An Untimely Death Offers Estate Planning Lessons
Philip Seymour Hoffman’s untimely death on February 2 ended a great film career and we mourn for both the man and the future film-going pleasure we will all now be denied. As is so often the case when a public figure passes away, Hoffman’s will has garnered more than a little media attention. It was drafted in 2004 and references only the first of his three children as a result. The provision that is making headlines is Hoffman’s desire that his son be raised in Manhattan, Chicago, or San Francisco, and the further wish that if his son could not reside there, that he would visit those cities at least twice per year so that he “will be exposed to the culture, arts and architecture that such cities offer”. Hoffman’s will is a prime example of how an estate plan can help ensure that your desires are understood as well as the importance of keeping the plan up to date.
By putting a proper estate plan in place you will ensure that your wishes are known, the right people know them, and that those people will have a smoother time managing your estate. You could also potentially save your estate a good chunk of money on legal fees and taxes. Here are a few do’s and don’ts to help you get your estate plan in tip top shape.
- DO: Make your life easier
Consider consolidating your accounts if you have several spread across multiple custodians. This will alleviate cumbersome paperwork, provide for more efficient account and investment management, and likely cost you less in management and rebalancing expenses.
- DO: Create a list of all of your assets and liabilities
-Physical (electronics, home furnishings, etc).
-Non-physical (brokerage accounts, insurance policies, debts, etc.).
This will be very useful in identifying and managing all the components of your estate.
- DO: Review your beneficiaries
Review the beneficiaries of your insurance/annuity policies and retirement accounts (ex: 401(k)s and IRAs). These assets pass according to the person(s) designated as beneficiaries on the account and will take precedence over anything in your estate documents.
- DO: Determine who you’d like to manage your affairs
Consider who you would like to be in charge of your estate, the guardian for your kids, your power of attorney for financial affairs, and your power of attorney for medical affairs. This will be an important step in preparing for the next item.
- DO: Meet with an estate attorney
An estate attorney will help you determine the best plan of action for your estate and will help recommend and draft the necessary documents.
- DON’T: Forget to review and update your estate documents
As Hoffman’s will illustrates, it is important to review your estate documents on a regular basis, when your desires change, or when any major life-changing events occur such as marriage, divorce, having kids, adoption, etc.
- DON’T: Keep it to yourself
Give copies of all the documents above to at least two to three other people you trust such as a relative, close friend, financial planner, attorney, etc. (you can even utilize a safe deposit box). This will ensure that other people know about your estate arrangements and will have the documents to support it.
- DON’T: Let indecision or procrastination stop you from creating your estate plan
They say two things in life are certain: death and taxes. Plan for both. Now. You can always make changes so starting off with where you are now is an excellent step no matter how your thinking ultimately changes. The cost of not having a plan can result in family disputes, your desires not being carried out, higher court fees, and/or higher tax liabilities.
Now the rest is up to you!