Estate Planning

Some people think of estate planning as simply drawing up a will or perhaps creating a trust, but there's much more to it than that. An estate plan shouldn't be limited to simply providing for the disposition of your property after your death. The term "estate planning" itself can be intimidating, particularly for those who are not wealthy. Somehow the word "estate" implies that such planning is only for people who have vast sums of money. Everyone needs an estate plan, but it doesn't have to be complicated.

Over the years I've learned that many people avoid estate planning because they don't want to think about such unpleasant occurrences as premature death or serious disability. They don't think they are being selfish, but they usually don't realize that the absence of proper planning might create unnecessary burdens on their families. Others prepare the requisite documents, but fail to keep them current. Just this week I was reminded of the importance of regular reviews.

Early Monday morning a man called me about his wife, who is not expected to live more than another few weeks. Her cancer treatments have been unsuccessful, and her health is declining at a rapidly accelerating pace.

In the process of reviewing their information, I uncovered a partially completed estate plan. The wife has a proper will, but no power of attorney or health care directive. Her attorney recalls drafting those documents, but she never signed them and the attorney never followed up with her. She owns an annuity with a beneficiary designation that hasn't been updated since before her marriage. The people she listed on the original form were friends she hasn't been in contact with for several years.

Fortunately, it's not too late to fix the broken plan, but it's going to require quick action, and the realization that these oversights might have gone unnoticed has added more stress to an already tragic situation. I don't look forward to taking documents to the dying woman for her signature.

A common estate planning misconception is that you don't need a will if you're married and your home and financial accounts are owned jointly. Many people also don't realize that beneficiary designations override instructions in a will or trust document. For example, your will can say that everything you own should be left to your spouse, but if you have an old life insurance policy that names your brother as your beneficiary, your brother will inherit the policy proceeds.

It's easy to be confused about estate planning, and errors can be devastating. For these reasons you should consult with an attorney who specializes in estate planning. If you need assistance locating a competent attorney in your area, two valuable resources to check are the National Academy of Elder Law Attorneys (www.naela.org) or the National Association of Estate Planners and Councils www.naepc.org.

Whether you already have an estate plan or if you're planning to work on the project soon, don't assume you're finished after you've signed your documents. If assets need to be re-titled, be sure to do so. Review your documents and the beneficiary designations on your insurance policies, annuities and retirement accounts regularly, to be sure they continue to reflect your current circumstances and wishes. Start to think about estate planning as an ongoing process that optimizes the management of your assets during your lifetime, provides for the administration of your affairs if you are unable to do so for yourself, maximizes opportunities to save taxes, and leaves instructions for when, how and to whom to leave your assets after your death.

Elaine Morgillo is a Certified Financial Planner and president of Morgillo Financial Management Inc. She has offices in Portsmouth and North Andover, Mass., and can be reached at emorgillo@morgillofinancial.com.