Preparing for the future
Some people don’t bother. After all, they won’t be around when the family goes nuts.
But ignoring estate planning can leave an expensive, drawn-out mess that the courts — not family or friends — will decide and that might not resemble anything that the dearly departed intended.
“Scribbles in a notebook you kept with your stamp collection will not help your family figure out that you had a huge Target credit card balance, or that you wanted the stamp collection to go to your cousin Ted in Mansfield because he was always interested in the philatelic arts,” said Vito J. Abruzzino, a lawyer with Harrington, Hoppe & Mitchell Ltd. in Warren.
Plus, many people fail to realize how deeply the government can reach to yank away assets that had been intended for friends and family, he said.
“Understand that Uncle Sam will take whenever, and whatever, assets he can,” Abruzzino said. “The government can’t 1099 a dead man’s stamp collection or his ’69 Camaro in the garage. However, by failing to estate plan, you make these assets part of what will be fully reported to the feds/state/commonwealth as part of your estate.”
Planning prevents confusion and squabbles, and protects the house, savings account and even the stamp collection.
“In my estate planning/probate practice, I get two types of calls almost every day: One, ‘We really need to sit down and discuss what exactly dad/mom/aunt/uncle has’ and two, ‘Dad/mom/aunt/uncle passed away and we have no idea what they had,'” Abruzzino said.
The first call is better for families because deciphering the financial paperwork is a much easier task when family members aren’t doing so during a time of shock, he said. People aren’t always thinking straight then.
“Under scenario two, you’ve made a lawyer’s day,” Abruzzino said. “The process of sorting out an estate with no will or other guidance takes hours of work … and hours equal dollars in the legal profession.
“By giving a little thought to your estate plans while you are still alive, you reduce the amount of work — and cost — your family members will have to put in to honor your final wishes,” he said.
William Hanshaw of Howland, vice president and trust officer at Farmers Trust Co. in Youngstown, said there are four documents every person should have — a durable power of attorney for finances, a power of attorney for health care, a living will, and a last will and testament.
If it’s a large estate or if a child with a disability is involved, a trust for the beneficiary also should be drafted. An attorney should be consulted for all of the documents, Hanshaw said.
Powers of attorney come into play if a person becomes incapacitated and financial or medical decisions need to be made. Because of privacy laws and policies, medical or financial institutions may not release information or listen to anyone else — even the spouse — who does not have that legal authorization, Hanshaw said. The institutions may end up making choices with no clue about the person’s wishes or goals.
The living will expresses a person’s wishes for end-of-life care in the event the person can no longer communicate.
The last will and testament details who will receive a person’s assets and how.
But don’t just draw up the papers. Review them every two to three years to make necessary changes or updates. Deaths, divorces and other life events can change what needs to be done, but if it’s still listed the old way on the legal document, that’s still who gets to make the call or who receives the assets.
Trumbull County Probate Court Judge James A. Fredericka said, “For most people, the biggest asset is their house — and oftentimes there is a dispute over the house. The house can be set up as a survivorship deed and can avoid probate of the house, or you can set up a transfer upon death that that can avoid having the house going through your estate as well.
“For bank accounts, you can put bank accounts in a survivorship account or a payable on death account. That will avoid going through probate. It’s a simple procedure to do (with the bank), it costs you nothing, and the person who survives you doesn’t have to go through a significant process,” Fredericka said.
“Most people should consult their family lawyer to see what’s best for them because every situation is different. It’s not a one size fits all. Certain people may need a trust. Other people may not. The best thing to do is consult with the family lawyer.
“Estate planning isn’t just for the rich. Estate planning is for everybody,” Fredericka said. “It’s never too late to do estate planning.”