Earlier this month, we spoke with Lindsay Harris, an Estate & Business Planning Attorney at Harris Law & Co., in Sioux Falls, for insights on estate planning and how to start preparing and managing assets.
Lindsay, what is your take on wills versus trusts, and how they differ or benefit an individual?
In the legal world, we’re actually seeing Wills become a more outdated form of estate planning. Most clients who come in thinking they need a will, don’t usually end up with a will. Their vision of what they need is usually a revocable trust.
At Harris Law & Co., we’re pretty big fans of well-drafted trusts. All in all, we want to make things easier for our loved ones, so when we say things like ‘hey, let’s get rid of the chaos and make it easier,’ living trusts are going to do that for us.
A trust is really a superior document because it works both during life and after death. Trusts don’t rely on a power of attorney, and if you have assets in the trust, the trust dictates what happens if you become incapacitated, so you don’t have to worry about a judge who doesn’t know you making those decisions for you. When done right, trusts can also remain completely private and avoid the probate process.
However, there is some homework with a trust. A will, you can sign and be done, but it doesn’t manage your estate like a trust does. That’s a big thing people overlook. Even a very simple trust is not that much more work to put together than a will, and you get a lot more benefits.
When should someone start to build an estate plan?
If you are reading this article, it is likely time to start putting a plan in place. Although many of our clients are in their 50’s when they start putting together flexible plans, our biggest planning generation is our millennials. They’re good pre-planners and they want to help make things easy, so they’re actually bringing that average age down.
Ultimately, estate planning comes down to progress over perfection. Unfortunately, experiencing a death is a big reason for starting the process, but whether you have a dollar in your pocket or a million, you have an estate that needs to be planned for. You just need to start. And it’s not a one and done process. Most people should review their estate plan every five years, maybe even more depending on assets and their attorney’s recommendation.
What do roles in a trust look like?
Naming a trustee really depends on the type of trust you put together. With a revocable trust, it’s quite common to see trustors name themselves as the trustee. This gives them complete control over their assets and power to manage their affairs as they always have.
As I mentioned earlier, a trust has incapacity terms that allow the trustor to name someone to step in and manage the trust should they no longer be able to. Most trusts are going to have protections built in that allow the successor trustee to pay bills and maintain the status quo, but not make any big changes to the trust or the trust assets during an incapacity.
When someone passes, the trustee’s role looks a little different. Their focus turns to wrapping up the estate pursuant to the trust terms. This includes gathering and accounting for the trust assets and determining which bills need to be paid. At the end, the Trustee will also make distributions to the beneficiaries. In many cases, the beneficiary is a child who’s likely working with an attorney to help sort through the assets they’ll be receiving in the trust.
As an attorney, what information do you expect clients to provide when first meeting to draft an estate plan?
Oftentimes, we overthink this. We see people wait to start planning because they don’t have the “perfect solution” for how to divide up their estate. What they fail to realize is that a skilled estate planning attorney can help them develop these ideas—giving them options they didn’t realize were available.
For your initial meeting to be really successful with an attorney, you just need to come with an open mind and be ready for conversation. If you can tell us a little about your kids and your accounts (think types of accounts and general values), then you are ready for your first meeting. The attorney you work with should be someone who focuses on estate planning—someone who does it every day—that’s a good fit and that you like to work with. They see the practical side of estate planning and help ensure your documents are not only legal, but also practical.
As an attorney, we also understand you are on a budget and want to know what you are going to pay for your planning. However, it is almost impossible for an attorney to give you an accurate fee quote before meeting with you. It’d be like quoting the price to build a house before the client tells you how many bedrooms the house will have. A great estate plan—even a simple one—is still custom built.
When you meet with your attorney and they give you a planning fee, make sure you understand what other costs are added to that fee. It’s crazy how many people end up paying more in fees for a basic Will than what they’d pay for a simple living trust. A $750 Will sounds like a great price. But if you are charged $255 to meet with your attorney, $127 to revise to the first draft, and a $75 printing fee. The cost of your quoted “$750 Will” just became $1,207.
Don’t come in to your initial meeting having all the answers figured out. Come in ready to discuss your goals and wishes for your family, then I can draft a plan that fits your individual goals. The biggest thing is just getting started.