Selecting a Lawyer
Possibly, you already have a lawyer with expertise in estate planning, so you can immediately proceed to setting an appointment with that person. If you have had no dealings with an estate planning lawyer, or the person who previously represented you is no longer practicing or was unsatisfactory, then you face the daunting task of selecting a new one.
You could, of course, look on the internet or in the phone book for lawyers with the specialization you seek, but you are probably uncomfortable with a random selection. One way to narrow the choices is to ask a friend or associate for a recommendation. Another is to call the Lawyer Referral Program or the Bar Association for referrals. Still another is to refer to our list here. We have the names of several competent lawyers, financial planners, and other such advisors with whom we have worked.
Just as you would not hire an employee without an interview, you should not retain a lawyer without a telephone interview. Most lawyers would be willing to spend a few minutes on the telephone with you explaining their areas of practice and describing the kind of clients they typically represent. If you ask them, they will also tell you their hourly fee. Be sure to telephone the top two or three candidates on your list just as you would interview the job applicants who look best on paper. Based on your comfort level with the lawyers your interview, recommendations, and hourly fees, choose someone to represent you. That person will probably require a retainer letter to be signed and may request a deposit.
PREPARING FOR THE MEETING WITH YOUR LAWYER
You will expedite the estate planning process and reduce the number of billable hours if you assemble all pertinent information in advance of the meeting with your lawyer. We have created a list of pertinent information to record, available here. This information will also be invaluable to the administrator of your estate, so you should include with the original copy of your will instructions as to where to find it.
Your lawyer will need information about the following:
- Existing will, any trust agreements, and other estate planning documents.
- Your assets and how they are owned.
- Any privately-owned businesses in which you have an interest. If you are the principal owner of a business, any succession plan you may have in mind.
- Individuals and institutions that will be beneficiaries of your estate and how much each should receive.
- Tax records pertaining to income and property taxes.
- The trusted individuals to whom you will delegate powers and administrative responsibilities.
- Your personal wishes and instructions regarding final arrangements, memorials, and personal items.
Each of these items is discussed more particularly below.
You may have a will and possibly other legal documents that have not been updated for many years. Meanwhile, your estate has grown, tax laws have changed, your family situation is different, and your interests have evolved. Sections of these existing documents may still express your wishes, but other sections definitely need to be revised. As you begin the process of developing a comprehensive estate plan appropriate for your current circumstances, these documents are a starting point, and you should take copies to the meeting with your lawyer.
Whether you are updating existing documents, or engaging in estate planning for the very first time, the remaining items in the list are relevant to you and should be compiled for your lawyer.
Ownership of Assets
There are numerous ways you might own or have an interest in real estate: sole owner, joint tenant with right of survivorship, tenant-in-common, or shares in a corporation, Limited Liability Company (LLC), or perhaps a partnership that holds title to the property. Your lawyer will want to know the type of ownership in order to determine how the property will be conveyed. For example, property held in joint tenancy passes directly to the surviving joint tenant while a tenancy-in-common interest can be conveyed through a will. If you have rental property, you may have transferred title to a corporation of or an LLC to shield yourself from personal liability.
Other assets, as well, can be held in various ways. Indeed, your lawyer might suggest forms of ownership, such as a corporation or partnership, in order to facilitate periodic transfers of partial interests to family members. At your bank, you might have arranged for beneficiaries to receive the funds at the end of your life.
Make a comprehensive list of all of your assets and how they are owned. Your lawyer needs this information to draft documents assuring that these assets are transferred according to your intentions. When you have completed the list and tallied the value, you may be pleasantly surprised to learn that your net worth is much larger than you had supposed.
If you are the principal owner of a family business, you might have some children who are involved in the business and some who are not. You would like to keep the business in the family while treating the children equally. This can entail some complex planning which, if not handled carefully, can lead to fractures within the family. You should be prepared to describe to your lawyer your hopes for the business and your family situation, so that he or she can help you develop a succession plan that accomplishes your objectives and minimizes taxes.
Beneficiaries of Your Estate
Normally, members of your immediate family will be significant beneficiaries unless provision has already been made for them through a family trust. There may also be more distant relatives and friends to whom you want to make gifts. Many people add to this list charitable organizations that have been important in their lives and express their values. We would be pleased to discuss the purposes for which a bequest to the Winnipeg Symphony Orchestra might be designated. For instance, we can explain how you can establish a perpetual, named endowment.
Be prepared to discuss the financial circumstances of the various individual beneficiaries, so that your lawyer can recommend a means of conveyance appropriate for a particular person’s situation. For example, you might be willing to give a financially-responsible heir a lump sum, but prefer to create a trust for a child who has been imprudent with money.
The income you earn during your final year of life plus 50 percent of the capital gain in your assets, other than your principal residence and the assets that pass to your spouse or a spousal trust, will be taxed on your final income tax return. Your lawyer will want to know the cost basis of the real estate, securities, and other assets you own in order to estimate the taxes due on your final income tax return, and to provide the liquidity to pay them.
If you inherited property, the cost basis is the value as of the date-of-death of the person who gave the property to you, with any subsequent adjustments. If you are a surviving spouse or the beneficiary of a spousal trust, you should also provide the cost basis of property you received outright and the cost basis of any property used to fund the spousal trust. This tax information will likewise help your lawyer and accountant provide for payment of taxes that may be due upon your death and the termination of a spousal trust. Providing copies of recent income tax returns can also give your lawyer a better understanding of your tax situation.
You will need to designate a personal administrator (commonly called “executor”) for your will, a trustee for any trust you may establish, someone with a durable power of attorney to handle your financial affairs if you become unable to do so, and possibly someone who has a power of attorney for health care decisions. You could name one person or institution for all of these roles, but more likely you will divide these duties.
Before seeing your lawyer, give thought to the individuals or institutions you trust to serve in these capacities. Relationships, expertise, fees, and age (if an individual) are all considerations. Your lawyer can discuss with you the advantages and disadvantages of appointing individuals and institutions, but ultimately the decision is yours, and this decision is one of the most important you will make.
Any wishes you have about life sustaining procedures, in the event that you should be rendered permanently incapable of making a decision, can be expressed in an Advance Health Care Directive. This is likely to be one of the estate planning documents suggested by your lawyer.
Certain other wishes, such as those pertaining to memorial services, can be included in a will. Alternatively, you might write a letter with detailed instructions and reference it in your will. Also referenced in your will can be a document describing various items of tangible personal property, such as jewelry, cars, and artworks and indicating who is to receive each. You need not have compiled this list before seeing your lawyer, but be aware that these matters are likely to be discussed at some point.
Preparation is the Hardest Part
Just as collecting records of income and deductible items can be more difficult than actually completing your income tax return, so can assembling and reflecting on the above information be the hardest part of estate planning. However, the exercise is worthwhile, not only to prepare for the lawyer meeting, but also because it prompts you to consider questions you may have pushed to the back of your mind. Collecting and recording all of this information in a single place will also be very satisfying to you. It is a foundation for all of your future planning, and it provides coherence to your life.