The Foreign Service Journal, January-February 2016
THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2016 59 should begin by selecting the state law that will govern their wishes, regardless of the location of death. In addition, many parents want to designate emergency guardians for their minor children. Some must plan for litigious family members or ex-spouses. If you are unsure what goals you should have, conduct research online, visit a law library or contact an estate planner. Taking Inventory. An estate planning inventory is a lengthy questionnaire about your money, family and obligations. You’ll need to gather your land records, deeds, titles, mortgages, loan documents, insurance policies, bank and brokerage account information, judgments, existing beneficiary designations and your existing estate plan. The very mobile Foreign Service lifestyle makes it difficult to maintain current copies of all these documents. You may also find it difficult to develop enough close relationships to make wise fiduciary designations. Avoid the impulse to rush through the inventory without gathering the appropriate information and designating the same person in too many fiduciary capaci- ties. Filling Out Your Planning Documents. These come in many varieties, but at a minimum they encompass beneficiary desig- nations, wills, trusts, powers of attorney and advance directives. Non-Probate Assets. Beneficiary designations frequently control the descent and distribution of more wealth than the individual executing the will (who is known as a testator). These designations control the passage of your non-probate assets: Thrift Savings Plan (TSP-003), Federal Employees Group Life Insurance (SF-2823), independent individual retirement accounts, 401(k)s, brokerage accounts, and your final paychecks if you’ve completed a DS-1152. (See also the DS-5002 Designa- tion for Unpaid Annuity, SF-3102 Other Agency Designation, SF-2808 Civil Service Retirement, and DS-7715 Variable Contri- bution Plan). Revising these designations is a simple, effective way to make progress on your own. Probate Property. Everything else you own will probably be probate property. Double-check the small print in your titles, mortgages and other vital paperwork to make sure. Common examples include cash, cars, bank accounts, stock and house- hold property. Real estate is frequently a probate asset, but it can become a non-probate asset if the title contains language indicating you own it as a joint tenant with rights of survivor- ship. In that case, the terms of the joint tenancy would govern, not your will. But barring such exceptions, your probate assets must be in your will or the court will determine who inherits them. Wills . A will distributes a testator’s probate property when he or she dies. Most states require these documents to be in writing and to be signed by the testator and two witnesses. They some- times require the testator to orally declare the document to be his or her will. Meeting these requirements gets the will into a probate court proceeding. However, the true quality of your will, and the likelihood that it will withstand legal challenges, depend on the wisdom with which you have balanced the competing interests affecting your estate. These include check- ing your will’s compatibility with your beneficiary designations and properly calculating total gifts to each beneficiary. A blunt instrument that does little more than meet the legal threshold probably misses the mark. Trusts. A trust holds and preserves property. A settlor is someone who creates a trust by transferring property to a trustee, frequently a spouse. The trustee then holds that prop- erty for beneficiaries, often children. As with wills, most states require trusts to be in writing; identify the settlor, trustee and beneficiaries; reflect a body of assets; and impose duties on the trustee. A trust allows you to exercise some control over your prop- erty from beyond the grave. However, much like a will that only satisfies legal minimums, a poorly drafted trust can complicate estate administration. For example, it could continue holding your property indefinitely rather than distributing it to your beneficiaries. You must avoid leaving your fiduciaries in the position of having to probate your estate, and dispense with perpetual trusts. Your Finances and Health. A robust estate plan will include a durable power of attorney, which grants an agent authority to do business for the settlor. The main advantage of this mecha- nism is that the settlor’s bills will continue to be paid and utili- ties turned off when he or she can no longer do so. Similarly, an Members of the Foreign Service community should begin by selecting the state law that will govern their wishes, regardless of the location of death.