Trust & Estate Planning
Answer this riddle: what’s the one thing that will eventually happen to everyone, but generally, no one wants to discuss? Death is a subject that immediately conjures up all sorts of emotions because, let’s be honest, the absence of being IS emotional. But, death is also cause for practicality. It’s a cause for stating clearly what to do about money and property so there is no dispute or cause for fights between family members claiming rightful ownership. (We’ve all seen movies and TV shows where that happens and it never ends well.)
Unlike the Egyptian kings and queens buried with their golden furniture and gilded jewels and mummified pets, you cannot take your money or property with you. The stuff you own, from your house to the family heirlooms to the rest of your savings, will be transferred to another entity whether that be a grandchild or the government. This is where a will comes in and why a will is important. The majority of people would rather have the choice of whom their hard-earned stuff goes to, instead of state intestate laws deciding for you.
A will is a part of your overall estate plan, and while it may seem like you’re going to live forever, you won’t. Don’t put it off another year. If you don’t have a will to your name, now’s the time to make one, and if you’ve had a will for years, it’s probably time to update it. Here are some musts to include in your will:
Identify all of your assets. Yep. All of ‘em. Compile the information so you can take it to your lawyer. Assets is an all-encompassing term for just about everything physical (this list is pretty easy, but a long one, that includes goods like furniture, jewelry, cars, boat, etc.). Assets also include financial instruments in your name, like bank accounts, retirement funds, investment portfolios, and credit cards). In other words, sweat the small stuff. Your bigger assets are likely already accounted for in the case of your death through beneficiary designations. It’s all the small, perhaps sentimental things, that need to be divided up to your beneficiaries. Then there are the less obvious assets to your name, like in the digital category, such as money-generating websites and social media accounts. Ensure account information can be accessed by your desired executor or administrator of all assets.
Give proof you own your things. For your will to be valid and executed properly without dispute, it’s important to include evidence that you actually own the things you listed. Evidence could include proof like deeds, certificates, insurance policies, and titles. Have copies of these made, if possible, and include information as to where this proof of ownership can be accessed, such as in a safe.
Consider the kids. Most people know that until your children are legal adults there should be a legal primary guardian named in the will. What not everyone includes is a trustee. The trustee will be in charge of the assets left to the children and it’s wise to define a clear separation of power between the caregiver/s and the money manager. You don’t want one person in charge of everything related to your children.
Advocate for an advisor. If your children are legal adults and you will them any sort of financial assets, recommend they reach out to a trusted financial advisor, whether that’s your contact or theirs. If it’s your contact, list contact information for the advisor. The advisor will be able to recommend management strategies for the sudden influx in financial assets to your children whom, depending on their age and financial experience, may not be used to such money.
Double-check who benefits. Here’s a fun loophole: whomever is designated as a beneficiary on things like life insurance will be privy to to the asset over anyone who is listed as the beneficiary in the will. So, when you’re creating/revising a will, it’s a wise idea to review who you have listed as your beneficiaries to your IRA, insurance policies, and annuities.
Choose an executor. You cannot choose your family, but you can choose the executor of your will. And, while this can be a family member, it doesn’t have to be. The job of acting as your “personal representative” can be complicated. It can involve a bunch of legal and bureaucratic processes like settling up debts, notifying governmental agencies of your death, and handing the entire probate process. Sometimes it’s in the best interest for the executor to be a neutral party such as a lawyer or the bank. For example, if you name one of your children as the executor of the will, but not all your children get along, it could result in familial discord. Be aware, however, that a neutral party like a lawyer or bank will cost a small percentage (under five percent) that is dependent on your asset value.
Whether you name a family member, friend, or neutral party as the executor of your will, set them up for success with a checklist that includes clear, concise instructions for will execution and personal account/asset information.
Make a separate will from your spouse. If you’re married, you likely share many assets with your spouse. But, when it comes to a will it’s important that both you and your spouse have your own individual documents. Collaborate and share information that’s important to both of your wills, but since you likely won’t go to the grave at the same time, it’s essential the surviving spouse have a will to refer to without confusion. A point to remember is that with any assets where spouses have co-ownership, such as a house or a savings account, the living partner still has ownership and those assets are not passed on through a will.
Enlist an expert. The Internet is great in helping you consider elements of will creation and revision that you may have never thought of before, but the Internet doesn’t have your personal best interests in mind. A DIY online will-creation tool may seem fast, cheap, and easy, but it may not prove to be so cheap and easy for your heirs who may end up paying for any mistake. Engage the services of a trusted lawyer to help you create an ironclad will that won’t even have the chance at contention. Your financial advisor should be involved to help you identify all of your financial assets you’ll want to list out in the will.
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2016 Advisor Websites.