Music icon Prince, whose estate is reported to be worth more than $300 million dollars, was one of them. Because the music legend died intestate, his heirs are already battling one another in court to ensure they receive a cut of the loot.

If that’s not what you want to have happen to your assets upon your death, it is imperative to do something to change that. “We spend a lot of time telling clients it is important to have wills and trusts, but many of us don’t have these documents," says Edward L. Armstrong, a St. Louis attorney whose practice focuses on estate planning and probate. "We want to be able to answer ‘yes’ if someone asks if we have them. It’s an important consideration for families.”

Planning Ahead

Just like with non-lawyers, a primary reason attorneys create estate plans is to ensure their assets are distributed as they would like after they die. Other reasons estate planning is important include:

• Determining who will oversee the distribution of assets
• Reducing the tax burden on an estate
• Planning for the possibility for the need for a nursing home or assisted living situation

But attorneys have additional estate planning considerations to ponder that aren’t limited to the typical “who gets what."

According to attorney Barry Seidel, principal of Barry Seidel & Associates, a small law firm in Queens that handles probate and other matters, lawyers need to ensure their law practices are organized, too.

For example, files need to be orderly and client contact information should be readily accessible so that after the lawyer dies, clients can be reached and the attorney taking over the file can understand the status of the case. It’s also important to have a plan in place for the smooth transition of client files, Seidel says.

Then there’s the consideration of whether the monetary value of a law firm’s name outlives the person the firm was named after. Seidel offers an example to illustrate this situation: say two lawyers are name partners in their firm and one dies. The consideration, he says, is “how will the respective estates of each partner be protected when the (surviving) spouse can’t come in to take over” the law practice.

Say the firm is worth $1 million dollars. Seidel suggests the firm secure life insurance for each of the partners worth $500,000, with each policy payable to the surviving spouse or heirs of the partners. Each lawyer and their spouse should execute an agreement stating that upon receipt of the life insurance proceeds, the surviving spouse (or heirs) relinquishes all rights to the law firm and any monetary value its name might hold.

The agreement can also cover accounts receivable, so it is clear to all survivors where those funds are to be directed. “Be mindful to keep valuations current,” Seidel cautions.

Another reason lawyers should execute appropriate estate planning documents pertains to the tax considerations wrought by their law practices and investments. Every state has its own tax exemption tables, while different exemptions exist on the Federal level. Because the tax system can be complicated, “lawyers need help to create an estate plan,” says Sarah J. Rowley, Of Counsel with Barnes & Thornburg in Minneapolis. For example, some states tax estates valued at more than $1 million while the Federal exemption is currently $5 million.

“Not a lot of people have a Federal taxable estate, but state tax exemptions vary,” Rowley says. So, when a goal of estate planning is to minimize estate tax liability, it’s imperative to know the exemption for your state, she says.

Moreover, to calculate the approximate value of an estate, factors such as life insurance, real property, retirement accounts, family vacation homes and bank accounts all count, Rowley says. “If you can change the beneficiary, it’s part of your estate.” 

Another consideration are gifts lawyers make to their children, for example. “It’s important to know the definition of a ‘completed gift,. If the Principal maintains some control” over the gift, it’s not completed, she says. That could have tax consequences for the giver.

Powers of Attorney (POA) are another matter to consider when it comes to estate planning. “POAs are important while you are still mentally competent. It’s a degrading process to be declared incompetent,” says Armstrong, but having Durable POAs granting certain powers can bypass that process.

There’s no reason not to grant a durable POA unless you’re extending a power for a specific situation, Armstrong says. Of course, you must be careful about the Agent you select to be your Attorney-in-Fact for any type of Power of Attorney.

Depression and the Practice of Law

It’s no secret that practicing law can be stressful. Dealing with client complaints and problems, arguing with opposing counsel, conflicting case-law and more are not easy undertakings. According to the American Bar Association (ABA), an average of 11 people out of every 1,000 commit suicide annually. However, lawyers commit suicide at a rate six times that. Moreover, the National Institute of Safety and Health reports that male lawyers between the ages of 20 and 64 are twice as likely to commit suicide than men the same age in different occupations.

“Lawyers are a close second to dentists as far as the pressure we’re under," Armstrong says. "Lawyers have to think about the advice they give their clients with the added responsibility of their law practices, their clients and those files.” The public’s general dislike and distrust of the legal profession doesn’t help matters, either. “The way the public perceives lawyers can be depressing,” he says.

It’s no surprise that practicing law can drag a person down. “We tend to get bogged down to the point we don’t take care of our family, our practice, our clients and ourselves,” Armstrong says. That makes proper estate planning for the practicing lawyer all the more important. “Estate planning forces you to consider what you do impacts other people and clients,” he says.

Tami Kamin Meyer is an Ohio attorney and writer.