis Law Firm in Warren Township, NJ, counsels his clients to think through decisions to exclude relatives. What emotional impact will this have? What kind of discord will erupt? Do you really want to live — and die — with that on your conscience? “You don’t want to hide this decision and have a family blow up down the road,” says Augulis.

Avoid creating a family feud by bringing your loved ones into the conversation, on how you would like to divvy up your worldly possessions, early. Whatever you decide, put it in writing. Update the written document as needed, and let your family know where to find it.

Grandparents who want to take care of their grandchildren’s future have a multitude of options for doing so. Most divide any money and property they have equally among their adult children, who can then use whatever funds they need to care for their offspring. But, that's not the only way. As Helmsley proved, the sky is the limit — and even your favorite pet can get in on the action.

Think Outside the Box

Many believe that trusts are just for the uber-wealthy. Not so. Even middle class individuals can use them. Trusts, by definition, can replace or supplement wills as a way to manage the distribution of a person’s property by transferring its benefits and obligations to different people. They are a bit complex and taxed at a higher tax rate, so you just have to be sure it’s the right choice for you, say experts.

Putting the money in a one-pot trust for all the kids, advises Financial Planner Martin M. Shenkman, is a way to avoid hurt feelings or unrealistic expectations that are created when a trust is in one person’s name. “While many [financial] planners may downplay the importance of perception and feelings, that’s a mistake,” writes Shenkman. “In family dynamics, these are critical.” After all, creating a war among relatives is likely not the legacy you want to leave.

A revocable living trust, also known as a family trust or living trust, replaces a will and can be changed at any time. It is used primarily to avoid probate and maintain privacy. Probate is the time it takes for the law to determine if a recently-departed person has a valid will – which could take up to several months or years, depending on the state in which you live. With a living trust, property will go immediately to your loved ones upon your death. A will is public information, so if you are disinheriting a loved one or have a disabled child and you do not want anyone to know about it, says Furman, you would choose to have a living trust instead.

The downside is that creating a living trust costs twice as much as a will. They are only worth it or necessary if you own property in a state where probate is a difficult, lengthy process, says Furman. Some argue that living trusts help reduce estate taxes for inheritors. But Furman says that is not true because a will can also be devised to create a minimal tax impact.

Spread the Joy

Sharing your wealth with your grandchildren while you are still alive has its benefits, say experts. If you’re wealthy and give your money as gifts now, you can help your loved ones avoid estate taxes, which are not due to the federal government unless your estate is valued at $2 million or more, but might have to be paid to your state government depending on its laws. Also, by having less in savings, you may find it easier to qualify for Medicare. Of course, most importantly, you’ll be able to get the satisfaction of watching the money you’ve earned be put to good use by your family.

Don't Wait, Make Your Plans Now

However you decide to divide your life's assets, it's wise to start thinking about estate planning, wills and estates, earlier rather than later. After all, you want to ensure that you — not the state — choose exactly how the wealth you've accumulated during your lifetime will be allocated and to whom.