The Whys and Wherefores of Sensible Estate Planning
Anyone with a spiritual understanding will recognize the title of this newsletter as one of the key petitions in the Lord’s Prayer. This “divine directive” (“Your will be done ..”) has some very practical and pragmatic meanings for us on a material level, also. Unless we have a proper and legal will drawn, it – the disposition of what we have received during our lifetimes – will be done as someone else determines.
This topic also brings up the question “Why?” Why were we given all these blessings and allowed to accumulate wealth beyond our immediate needs?
There are multiple answers to this question:
First, we want to be able to provide for ourselves in our “golden years” so that we are not a financial burden on others, especially on our family members, friends, and the state in which we live.
Secondly, we would like to be able to perpetuate our personal set of values and ideals: What has been important to us during our lifetime, we would like to support beyond our lifetime.
The Big “IF”
What happens if we do not plan ahead for the final disposition of the valuable assets remaining in our estates after we can no longer use them or have use of them?
The answer should send shudders to the very core of our being: The State Will Decide!
The state in which we have our legal residence at the time of our death has a particular formula which it will use to determine who gets what and how much. It varies from state to state but it usually has a single equation: closest relative. It matters not whether a friend has a closer relationship to you than a distant cousin once or twice removed. Blood wins out. Bonds of friendship count for nothing!
Not only does a state-mandated disposition not take into consideration your actual desire and intent, its process through the probate court takes time, and time costs money. What a personal executor or administrator could accomplish with a properly executed will in days and weeks will now take months and even years for a a court-approved administrator to accomplish.
All this time and money poorly spent is an unnecessary expenditure. The larger the estate is, the larger the bill will be! What could have been a loving legacy to family, friends, and favorite charities is consumed to fulfill the “testamentary pattern” of your state’s intestate distribution laws.
While the court-approved administrator fulfills the same role as the executor, he/she does not have the wide, flexible powers you may grant your personally chosen executor. This administrator must operate strictly as the law dictates. If it becomes necessary to dispose of property to pay off debts or taxes – or do anything that is not strictly within his legal powers – the administrator must go back to court to obtain permission. Each court appearance adds to the administrative cost and cuts down the amount that eventually would go to your family.
More Bad News
In the case of grandchildren, not having a will produces even more problems. They will not necessarily receive equal shares of the grandparents’ estate since their inheritance descends to them through their parents. For example: the Smiths have two children, John and Mary. In this case, each of these children are entitled to 50% of the Smith’s estate. If John and Mary die before their parents, each of their 50% shares would be divided equally among their children. But since John and Mary have different numbers of children (John has two, Mary has five) this means that the grandchildren would end up receiving unequal shares. The Smith’s two grandchildren by John would each receive 25% of the estate, while the five grandchildren by Mary would end up with only 10% each.
Should Mary’s children feel that their grandparents thought of them 2 1/2 times less than they thought of their cousins?
No Legal Heirs
If no will is left and no legal heirs can be found, the estate becomes the property of the state. The time allowed to search for heirs or to make claims against the estate varies from three to seven years, depending upon the applicable state laws. It is hard to imagine that there are sensible people among us who would want this to happen or who couldn’t find a more worthwhile beneficiary to what they have spent their lifetimes accumulating!
A Sensible Estate Plan
So what constitutes a sensible estate plan? To begin with, it should be the reflection of the real you, a mature, responsible and loving person. It is your last chance to leave a legacy of love and concern for others.
1. Discuss your estate and its disposition with your close family members so that there will be no question of your intent. Your estate plan should draw them closer as a family, not divide or draw them apart.
2. Choose a competent estate-planning attorney. Have everything down in writing and bring whatever he/she may request to your first meeting. Remember, time is money in this case also.
3. Choose your executor from someone whose judgment you trust and who is willing to help you carry out your last wishes. It may be a family member or a close friend. It may also be a bank or law firm.
4. Make sure you have enough liquity in your estate to satisfy any claims – taxes, funeral expenses, outstanding debts – that must be met before your estate can be settled. Fire sales to satisfy creditors is not something you want your executor to have to go through.
5. Consider other estate planning tools to accomplish your goals. A trust that currently contains large-value assets into which your “pour-over” will deposits the remaining valuable assets after all creditors are satisfied is a very handy instrument from which to settle your estate.
6. Make your favorite charities the beneficiaries of your estate along with your family members. The good that they do now will be empowered by your remembering them in your estate. Many thoughtful donors “tithe” their estates, giving at least a tenth of the value of their estate to the charitable causes which reflect their lifetime values. Some request that their last gift be placed into the charity’s endowment fund so that this last gift enables them to “keep on giving” to support their charity’s mission
For further information about Wills and other estate gift planning, you may contact Parvati Hansen at the Janaka Foundation office.
We thank you for helping us look to the future of Ananda and for taking the time to consider including us in your estate planning.