FOR IMMEDIATE RELEASE
Washington, DC, October 17, 2014 — When embarking on the estate planning adventure, many people want to focus on ways to protect and grow their investments or create a “golden” retirement for themselves.
But the best place to start is actually at the end, insists estate planning attorney Lisa Hughes.
“I recommend that you start by asking yourself one important question: What do I want to happen to my assets after I die? Then answer it in writing,” says Hughes. (Spoiler alert: The answer should be your Will, aka: Last Will and Testament.)
“This document delegates control over property once the person creating the Will (the “testator”) dies,” Hughes says. “Since Wills are the cornerstones of all estate planning, your Will should be the first document you prepare when doing your estate planning.
Hughes suggests you consider these seven tips when creating your Will.
- In the Will, nominate a “personal representative” of your estate. This can be a person, a series of persons, or a financial institution to take over the administration of your estate after your death.
- Consider whether you want to specify in the Will how the personal representative should be compensated for the work associated with the administration of your estate. If your Will doesn’t indicate how the personal representative may be compensated, then the rules of the jurisdiction where the Will is probated will apply.
- List any specific bequests of treasured items (for example, Grandmother’s brooch, the coin collection, or even the vacation home) to one or more named persons. You could also designate a specific percentage of the estate (10 percent to my favorite university) or specific dollar amounts ($20,000 to my grandson Billy). In my experience, however, unlike in the movies and on TV, most Wills do not contain specific bequests.
- Most importantly, your Will should indicate to whom the remainder of your assets—known as the “residue” —will be distributed once all taxes, expenses, and debts are paid. In the event that those you’ve designated to receive the residue die before you do, be sure to include in the document an alternate disposition of the residue.
- State how you would like certain expenses and debts to be paid within the parameters of applicable law. For example, in case there is a car loan or home mortgage outstanding at the time of your death, it is a good idea to address in your Will how that debt should be paid. The options are to bequeath the property subject to the debt—meaning that the loan follows the property out to the beneficiary—or specify that the loan will be paid off using other assets in the estate so that the beneficiary receiving the car or the real estate can receive the property free of the debt.
- Take the same approach in specifying how any taxes should be paid that might be generated as a result of certain property changing hands under the Will. Do you want those taxes paid from the residue? Or, should the beneficiary receiving the asset that generates the tax be responsible for that tax?
- Think about what’s fair in addressing how certain lifetime gifts should be treated. For example, if Mom has bailed out son number three from several failed businesses and marriages, she may want those lifetime advances “brought back into the ‘hotchpot‘” for purposes of dividing her estate fairly among her three sons. Or, Mom might decide that those lifetime advances (or loans) shall not count toward that son’s share of her estate. This is an area where the term “fairness” has many definitions.
You also want to protect young children in your Will, Hughes says.
For more information on how to accomplish that, click here for details.
Questions, ideas, other thoughts? Contact Hope Katz Gibbs to schedule an interview with Lisa Hughes.
About Lisa Hughes
Attorney Lisa M. Hughes is experienced at preparing Wills and trusts, powers of attorney, guardianships, and conservatorships; in administering estates of decedents and incapacitated individuals; and in the related tax and asset-protection planning. Her particular areas of focus include succession planning for closely held businesses, same-sex couples, and incapacitated beneficiaries, as well as certain elder-law challenges and trusts for those with special needs.
A graduate of Georgetown University Law Center, Hughes is licensed in the District of Columbia, Maryland, and Virginia, and has more than two decades of experience in estates, trusts, and wealth-planning.
Additionally, Hughes is a member of the Board of Governors of the Trusts and Estates Section of the Virginia State Bar; she is a Public Safety Trainer with the Commonwealth Autism Service; and she serves as legal counsel to Spectrum Housing Foundation, a tax-exempt organization that facilitates support for disabled adults.
Contact Lisa Hughes by email.