Why I Created an Estate Plan

The past couple of years have ushered in a lot of change for me. I received many reminders that life can end in an instant. I was among those left to pick up the pieces when some of my closest loves ones passed away suddenly.

These events — combined with my own close call with mortality — caused me to do a lot of self reflection. I have always felt like I did a good job planning for the future. I have clearly stipulated beneficiaries on all of my accounts. Each year I communicate with these beneficiaries about those accounts. Even so, I realized that my unexpected death would leave my loved ones with a lot of uncertainty.

Further, in a few months I will be traveling internationally with my two primary beneficiaries. It occurred to me that if a tragedy hit all three of us, my finances would end up in probate court.

Setting Up the Trust

I decided it was time to meet with a lawyer and create an estate plan. I found a highly recommended estate lawyer, and met for a free one-hour consultation. He explained the advantages of having a trust to me.

Not everyone needs a trust, but if you have money or property that you want to go to certain people — and there is a possibility it will end up in court — then a trust is a good idea. A properly set up trust will keep your assets out of probate court, and speed up the process of distributing them to your heirs.

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However, one of the major selling points is that a trust can also financially protect your heirs. If you pass on money to your children, that money could be lost in a lawsuit or divorce, for example. Assets in trust are protected.

In the process of setting up the overall estate plan, we set up a living will, and various powers of attorney in case I am incapacitated. I don’t think many of us believe we are going to lose our sensibilities as we age, but it does happen. Right now I am of sound mind, but will I always be? There’s no way to know that, but an estate plan can help address that possibility.

One of the reasons I hadn’t set up a trust previously was that I thought I would have to pay someone to manage the trust. I had heard that it could cost 1% of my assets annually to manage the trust.

A Painless Process

That’s not how mine is set up. It cost me $4,000 to have my attorney (in Arizona) put this all together. All my beneficiaries were changed to go into the trust. If something happens to me, then my lawyer will start making phone calls to the beneficiaries of the trust. When I die, for example, assets will go into separate trusts for my heirs. We set up contingent beneficiaries for all accounts just in case one of the trust beneficiaries dies before me, or at the same time.

There is no ongoing fee for managing anything. My assets all stayed where they are. I did have to open up a bank account in the trust’s name, however, because the proceeds of any accounts will be paid out to the name of the trust.

If any accounts or beneficiaries change, I can let my lawyer know and he can update the trust. He wants to touch base once a year to see if there are any major changes. We will meet in person every three years to review the trust. If I change my mind, I can dissolve the trust at any time.

Overall, it was a painless process. It substantially simplifies what happens after I die, and relieves my loved ones from many financial stresses.

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