For many families, estate planning is only something that they tackle as they or their loved ones are nearing the end of their lives. While that’s entirely natural, it results in many people not learning about simple steps they can take to protect their interests in advance – many of which do not require an attorney.
Ideally, with good planning, virtually all of an estate’s assets aside from personal property items can be dealt with in advance, greatly reducing the cost of work needed to be done to close an estate.
Easy Steps to Simplify Estate Planning
These are the primary objectives to remember when making your plan:
1. Keep as many assets out of probate court as possible, in order to cut down on time and expenses.
2. Make the process easy as possible for family members.
3. Minimize any potential tax ramifications and maximize access to government aid, particularly for long-term nursing care through Medicare.
4. Accomplish all these issues before there is any question of competency or senility that could be raised to complicate an administration.
For many of these issues, a quick twenty minute appointment with an attorney can generate most of the documents you need to plan for end of life issues.
Item #3 is an issue better suited to another article entirely, but briefly, many people don’t realize that if their estate plan isn’t set up over five years before they might need to use it, they could needlessly lose practically their entire estate to the Medicare program in order to pay for long-term care. That’s where an irrevocable trust may come in handy, even for relatively modest estates.
Staying on top of these issues takes very little time or effort, but can save thousands upon thousands of dollars in attorney’s fees, down the line. There are also numerous details that can be handled without attorney assistance at all, which is what we’ll focus on today, with two simple but critical suggestions.
Transfer on Death Designations
Virtually every major asset – your home, your checking account, your retirement accounts, insurance policies, your car – can be automatically transferred on death if you set up the right documentation. These automatic transfers, sometimes called Payable on Death, skip probate entirely, saving a substantial amount of time and money.
Checking accounts, retirement accounts, and insurance policies are usually very simple to set up, and require simply designating joint owners or beneficiaries. A simple form through the BMV can transfer ownership of your car without probate.
The form also includes watercraft and outboard motor vehicles. You will need to have the form notarized, and then return it to your local BMV. To complete the transfer with the BMV, any heirs will need to bring the original Ohio title for the vehicle, a certified copy of the death certificate, an application for Certificate of Title (form BMV 3774), an identification card, and payment for title fees. This is one of the most common items that people miss, and not infrequently requires either instructions or action from an attorney on how to address this issue.
Real Estate
Another major item that is often mishandled is real estate. It is critical not to simply deed the property to an heir, without understanding the impacts upon taxation and liability. When real estate is gifted to an heir outright, the heir’s tax basis is reset to zero. This means that if the property is sold, the heir could be taxed on the entire amount of the sale. In addition, if an heir is sued during their lifetime, the property could be subject to judgment liens or a forced sale. Alternative methods should be used to avoid these problems.
For married couples or sometimes for people buying property jointly, the most common type of deed used by most attorneys is a survivorship deed. This transfers the property automatically to their spouse, upon death. However, after the spouse’s death, or if you don’t have a survivorship deed, additional action may be necessary. Although there are a variety of strategies on how to handle this, one of the most common is a Transfer on Death Affidavit. Because these are put on record in the recorder’s office, they typically require an attorney’s assistance to do properly. When properly executed, they allow you to continue to own the property until your death, and to revoke the affidavit if you so choose. Upon death, they fast-track the process of conveying the property to your designated heir or assign.
Keep Good Records, and Keep Them in the Right Place
One of the most arduous and time-consuming aspects of administering an estate can be having to research what a person owned at the time of their death, and gaining access to all their accounts and records. However, if those documents are securely stored, and well-organized in a single place that your loved ones are aware of or can easily find, that can save an incredible amount of effort.
The container you select should also be securely locked, and fire-proof. Ideally, these materials should be kept in clearly labeled folders or binders, for ease of use and updating as necessary. Your executor should be given access to a key or at a minimum, knowledge of where the key is stored. When dealing with the emotions and other difficulties that can come with losing a loved one, sometimes unexpectedly, the last thing that most families wish to take on is a weeks-long scavenger hunt for financial information.
Password preservation Worksheet
Your password-protected information may be very sensitive and financially valuable, so you should think carefully about which, if any, passwords you are comfortable recording in writing, even in a secured location. Should you choose to do so, we recommend that you never store or transmit this password information in any electronic format, due to the risk of identity theft. If you do choose to record this information, it may greatly assist your executor in quickly and easily gaining access to your electronic accounts
Information List
You should make a list of all the information that should be stored, that your executor may need to have access to. That list should be included in the lockbox as well. Some of the documents that may be relevant to include are:
- A copy of the deed to your home and/or transfer on death affidavit
- Estate Planning Documents – Your will, trust documents, powers of attorney for medical care and/or property, living will, and any other estate planning documents
- A copy of your Form 3811 for Vehicles
- Funeral Arrangements/Final Wishes – Details regarding any advanced funeral arrangements you have made, or a description of your wishes regarding burial, cremation, etc.
- Financial Records – A list of financial accounts such as checking and savings, investment and retirement accounts of any kind, insurance policies, regularly reoccurring bills such as utilities, mortgages, car payments, insurance of any kind, credit cards, and any other debts that may need to be cancelled or addressed. Make sure to include the institution where the account is held and information about how the account is titled. Copies of statements are a great way to give all the information in one place.
- Who your heirs should notify and how – A list of persons that may wish to be notified, with contact information, for funeral or memorial services.
- Items of Significance – Some people may also wish to include letters, videos, pictures, or other items of sentiment for their loved ones to receive after they have gone.
Conclusion
Losing a loved one is never easy, but with good preparation, it doesn’t need to be extraordinarily complicated as well. If you have any questions regarding wills, trusts, or other elder law and estate planning issues, we offer free phone consultations with our attorneys.
We’ll also be continuing our wills and estate planning article series in a few days with a discussion of some of the most critical documents for estate planning, and how they can help you. If you’re interested, feel free to subscribe via email.
Gregory J. McCleery, Esq., Managing Attorney
Disclaimer: Please note that use of this website, in and of itself, does not create a client relationship between you and McCleery Law Firm, LLC, or any individual lawyer. This website provides only general information. It does not and is not intended to provide legal advice regarding any specific case or situation. Please contact our office if you wish to establish a client relationship.
Greg
Greg is the founder of McCleery Law Firm, and opened his own practice several months after passing the bar. His primary areas of practice are oil and gas and family law. In the early phases of the Utica and Marcellus shale, Greg assisted both both major industry players and local landowners with title research, leasing negotiations, sales of minerals and royalties, and curative title work, and acted as the title supervisor for an oil and gas brokerage firm, overseeing all title operations and leading a team of experienced abstractors. Next, Greg focused on expanding the firm and adding new areas of practice, with an emphasis on family issues.