Willing Your Future

Three things you need to know about your will – so you can rest in peace.

By Roni Robbins

It started as a handwritten note tucked away in her dresser drawer that read like this: “In the event something should happen to me, all my worldly belongings go to my son.”

Building her Chicago courier business, Phyllis Apelbaum didn’t have time to turn her postmortem wishes into legal documents that spelled out what should happen with her property in the event of her death. “I had one son,” she says. “I thought, ‘He’ll figure it out.'” Besides, she didn’t want to face that very depressing subject.

But as her business became more successful – the million-dollar Arrow Messenger Service is the largest female owned company of its kind in the Windy City – she could no longer ignore the tax consequences of not having a formal estate plan. These plans include a will and other legal directives, such as a living will or power of attorney, to be followed when the individual can no longer make healthcare and financial decisions for herself. “In the past I just assumed it would all take care of itself. The older I get, I’m not willing to leave it to chance,” Apelbaum says.

Too many high-level professional women like Apelbaum do not start early enough in preparing their financial legacy. Estate planners say even women in their 20s and 30s should begin such planning if they have accumulated assets such as a house, a car, a bank account, insurance or a pension plan.

Only about 50 percent of Americans have prepared wills or estate plans, the rate increasing progressively with age. And women make up a small percentage of those will writers: According to a 2004 survey by Prudential Financial, only 15 percent of women planned to create an estate plan or will within the year.

If there’s anything that recent American history has proven, it’s that you never know when it’s your time to go – and you can never be too prepared. Consider, for instance, the tragedy of September 11th and the legal battles in the controversial Terri Schiavo case. It’s key to expect the unexpected.

While there is no substitute for good legal advice, consider three points when you plan your legacy:

1. Avoid the “I love you” will. This is the most common will, says Sally Hurme, an AARP consumer protection attorney and an adjunct professor of elder law at George Washington University. A husband dies, for example, and leaves everything to his wife and children. But what if the whole family is wiped out in an automobile accident? You need to spell out where you want your money to go in such a case, Hurme says – for instance, to a charity, a church or your alma mater.

You may also need to decide how your own family will receive and use your bequest. “I’ve had some really surprised individuals,” says Christine Albright, a partner and head of the trusts and estates department of Winston & Strawn LLP in Chicago. She recalls an elderly woman who died before her husband. She had a very restrictive will and he had trouble accessing her assets. Of course, this wasn’t the way it was supposed to be, the man lamented to Albright.

Consider, too, that if you haven’t taken precautions before marriage to protect your assets by signing a prenuptial agreement, your husband could spend all of your money after you die, including what you left to your kids or what you inherited from your family, says Barbara Freedman Wand, a partner with Bingham McCutchen’s estate planning group in Boston.

And if the census reports bear out and your husband is quick to remarry, you have to decide how comfortable you are with the idea he might give property he got from you to his new wife instead of your children or other family members you care about, says Eileen Bannon Trost, a trusts and estates attorney with Sonnenschein Nath & Rosenthal LLP in Chicago. “I’ve seen guys disinherit their kids in favor of the new wife,” Trost says.

When it comes to blended families as a result of remarriage, careful estate planning is needed to specify what of his goes to his side of the family and what of hers goes to hers, Hurme says. “It’s a huge area of potential family discord and gnashing of teeth.”

2. Don’t forget about spot. Pet owners should consider who will care for their beloved animals in the same way they might think about guardianship for their children.

An increasing number of lawyers are specializing in estate planning for pets, and a majority of states now recognize pet trusts that provide for a pet’s care after the owner dies. Recent studies show that fewer than one-third of all pet owners include their pets in their wills. Without those final instructions, your pet stands the chance of ending up roaming the streets, being taken to an animal shelter or worse.

Not everyone chooses the option, despite the growing trend of legal advisors’ encouraging clients to write down their wishes. Tracy Britton, senior communications manager for a major New York financial company, doesn’t see it as a risk, though she leaves more than 80 pages of instructions for the pet sitter who watches her nine animals when she’s away. “I did not feel the need to make it legal,” Britton says.

Having had a will since her early 20s for her other property, Britton, 46, is well aware of her option to include her pets in her will. After all, she’s listed on a friend’s will as the designated caretaker for the woman’s horses. If the friend dies, Britton will inherit the horses and receive a sum to provide for their care. But Britton says the people who have agreed verbally to take her pets will love them and care for them for the rest of their lives – or so she hopes.

3. Review your plan frequently. Most estate planners will tell you to review and possibly update your estate plan every two to five years, or as your situation changes. Consider changes in your finances or family, such as the birth of a child. Later, for example, when that child is a teenager, you may feel differently about the disposition of your assets, Albright says. In addition to changing beneficiary designations, you should update property titles. If you move to another state, tax laws could be different. Changes in state and federal tax laws may also affect your estate, Albright says. “I handled the estate for a professional woman who had her own business,” she recalls. “She had a heart attack. Her plan was terribly out of order. It resulted in millions in estate taxes being due that would have been diminished with an updated will.”

When to Rethink Your Estate

• You’ve acquired major assets (car, home, bank account).
• You’ve recently married or divorced.
• A relative, beneficiary or executor has died or your relationship has changed substantially.
• The mental or physical condition of a beneficiary or executor has changed.
• You’ve had more children or grandchildren, or your children have gone to college or moved out of (or into) your home.
• You’ve bought, sold or mortgaged a business or real estate.
• Your business or financial circumstances have changed significantly, including changes in estate size, pension, salary or ownership.

Source: The American Bar Association