The Fundamental Questions to Ask Before Estate Planning

Because estate planning is not just about reducing taxes but more about making sure your assets are utilized for my care and the care of my loved ones during an illness or disability and then distributed as you wish after you are gone, you need to consider four questions before you begin estate planning.

WHO DO I TRUST TO CARRY OUT MY ESTATE PLAN?

This is the first critical question to answer because you will not be available to oversee the plan. Carefully selecting your fiduciary and the alternate fiduciaries is the first step to the success of your personalized estate plan. The fiduciary will continue to carry out your estate plan during your illness, short or long term and then your wishes after you are gone.

WHO SHOULD INHERIT MY ASSETS?

If you are married, before you can decide who should inherit your assets, you must consider marital rights. Ohio has specific laws designed to protect surviving spouses. If you die without a will or a living trust, state law may dictate how much of your estate passes to your spouse. Even with a will, if you provide less for you spouse that Ohio law deems appropriate, the law will allow the survivor to elect to receive a greater amount. If your spouse is not the natural parent of your children, Ohio law may also allocate a majority of your estate to your natural children and not to your spouse.

Once you considered your spouse’s rights, ask yourself these questions:

• Should your children share equally in your estate?
• Do you wish to include grandchildren or others as beneficiaries?
• Would you like to leave any assets to a charity?

WHICH ASSETS SHOULD THEY INHERIT?

You may want to consider special questions when transferring certain types of assets. For example: If you own a business, should ownership pass only to the children who are active in the business? Should you compensate the others with assets of comparable value? If you own rental properties, should all beneficiaries inherit them? Do they have the ability to manage property? What are the cash needs of each beneficiary? Their needs may not all be the same.

WHEN AND HOW SHOULD THEY INHERIT THE ASSETS?

To determine when and how your beneficiaries should inherit your assets, you need to focus on three factors:

• The potential age and maturity of the beneficiaries
• The financial needs of you and your spouse during your lifetime
• The tax implications of the bequeath.

Outright bequests offer simplicity and flexibility, but you have no control over what the recipient does with the assets once they are transferred. Trusts can be very useful when the beneficiaries are young or immature, when your estate is large and for other tax planning reasons. 

Ohio law allows your wealth to be transferred for the benefit of your beneficiaries in a manner that will protect it from their creditors and any government entitlement programs such as Medicaid and the Veteran benefits.