Sometimes, clients visiting my office will say that they know that they need to do “something” regarding estate planning (maybe a new will?) but have no idea what goals they should be pursuing. Set forth in this column are five primary goals that you might consider to be the “ultimate objectives” of your estate planning.
First, ensure that the “stuff” that you have goes to whom you want when you die. The old and accurate saying is that when we die, we cannot take anything with us. Ohio law has a default set of rules that provides for the distribution of someone’s possessions when that person dies. However, that default distribution is seldom an accurate reflection of each person’s unique wishes, especially in big or blended families.
Second, ensure that administrative expenses are minimal. Keeping administrative costs down in the process of distributing someone’s assets after death is usually accomplished by ensuring that there are contracts (other than a person’s will) that govern the distribution of assets. Those contracts include life insurance policies, annuity contracts, bank and investment account agreements, survivorship deeds and living trusts.
Third, ensure that the distribution of assets can be done promptly. The process of promptly distributing someone’s assets is also usually most often also accomplished through contracts (not a person’s will) that are entered into by the person before the person dies. If any particular asset is not subject to a contract, that asset will be administered pursuant to the instructions in the person’s will, which is not a bad thing. However, distribution through a will (called “probate”) often takes at least six months, in contrast to post-death distributions that are governed by contract that can sometimes be done in days or weeks.
Fourth, ensure that there are little to no taxes associated with death. These taxes go by various names, including estate taxes, death taxes and inheritance taxes. The distinctions in these descriptions are negligible, but the point is that for a long time in our country, a person’s assets were aggressively taxed as a part of a person’s passing before those assets were distributed to others.
This fourth goal is not as strenuous as it used to be due to the fact that Ohio has eliminated the death tax, and the federal government does not impose a death tax unless and until the deceased person has given away approximately $11.5 million cumulatively during the person’s life and when the person dies.
Fifth, ensure that the asset distribution process is simple. Complex, subjective processes required to distribute a deceased person’s assets can leave already grieving loved ones completely exasperated. Of course, this fifth goal dovetails with the other goals, because the simpler the asset distribution process, the less expensive and the more prompt the entire process will be.
The specific tools that accomplish the five main goals of estate planning should also be designed to work well with during-life plans, including those plans related to long-term care planning, such as nursing home, assisted living or in-home care.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.