What is Estate Planning?

What comes to mind when you see the words estate planning? Some might think of huge inheritances, asset transferrals, and trust funds. Others may think of paperwork, attorney meetings, and labor-intensive planning. Regardless of the aspect considered, estate Planning is an essential part of a financial plan. During the coming weeks, we will be asking industry experts for their advice and input while we cover the 6 major modules that make up a financial plan.

In this week’s post, we asked attorney Mike Ruppert to help us better understand estate planning and clarify some misconceptions. Mike is an estate planning attorney for Loose Law Group P.C. in Scottsdale, Arizona. He assists clients with various estate planning needs in varying degrees of complexity. We asked Mike the following questions:

What is estate planning?

In the simplest sense, estate planning is the process of making a plan for how you want your estate to be handled after you pass or if you’re incapacitated. Much can go into this planning, but a good first step when embarking on your journey to create an estate plan is to conduct a comprehensive review of your estate’s assets. Your estate is made up of all the property that you own.

There are a wide variety of reasons why someone should consider creating an estate plan, and not each reason will apply to each person. Regardless of what tax bracket you may find yourself in, creating a plan should be something that everyone does. Unfortunately, not putting an estate plan in place could subject your estate to additional formalities and costs. Take the estates of Jimi Hendrix, Bob Marley, or Steve McNair as an example. All three died intestate (without a will), despite having sizable estates.

In short, despite how large or small your estate may be, having an estate plan in place is something everyone should consider. Reviewing your property and speaking with an experienced attorney is an easy first step for getting an estate plan in place.

What are some misconceptions you have seen?

I, unfortunately, see many people make assumptions such as “estate planning is only for the wealthy,” “I’m too young for an estate plan,” I’m married, so I don’t need to put an estate plan in place,” “my family will do the right thing after I pass away,” and the list goes on. Even if you believe that your estate is too small for you to even have a plan put in place, you will likely still find value in speaking with an attorney that can give you an opinion on how to best ensure your property ends up in the hands of the people you want it to following your death.

What are some of the most common mistakes, and how can they be avoided?

Common mistakes often arise when people draft and execute estate planning documents on their own or utilize the services of a document preparation service. All too often, there will be a mistake in the documents or a misunderstanding as to what a particular document states or does. Even if you’ve already taken the steps in doing your planning yourself, you would likely still find a benefit in having an attorney review your estate plan with you to ensure it is tailored the way you truly intend it to be.

Some common mistakes include failing to properly fund a trust, failing to update the plan, and not nominating an appropriate personal representative or successor trustee. These common mistakes can usually be avoided by speaking with an attorney and obtaining guidance.

What are some items every individual or family should consider?

People seeking estate planning services, but don’t know where to start or who to use, can begin looking for assistance from an attorney in a number of ways. A good place to start is by asking close friends or family members what attorney they used to assist them in creating an estate plan. For some, there may be an employer-provided benefit that covers the cost of obtaining legal services, such as estate planning. In which case, contacting the benefits administrator for a list of attorneys that can help would be a great place to start. Searching Google is another option. Additionally, many state bar websites provide resources for locating attorneys that practice in particular practice areas, such as estate planning.

When considering whether to utilize the services of an attorney, it never hurts to call the attorney’s office and find out what information the attorney may need from you to provide advice on how to create an estate plan that will best serve you or you and your family.

What should small business owners think about when going through the process?

When it comes to estate planning and small business owners, succession planning is a typical place to start the conservation. For small business owners, a part of their planning may include a business succession plan that addresses the ownership of the business, and even the transfer of management. Small business owners already have a lot on their plate, however, putting in a succession plan can aid in ensuring a smooth transition of your business’s ownership and management during or after your lifetime.

Are you available to our readers who may be looking for advice, guidance, or a second opinion?

I’m always happy to have a consultation with anyone that is interested in having an estate plan put in place or having their existing plan reviewed. I can be reached at my office at (602) 971-4800.

We thank Mike for joining us in this week’s post. As always, please reach out to your legal, tax, and financial expert for specific advice. Sun Valley Financial and Loose Law Group are here to help, and you are free to reach out with any questions. Until next time, stay well!