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Patricia Annino
Patricia Annino
Is Your Estate Planning in Better Shape Than Stieg Larsson's?
Nine New Year’s resolutions you and your clients can’t do without.

January 19, 2012
by Patricia Annino, JD, LLM

Now is the time of year that we all make our New Year’s resolutions. At first, we tackle our resolutions with gusto. We chug along for a month or so and then we never look at our list again. But let’s make this year different. Make this the year that you, your family and your clients resolve to get your affairs in order. Unlike my previous columns, this one is also expressly directed to you — the reader — as it is my experience that when the advisers have their affairs in order, they are more likely to ensure that their clients do too.

If you don’t, however, you certainly aren’t alone. You will be in the company of Jimi Hendrix, Bob Marley, Sonny Bono, Stieg Larsson, Pablo Picasso and Abraham Lincoln. All of them died without creating a will. The court fight over Jimi Hendrix’s assets lasted 30 years. Bob Marley was diagnosed with cancer eight months before his death and still did not do a will. Sonny Bono died suddenly in a ski accident without a will in place. His ex-wife Cher filed claims and a “love child” appeared looking for a share of his estate. When Stieg Larsson, author of the book, The Girl With The Dragon Tattoo, died suddenly of a heart attack without having a will, his lifelong partner of 32 years received nothing; Swedish law divided his intestate estate between his father and his brother.

The moral of the story is that if you do not have a will, the law in the state in which you are domiciled has written one for you and the default law is probably not the one that you want, especially if you are in a non-traditional relationship, have children from different marriages, have creditor claims, family conflict, charitable intentions or a business.

Nine New Year’s Resolutions That Are Keepers

Resolve to take the following actions this January:

  1. Gather all of your personal and financial information together. Look at it, sit down with your spouse/significant other and review it. Is it all in order? Are all your beneficiaries (primary and secondary) up to date? Are your assets titled properly (individual name, joint, in trust)? Do you have copies of all your important documents and passwords and do you each know how to access them? What if something happens to both of you? Who else has that knowledge?
  2. Review all your insurance coverage. Is all your insurance up to date and in the right dollar amounts? Review life insurance, disability insurance, long term care insurance, property and casualty insurance and umbrella coverage.
  3. Be up to date. Make sure every member of your family — you, your partner/spouse, your children and your parents — have up-to-date health care proxies and durable powers of attorney.
  4. Have proper homestead protection. If homestead protection is available in your state, make sure that you have made the proper filings to protect your family home from creditors.
  5. Review your estate planning documents in light of the recent changes in the tax law. Review the documents not just from a technical point of view, but also from an operational point of view. If you died today what would flow into which trust, who would receive what, what would be the tax consequences, what is the authority to make distributions, who is in charge?
  6. Prepare an income and asset analysis. If you became disabled or died today how would your family be provided for? Is it sufficient? If your spouse/partner died or became disabled today how would you be provided for? Is it sufficient? If both of you died or became disabled today how would those you are supporting be provided for? Is it sufficient?
  7. Review your fiduciary choices. Who have you named as your healthcare agent, attorney-in-fact under a durable power of attorney and guardian of minor children? In your durable power-of-attorney you have the ability to nominate who should serve if you become disabled or incapacitated — have you done that? Who is named in your will as your executor or personal representative? Who is named as the trustee of any trust you have established? Look at your back-up choices. Are your selections still the right ones?
  8. Communicate wishes clearly. Consider writing a side letter to those who will handle your affairs that expresses thoughts that you may not wish to express now while you are alive, but that would be important for someone to know later. These thoughts could include special mental health issues for family members, thoughts about an in-law or confidential information about certain assets.
  9. Update contact list. Make an updated list of all your advisers, including their updated contact information.

Conclusion

Review the prior nine steps and make sure that you have truly accomplished them. Then encourage your clients to do the same.

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Patricia M. Annino, JD, LLM, is chair of the Estate Planning Practice Group at Prince Lobel Tye LLP. She is a Fellow of the American College of Trust and Estates Counsel.

* The AICPA’s PFP Section provides information, tools, advocacy and guidance to CPAs who specialize in providing tax, retirement, estate, risk management and investment advice to individuals and their closely held entities. PFP Section members, including PFS credential holders will benefit from additional resources on this topic in Forefield Advisor on the AICPA’s PFP website at aicpa.org/pfp. All members of the AICPA are eligible to join the PFP section. For CPAs who want to demonstrate their expertise in this subject matter, apply to become a PFS Credential holder.