First, this article is not intended to provide factual, reliable legal advice. I urge you to consult an attorney. The purpose of this article is to provide some basic familiarization, and to illustrate how relatively straightforward this process is.
Second, while you can do-it-yourself anything that’s described herein, you shouldn’t. In my experience, a lawyer will charge you $1,000-$2,000 for this whole kit and caboodle, and it’s worth the money. Each jurisdiction has its unique idiosyncrasies, many of which aren’t in written law but are rather the result of court cases over the years. A lawyer will be familiar with those specifics.
Is your life in order? I ask because this is something I’ve gone through recently, and am going through again. The irritating tendency of we humans is that we don’t like to think about bad eventualities, and so we tend to procrastinate doing what we know is the right thing. In the end, though, we just make life more difficult for our loved ones. If you own any kind of property, investment, insurance policy, or anything, you should be planning for what happens to those things if you die or are incapacitated. If you are human and might be other than 100% healthy, at any point in your life, then you should plan for that contingency also. And it isn’t difficult!
Be beneficial. Many financial instruments – bank accounts, investment policies, insurance policies, and so on – allow you to state a beneficiary, which is the person who receives the assets when you die. Make sure those are all up to date. If you want to consolidate, have a lawyer set up a revocable trust, and name it as the beneficiary. This named assets will bypass probate upon your death, and a revocable trust doesn’t make your taxes or anything else more complicated. Assets can be taken back out of the trust during your life.
Trust me. Revocable trusts are incredibly easy to set up, and require basically no management once they are set up. Re-title fixed assets like your real estate into the trust (that’s a simple Quit Claim or Warranty Deed, which most lawyers can prepare for $100 or so). Upon your death, your named trustees take control of the property in the trust, without the property actually changing hands (the trust continues to own it). That avoids probate and inheritance taxes. Did you know probate alone, which is what kicks in if you merely will property to someone, can eat up 3-4% of the asset’s values in fees? Don’t forget about “other” property too, like vacation properties, timeshares, art, or anything with a title of ownership. Most importantly, a trust lets a named trustee act on your behalf if you’re incapacitated – something that’s actually more likely to happen as you get older.
Medical concerns. A Living Will and Medical Power of Attorney can allow someone – like a spouse – to make medical decisions on your behalf should you be unable to do so at the time. And don’t think for a second that simply being married will accomplish the same thing – there have been numerous your cases (remember Terry Shaivo?) where marriage wasn’t a strong enough protection. A signed PoA stands up much stronger in court.
None of these things need to take up a lot of your time. An hour or two with a lawyer, a relatively modest fee, and it’s all set up. Most of it’s set up in a way you can easily modify on your own – such as amending your trust to change the list of successor trustees who take over from you. None of these should create any tax difficulties (ask your lawyer, to be sure) or ongoing pain. And they’re an essential part of making sure you’re not leaving a massive legal burden for whoever comes after you. Even simply leaving a house to someone in a will can mean months of legal wrangling, probate fees, and other headaches – don’t do that to someone. Take some time in 2015 to make sure you’re life’s in order.