It took a parent’s medical crisis to prompt Patricia Latimore and her husband, Bourdi Apreala, to take action on drafting their estate plan. The Milton, Massachusetts-based couple had dragged their feet because they’d considered themselves too young to need one–both are in their early 50s. Cultural traditions were also at work, since wills are virtually unheard of in Apreala’s native Nigeria, where the eldest son usually inherits everything upon the death of his parents.
The couple began to focus on the estate planning process in 2003, when Latimore’s father became ill. He died of a stroke in 2005. Leaving assets worth approximately $750,000, he fortunately had a will. Latimore served as executor of the estate, and she appreciated how her father had bequeathed his property and put other wishes down in writing. “At [the time of his] death, there wasn’t a whole lot of mystery about where his assets were and who they should go to,” says Latimore.
During her father’s decline, Latimore and Apreala began formulating their own estate plan. Although both have a general understanding of such issues–Latimore is senior vice president of institutional investor services at State Street Corp., while Apreala teaches business courses at Roxbury Community College and runs a business consulting firm–they hired McKenzie & Associates, a law firm specializing in, among other areas, estate planning .
The firm gave the couple an overview of the elements to consider–a will, power of attorney, healthcare proxy, and trusts. They also received worksheets to help them inventory and estimate the value of their assets. The most difficult part of the process, however, was deciding whom to put in charge of administering their estate.
“It brought up quite a few interesting considerations about whom you want to be executor of your will, who is going to be the administrator of your trust,” says Apreala. “It comes down to, not so much if you like the person, but if the person has the wherewithal to actually do something complicated. Would they be interested in doing it? It is a very emotional process.”
Latimore and Apreala have two sons: Kiye, 25, and Bena, 16. Their soul searching paid off; it helped them select a guardian for their younger child in the case of their untimely deaths. “Who is going to pass down the same values as you have to your children?” says Apreala. “That becomes very, very critical.”
The planning process helped the couple think not only about who Bena’s guardian would be but also who they implicitly trusted to manage their estate on a long-term basis–an especially important consideration if those funds are being relied upon to pay for a child’s care and education. “A lot of people are very good people, but they may not necessarily have the skills or the desire to step up to being trustee over a number of years,” says Latimore.
Their completed estate plan consists of several parts, including a will, power of attorney, a living will/healthcare proxy, and trust documents.
The couple estimates the value of their entire estate to exceed $3 million. Their home in the affluent Columbines section of Milton is a major asset, and they own other real estate in the U.S. and Nigeria, along with investments in stocks and bonds. Because their assets exceed the tax-exempt first $2 million of an estate, the couple was advised to create a trust. Transferring assets to a trust reduces the taxable portion of an estate’s value.
The couple’s primary goal was to provide a legacy for both sons and, if needed, security and custody for Bena. They also defined their wishes should one or both of them become incapacitated. “Having dealt with a parent who was not able to make decisions for himself in his last year of life, the healthcare proxy was a very important piece for me,” says Latimore. The trust for their children was also critical. Though their elder son has already graduated from college, they wanted to ensure that their younger son would have the opportunity to do the same.
Apreala says he learned that creating an estate plan involves weighing competing emotional considerations and making practical, objective decisions: “It gives you a lot of self-examination. It’s like an audit of your own self and your environment.”
Apreala’s and Latimore’s Advice:
Don’t wait—start now. Taking an inventory of everything you own and estimating its value takes time, as does deciding who would be good stewards of these assets. Couples must agree when choosing guardians for minor children. Completing an estate plan may take far longer than anticipated because of all the asset accounting and deliberations involved.
Think the unthinkable. Carefully consider what you would want to happen should the unthinkable occur. Who would you want to raise a minor child? Who would be a good role model? Who would best manage your affairs if you become disabled and are unable to speak for yourself?
Honestly appraise the skills of others. Don’t assume someone you want as a guardian or executor actually wants to do it or is capable of doing it. Someone who is an outstanding money manager who would be an excellent trustee or executor may not function satisfactorily as a parent–be aware that you don’t have to give one person both duties. Ask about his or her views; don’t spring responsibilities on anyone.
Let a professional design the trust. A properly crafted trust will minimize taxes on assets valued at more than $2 million. While some estate plan elements, such as a healthcare proxy, power of attorney, and will, are relatively easy to understand, laymen rarely know what needs to be included in a trust document.