by Jennifer R. Hallos, Esq.
Ben Franklin once said, “… nothing can be said to be certain, except death and taxes.” For all certainties in life, the best thing you can do is plan for their eventual occurrence. Planning for the inevitability of both death and taxes is vital to handling their associated outcomes. In my practice, I advise my clients to think beyond planning for what is going to happen to your assets when you die. I encourage them to think bigger picture about how we can preserve and protect assets throughout their lives.
Breaking Down the Estate Planning Process
In my practice, the estate planning process proceeds accordingly:
• Information Gathering. I begin by sending you our Estate Planning Questionnaire (EPQ) which requires information like names, dates of birth, addresses, children, etc. The form also asks for financial information. Gathering this information allows for an efficient introductory meeting.
• Introductory Meeting. Clients meet with me and using the information provided in the EPQ, I will provide recommendations and outline decisions to be made, such as who will serve in the various roles of the plan (executors, trustees, guardians, powers of attorney, etc.).
• Summary of Information, Objectives, and Deliverables. After the introductory meeting, I typically follow up with a letter summarizing our discussion and outlining action items.
• Document Drafting. Once decisions are made, our team begins the drafting process. I typically follow-up to provide copies of the drafts along with an overview summary.
• Finalization. Clients will meet with me to review the documents. Once approved, the documents are signed.
With a foundation set, future adjustments to be made to your plan won’t require repeating the process.
Reaping the Benefits of Asset Planning During Life and After Death
I have three main goals for my clients:
• Probate Avoidance. The probate process is time consuming, expensive, and emotionally draining. Ohio law requires a probate estate to be open for a minimum of six months after the date of death, however, this process can take years, and time means money. Above all, the process is emotionally exhausting. When a loved one dies, time should be spent mourning, not filing paperwork with the court. Establishing a plan will aid in avoiding this process.
• Asset Protection. Proper planning protects assets during life and at death for the next generation. It also provides protection from creditors (personal and business), divorcing spouses, and even from beneficiaries themselves.
• Tax Minimization. Nobody should pay more to the IRS than they are legally required to. As part of the planning process, I look for ways to save my clients money – now and at death.
The sooner a plan is in place, the better. Ideally, when an individual starts working and accruing assets, they should establish a plan to preserve those assets. A plan becomes more crucial when children are involved.
When to Update Your Estate Plan
Jen recommends that, outside of certain events, clients should review their plan every four to five years. This review should occur more frequently for high-net-worth individuals.
To proprly protect assets, notable life changes should be reported promptly to your attorney so they can be reflected in your plan accordingly. Examples of life changes include the birth of a child, a divorce, the death of an individual listed in the plan, or the start of a new business.
Overall, not changing your plan to reflect life events, such as moving out of state or experiencing an income event, will not invalidate the document. However, without updating it, the document may no longer service you in your best interest.
Death and Taxes are both certainties of life that everyone should have a plan for. If you have any assets (cars, houses, stocks, art, etc.), you need to have plans in place for:
1. Avoiding Probate and mitigating the impact of often lengthy probate courts timelines.
2. Protecting Assets throughout your lifetime to ensure they have maximum value at death.
3. Minimizing the tax liability for your assets so neither you, nor your heirs, ever pay more than you’re legally required to pay.
If you don’t have plans to address these issues, you should seek professional legal counsel at your earliest opportunity to help you and your family organize and protect your assets. Nobody likes to think about end of life planning, but try to resist the compulsion to put it off till later, because those pesky certainties of lie are not going to wait for you to have plans in place.
McCarthy, Lebit, Crystal
& Liffman Co., LPA
1111 Superior Ave. East., Suite 2700
Cleveland, OH 44114