“Estate planning.” You hear the term thrown around a lot, and you know it’s something you (probably) need to do, but … what is it? And where do you start? The word “estate” sure makes it sound like it’s for ultra-wealthy people, right?
These are all good questions. In short, estate planning is planning for what happens with your earthly possessions (your “estate”) after you shed your mortal coil. (And no, you don’t need to be wealthy to require estate planning—if you have a body, you’ll want to think about who to designate with power-of-attorney in case something happens to that body, and that’s one of the first steps in estate planning.) It covers everything from creating a will to sorting out what kind of care you’ll receive in the event you’re incapacitated.
A good place to start is to educate yourself about estate planning, so, how about starting here? To answer our burning questions—Who generally needs to do estate planning? How long does it typically take? What else do I need to know?—we turned to Jennifer Guimond-Quigley, an estate planning attorney in Chicago. Here’s what she told us.
Who needs to do estate planning?
“It’s kind of like the question: Who needs to file taxes? The vast majority of us need to do so,” Jennifer says. “Estate planning is for anyone who wants to make sure people they love are taken care of, and if there is a family member that is disabled, estate planning can be used to help plan for their future needs. It can help to minimize taxes, court fees, in case of death.” It’s heavy stuff, to be sure, but in essence, it’s a way for you to spend a little time now to ensure your loved ones don’t spend a lot of time later trying to divvy up your assets. (And to make sure Uncle Sam doesn’t take any more than he has to.)
That said, it’s perhaps more important for some people than others. If you’re a single, childless college student without a lot of money to your name, you probably don’t need to worry about estate planning. (Though even then, you may want to consider designating who will have power of attorney in case you’re incapacitated.)
For most people, the time to consider estate planning is either marriage or when you start having children. “Once you have minor children,” Jennifer says, “you need to start thinking about how to safeguard financial assets for them because kids can’t inherit money. So until they’re 18, someone needs to manage it for their benefit. And even 18-year-olds might not be able to handle a large inheritance. Sometimes people choose to delay payout until their kids are 25, except for college and other responsible endeavors.” More on that in a bit.
How do I choose an attorney to help with estate planning?
Think about it the same way you might go about planning your next important date: You’ll want to ask around, get recommendations, read the reviews, and consult any relevant authorities. (Only instead of Michelin or a local food critic, you’ll be consulting a local bar association.)
“Interview at least a couple people,” advises Jennifer. “The person should definitely have a majority or very large portion of their practice focused on estate planning. They should have a good grasp of the issues for your age group. They should be affiliated with different organizations, such as a local bar association.” Also be sure to ask about administration work. Basically, you want to know who actually handles the paperwork that goes with your estate planning, and who will make sure your plans are fulfilled. “An estate planning attorney doesn’t *have to* do this, but it’s good to do it—if something happens [that requires a change in plans, such as a marriage or a divorce], you might want to go to the same person who did the planning for the administration.”
One other tip: If the person is a sole practitioner (as opposed to someone with a larger practice), ask what their estate plan is in case they’re incapacitated. Who will handle your affairs if something happens to them?
How should I prepare before I meet with an attorney?
“Make sure you have a handle on what you own,” Jennifer says. “Have a full comprehensive balance sheet. You should have an idea of whether you’re receiving any inheritance from family in the future, and what that could be. If you don’t have kids, or even if you do, know if you’re planning on having them or thinking of having more. And you should have an idea of who should benefit from your estate beyond your spouse and children—perhaps what charities are important to you—in case something happens to all of you.”
Other factors to consider include:
- Who will be the guardian for your children (if needed)?
- Who will administer the trust (i.e., manage your money) until the kids come of age? (“It can be either a professional or a personal relationship,” Jennifer says. Someone you know well might have a better handle on your wishes, but a professional might be better at making unbiased decisions. Factors to consider include the size of your trust, the complexity of your assets, and whether you feel like your offspring might require more objective oversight.)
- Who will execute your will?
- Who will you want to make health care decisions around powers of attorney? (Note that you can also put specific directions in writing as part of your estate planning.)
Again, this can be heavy stuff, which is why you’ll want to give it some thought before you’re in a meeting.
How much time, and how much money, will estate planning cost me?
“It’s typically a couple of weeks to a month, start to finish, for a simpler plan. If there’s more complexity, that’s going to be an hourly rate and subject to a longer engagement.”
Which brings us to the financial side of the question. Jennifer didn’t give us a cost estimate because the price of services can vary from city to city and state to state. She recommends asking around and getting a few different estimates just so you get a grasp of the going rate. And again, for a more standard plan, you’ll likely play a flat fee. If things are more complicated, expect an hourly rate.
How do I keep my plans up to date?
“Different attorneys might answer differently,” she says. “But in my practice, I tell clients to reach out every five years, or in the event of a major life event, whichever happens first. A major life event could be a new child. Divorce. Remarriage. A large inheritance. Any major increase in assets due to employment, other sources, a gift. Any event that changes the picture financially, we need to have a phone call and talk to it.”
There’s one other factor to consider, per Jennifer: “Any major change in the tax laws. If a client is affected by the estate tax laws, and not everyone is, then we definitely need to have a conversation.” If this applies to you, your estate planning professional might reach out on his or her own, but you might want to call your estate planning professional just to be extra-sure.
Yet another factor would be if you move to a new city or even state. If that happens, be sure to let your estate planner know, and consider getting a new estate planning professional who’s local. This will make it easier to facilitate meetings, and there might be new considerations based on your new hometown or state.
What about my online assets—my social media accounts, my passwords, my emails?
“Digital assets are definitely considered parts of the overall estate that need to be managed and administered,” Jennifer says. In Illinois (where she’s based), you can designate someone to take care of your digital assets—email, Facebook, Snapchat, even cryptocurrency.
Think practically about how someone will access those accounts. Your best options would include an online password manager (like LastPass) or putting a list of master passwords in a safety deposit box. (One thing not to do: Write down a physical or digital list of passwords that could be accessible to someone with ill intent.)
Your estate planning professional should bring this up, but if not, be sure to ask about it when discussing your assets.
Some of my beneficiaries are four-legged. And furry. What do I need to know?
We’ll assume you’re talking about your pets. And while eccentric people leaving large inheritances to Fluffy always makes for a good headline, you may want to consider setting aside some money to ensure your faithful companions are taken care of.
“It’s another planning tool that is becoming more widely used,” Jennifer says. As with any other beneficiaries who depend on others for their well being, you may want to designate someone to take care of your animals. And then you can set up something called a pet trust to provide for them—and ease the financial burden on whoever might be taking good care of Fido for you. And in the event that you provide more cash then Fido ultimately requires, you can also designate a charity to receive the leftover money.
I’ve seen online estate planning tools. Can’t I just use those?
Not all estate planning attorneys are created equal, and neither are all online estate planning tools. As with just about anything else serious you do online, you should only use the tools you’re comfortable with. If you feel confident doing this on your own, an online option could be more convenient and affordable for you. (If you’re not sure, though, consider consulting an attorney.)
So while it might not seem fun to think about—considering your terminal point rarely is—think about estate planning another way: This is an opportunity to show your loved ones how much you care by handling things ahead of time. Your partner, your children, or any other beneficiaries will no doubt appreciate the time and care you put into it, even if you’re not there to witness it firsthand. And if you haven’t started thinking about estate planning yet, well, there’s no time like the present.
Louis Wilson is a freelance writer whose work has appeared in a wide array of publications, both online and in print. He often writes about travel, sports, popular culture, men’s fashion and grooming, and more. He lives in Austin, Texas, where he has developed an unbridled passion for breakfast tacos, with his wife and two children.
Haven Life Insurance Agency (Haven Life) does not provide tax, legal or investment advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or investment advice. You should consult your own tax, legal, and investment advisors before engaging in any transaction. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel.