The plan, which Taylor said is a "living document," will help prevent an estate from being tied up in a lengthy probate process after an individual passes away, and ensures their family and assets are protected the way they intend.
The framework
An estate plan outlines, through a will or trust, how and to whom assets will be distributed once an individual dies, Carroll said. The plan also designates powers of attorneys who can make financial or medical decisions for an individual if they become unable to do so.
Wills go into effect after an individual dies, while trusts take effect immediately, and Carroll said many are done in tandem. In the Lake Travis-Westlake area, about 90% of their clients have trusts, he said.
“Because of the level of affluence here, the trust is much more detailed and thoughtful about how you pass on wealth to kids,” Carroll said.
A key part of the estate planning process includes accounting for assets, such as:
- Homes, rental properties, ranches and farms
- Savings or retirement accounts
- Cryptocurrency
- Intellectual property such as trademarks or patents
- Personal items such as vehicles, jewelry or art and other collectibles
Sorting out details
Estate planning costs vary depending on an individual's goals and the complexity of their case, Carroll said, such as having minor children as beneficiaries or a previous marriage where beneficiaries have not been updated.
However, dying without an estate plan kicks in the “inefficient aspect of a probate system” to determine who gets someone's assets, Taylor said. An heirship determination preceding is first held to determine the legal heirs, followed by a proceeding determining who is in charge and who gets what—a process that can become "cumbersome," Taylor said.
Families worried about heavy up front costs can re-evaluate their estate plans as their wealth, family and needs grow, Taylor said.
The estate planning process looks different for everyone as “no two lives are the same,” Taylor said, but typically includes a few key points:
- Schedule an initial attorney consultation
- Fill out a workbook listing family members, assets, financial and medical decision makers, burial preferences, and more
- Meet with attorneys to design and revise your plan
- Review and sign all documents for the prepared plan
- Update the plan as necessary, such as when changing your powers of attorney, adding beneficiaries or acquiring new assets
Taylor said estate planning is not just something older adults should consider. The effort needed to create a plan for younger adults—especially those who are not married or don't have children—is “pretty minimal,” and helps prevent leaving their family to navigate the hurdles, she said.
“The effort it would be for, presumably your parents, to have to clean up your estate after you pass away is going to be five to 10 times more difficult, especially in a state of grief,” Taylor said.
However, the estate planning process can be overwhelming for both older and younger adults, she said. Those with young children can be affected by having to think about the fact that they could one day leave their children.
On the other hand, older adults may not be as sharp as they once were or have many assets to track through the years, she said. Helping to ensure their assets are organized, such as bank account passwords or safety deposit box locations, is key.
“I like to encourage them if they have trusted family members to get them involved,” Taylor said. “We go through the documents together at the end and make sure that is what they actually want. So, it helps reduce some of the decisions [they] have to make.”
