Planning ahead for your own death is a difficult step to take because no one wants to believe it can happen to them; but it will happen. By giving some careful thought to your goals for your beneficiaries, you will be confident that you are really protecting what matters. An estate plan may include some or all of the following: Last Will & Testament, Revocable or Irrevocable Trust, Powers of Attorney, Joint Tenancy designation, and Beneficiary designation. Whether you feel you have an estate to protect or not, consider the following:
1. Restrict Access To Large Sums of Money: To a teen or young adult, even $100,000 is a lot of money and can squash their own ambition. Setting up a trust that distributes funds over a specified period of time will ensure that your loved ones use their money wisely.
2. Plan Ahead For Disability:How will your family fare if you are disabled for six months, 12 months or more? What if both you and your spouse are involved in the same disabling accident? Even if money is not an issue, who will be authorized to write the check to the mortgage company to avoid foreclosure while you are recuperating?
3. Avoid Probate and Protect Your Privacy: If not structured properly, probate can require that your Executor reveal personal and financial details that you would rather keep private.
4. Special Needs Beneficiary: If you would like to benefit someone with special needs, the proper plan can allow the beneficiary to receive your bequest without affecting his or her eligibility for government benefits.
5. Name a Guardian For Minor Children: If the kids need a Guardian because you and your spouse are gone, wouldn’t you rather choose the right person rather than leaving it up to a judge?
6. Divorce Can Alter Your Estate Plan: If death occurs during divorce proceedings, the parties are still married and the surviving spouse has certain rights to the deceased spouse’s assets.
7. Non-Citizen Spouse: Do you hold citizenship in a foreign country? Does your spouse? If so, there are special planning considerations of which you should be aware.
8. Business Issues: Who will take over your business when you are not running it every day? Lack of management and succession planning, not the cost of estate tax, is the reason why two- thirds of closely held businesses fail to succeed in the second generation.
9. Community Property: If you and your spouse have ever lived in a community property state, you need to know how the rules of property ownership will affect your estate plan.
10. Saving For College: What is the best way to save for a child’s or grandchild’s college education? Is a ‘529 Plan better than a Uniform Gifts to Minors Act account? How much can be gifted each year without incurring a tax?
Once you consider these possibilities in relation to your life, take the next step to help yourself and your family by establishing an estate plan and other end-of-life instructions. Yes, it will take time for thought and direction to prepare appropriate documents, but the security of knowing it is all figured out will save your loved ones time and money.