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I was recently featured in an article about blogging and got the opportunity to discuss this blog.

You can read the story here at the Princeton Business Journal.

Posted by Victor J. Medina -
Medina, Martinez & Castroll, LLC

If you’re thinking about making a will, here are few things that you should think about before drafting the will (or having an attorney help you think about these things and draft the will for you):

1.  What assets will you be putting in the will?

Take an inventory of your significant assets.  These should be the things that you want to give to other people and hopefully, these are the things that other people want to get from you.  (I suggest the garage sale test - if you’d include it in your garage sale someday, skip it).  Note - there are some assets that cannot be passed by your will - and your lawyer should know what those things are (and why they shouldn’t be included in your will).

2.  Who will you be giving your assets to?

For the most part, this is a very straightforward task.  A few notes, though - first, there are some restrictions on your ability to disinherit certain relatives.  Second, you should think about where you want your assets to go if your first choice is not around or refuses your generosity.

3.  Who will administer your will?

This person is called the executor.  There are really only two qualifications for an executor or trustee.  First, you want a person of impeccable integrity.  Second, you want a person with good common sense.  You also want to make sure that this person is aware of your desire for them to serve as executor (and are agreeable to that role) and as always, have a back-up in mind.

4.  Who will care for your children?

If you have children under the age of 18, you’ll want to think about who will take care of you children, should you die before your kids are adults.  This section requires more thought and explanation than I can give you here in a blog post, but guardianship is an important concept that requires much thought.  For instance, will your chosen guardian have sufficient assets to raise your children?

5.  Who will care for your children’s assets?

In addition to choosing a guardian for your children’s welfare, you need to think about who will care for the assets that you leave to your children if they are still minors.  This person is known as a trustee.

6.  Who will witness the execution of your will?

The decision of who these people will be is not as important as following the necessary procedure to ensure that your will…will be deemed valid and enforceable.

Many clients come into the office saying that they need “a living trust” - often without a good understanding of what they are and when there are used. Here is a brief primer on living trusts for the uninitiated.

1) What is a living trust?

Well, breaking it down, a trust is simply an arrangement under which one person, called a trustee, holds legal title to something for another person, called a beneficiary. By the way, there is nothing to prevent the same person from both being the beneficiary and serving as the trustee. A “living” trust, by extension, is just a trust you create during your lifetime, as compared with one that is created by your will upon your death. You can use living trusts to avoid probate or plan for estate tax.

2) How do living trusts avoid probate?

For background, probate is the legal process for sorting out the affairs of an individual has died. (That statement is a major simplification, but bear with me). The process is often time consuming, expensive and exposes the deceased individual’s affairs to public scrutiny. For many reasons, avoiding probate is a desirable thing.

Living trusts avoid probate because legal title in the assets are held by the living trust and so there is no need to sort out ownership after the grantor’s death. The living trust has a provision for who will serve as trustee in the event that the grantor was serving as the trustee during his/her lifetime.

Well, that’s “living trusts” in a nutshell. There’s a lot more here to talk about, maybe we’ll explore some more basic concepts in the near future.

Having practiced in this area for a while, here are some practical tips for selecting an estate planner. I promise that this is not a thinly-veiled way of describing my practice. Although we have many of these qualities, I believe that these tips have universal value.

1. Select an attorney who is an excellent listener.

Too often clients are telling their story to a lawyer who is busy planning based on what they think is going on with this client, and not listening to what the client actually has to say. I find this practice is often the case with a “wills factory” where the attorney is itching to pass your case off to a paralegal and get to his or her next intake meeting.

Good estate planners will listen to you during an initial interview and continue to listen to your concerns throughout the process and into the future. Which brings me to….

2. Select an attorney who doesn’t bill you for every 5 minute conversation, fax and mailing.

This one kills me. I’m always wary of a professional who is more concerned with “nickel and dime-ing” his clients, than he is about providing value at every opportunity. I suggest you steer clear of the former.

Instead, I suggest that you engage an attorney who flat-fee bills for the estate planning work, including all of the interviews and meetings that need to occur to get the estate plan done. While estate administration is akin to litigation in that the time involved is difficult to predict, and therefore hourly billing is a better model for both parties, estate plans are fairly predictable matters in the resources they will consume. They vary in their complexity from client to client, but a lawyer worth his or her salt should be able to quote you a flat fee for that work, and that fee should include phone calls, meetings, etc.

3. Select a lawyer or law firm that plays an activel part of your (or his) community.

This tip is less about reducing your commuting costs and more about stability and long-term planning. You want a lawyer who will remain in the area (and in the practice) long enough to address your growing concerns and needs. You want a trusted advisor who will remain available to you when you need him the most.

This is best achieved by selecting a lawyer who is a pillar of the community in which he (and/or you) reside. This attorney should be involved with local schools or charitable organizations (whether or not in his or her actual practice), and should be known by others in the community. This is good news for you, the client, because it means that (a) the lawyer has a reputation to uphold, which means he’ll most likely treat you right, and (b) the lawyer has planted roots in the arean will be around for the long haul.

4. Select an attorney who fits your personality.

Some clients are looking for a lawyer in a stuffed shirt and standoff-ish attitude to do their estate plan. If you are one of these clients, please let me introduce you to a few colleagues of mine - there are many who will fit the bill.

On the other hand, if you’re looking for someone to listen to your concerns and work with you in an intimate manner to help achieve your objectives, make sure that the attorney across the table from you is someone who you instinctively trust and with whom you feel comfortable. They say that your first instinct is usually the right choice, and I believe that’s especially the case with the lawyer who will serve as your family’s legal advisor.

Estate planning is typically divided into two categories: (1) Estates large enough to require tax planning (which in New Jersey, because of decoupling, occurs on estates with as little as $675k in assets) and (2) Estates that require little or no tax planning.

Good estate plans should also consider an additional sub category of complexity, namely special planning considerations with respect to guardianship. Although there are other examples, I tend to think of these as including parents of children with special needs (both health-related as well as educational), children with parents requiring elder care and issues related to secondary or tertiary guardians.

If you find yourself with any of the above situations, make sure that your estate planner is considering the special issues of guardianship attached to your estate plan.

A common tool for a sophisticated estate plan is the creation of a Family Limited Partnership (FLP) or Family Limited Liability Company (FLLC). Basically, these entities allow grantors to get a discount on the assets that they contribute to the FLP or FLLC. That discount is based on a number of factors, but two of the biggest ones are a lack of control and a lack of marketability for the units that are given in exchange for the contributed assets.

Too often the grantors, their family or their counsel don’t take the necessary steps to protect the planning tool against a collateral attack by the IRS pursuant to Section 2036 of the Code. Some of the things you should consider are:

1) No comingling of partnership assets. In fact, keep the personal use assets out of the FLP or FLLC (vacation home, residence, etc.).
2) Establish a pro rata distribution (if any)
3) Avoid implied agreements, where the senior family member transfers almost all of the assets to the FLP or FLLC, and retains insufficient assets on which to support the lifestyle.

There are a number of actions you should take before, or upon, the formation of the FLP or FLLC, but that’s for another post and may be too late for some people.

Two good posts coming from Leanna Hamill in Massachusetts and Tredway, Lumsdaine & Doyle in California on planning for children with special needs.  Among the excellent suggestions are the following:

• Special Needs Trust - allowing parents, grandparents and guardians to provide funds for a special needs child without disrupting eligibility for government aid.
• Exploring the qualifications of the child’s guardian.  Specifically, are they located close enough to qualified medical personnel?  Can they handle (or are they knowledgeable) about the particularities of caring for your child?
• Have you left enough financial and other resources to care for the child?  Everything from remodeling a house to make it wheelchair accessible to paying for the guardian to stay home full-time should be considered.

I would add another wrinkle here that I think is too often overlooked.  Many times a child has special education needs that don’t necessarily come to planners or parents when they think about future guardianship.  There are many educational matters that need to be explained or provided for and should factor into estate planning. 

This post is important enough that I might run a variation of it every month for year.

Let me spoil the surprise and give you the answer up front.

You should have:

A Durable Power of Attorney for Health Care
A Durable Power of Attorney for Finances
A Living Will

The first and second one let you name who will make decisions for you concerning health care and money, respectively.  A living will tells doctors exactly what kind of care you do and don’t want to receive if you are terminally ill or incapacitated. 

Fortunately, these are not bid ticket items in the world of estate planning, so there’s no real reason not to get them done. 

The news is filled with battles between related parties fighting over the wishes of an otherwise incapacitated person. The US Supreme Court has ruled that a person has a right to direct the course of his own health care, even if family members disagree with those choices.

Although it’s difficult to think through all of the situations these documents need to cover (withholding of pain medication, food and water, etc.), you owe it to your loved ones to make clear your wishes in those situations.

On a related note, if you are the parent of a minor child, you absolutely, positively need to have a will setting down who you want to have custody of your child in the event of your death.

In short, unless you want to subject your loved ones to drawn out legal battles and financial hardships in the event of your incapacitation, if you don’t have these three documents then get thee to an attorney and get these documents drawn up.

The NC Estate Planning Blog, has a good list of 10 things you should do in 2007.  I’ve tweaked them a bit here, but all of the credit goes to them for the post. 

Here are 10 things you can do in 2007 to keep your estate planning on the right track.

1)    Last Will and Testament 
            Make sure you have an up-to-date, professionally-prepared Will and/or Living Trust.  Keep the original in a safe place and tell other people where that is.

2)    Title to Assets and Beneficiary Designations
            Check your property ownership and beneficiary designations for life insurance, retirement accounts and other assets to ensure that they are coordinated with your will or trust provisions.

3)    Durable Power of Attorney
            Prepare (or have an attorney prepare for you) a comprehensive Durable Power of Attorney.  Register it if necessary.

4)    Health Care Power of Attorney
            Even if you don’t currently have a medical condition, prepare (or have an attorney prepare for you) a current Health Care Power of Attorney, valid in your state of residence.  Make sure your primary care doctor has a copy and make sure that others know where they can find a copy.

5)    Think About What Advanced Directives You Want and Document Them
            Prepare (or have an attorney prepare for you) a current Living Will or Medical Directive that clearly and accurately states your wishes. Make sure your primary care doctor has a copy and make sure that other know where they can find a copy.

6)    Touch Base with your Fiduciaries
            Make sure you have spoken to your Executors, Trustees, Agents (under a power of attorney), and Guardians named in your estate planning documents to ensure they agree to serve and are aware of your wishes and other necessary information, including the location of the documents and contact information for your attorney.

7)    Insurance
            Review all of your policies, such as life/medical/disability/home/auto, to see if you have adequate coverage.  Consider upping the liability limits on your auto insurance and purchasing umbrella liability insurance.  Those of you with young children, make sure you have enough life insurance to cover expenses through college (and beyond if they have such graduate-level aspirations).  If you are reaching your senior years, take a look at long-term care insurance.

8)    Asset Protection
            Here are few tips lines under one heading (don’t say I never give you anything….):

            If you own rental real estate, place it in an LLC.

            Avoid large joint accounts.

            If you are getting married, talk to an attorney about the advisability of a prenuptial agreement.

            Protection your children’s inheritances by keeping the assets in trust for them.

9)    Taxes
            Though you may normally be a do-it-yourselfer, have a CPA or tax attorney review your return to ensure that you are making the most of your deductions and any tax breaks.  If your assets exceed $2 million (including face value of life insurance), make sure you have addressed estate taxes in your estate plan.  Do not give over $12,000 a year to anyone without seeking advice as to the gift tax consequences of the gift.

10)    Attorney

            It doesn’t have to be our firm, but establish a relationship with an attorney whom you can trust and easily communicate.  In addition to making sure that they are competent to handle your matter, make sure that you enjoy working with them and move on if they don’t return your phone calls promptly or act annoyed to explain the details to you.

That’s it….get started and sleep better at night.

Here begins a blog for Jersey Estate Planning.  This blog is maintained by the law offices of Medina, Martinez & Castroll, LLC, located in Pennington, New Jersey. 

For contact information, go to our website and fill out the contact form.  We will contact you within one business day.  For faster service, call us.

Lots more posts to come.