Death and dying are nowhere near as fun to think about planning a vacation, redecorating the house or taking the dog for a walk. In other words, we’re comfortable with any other task or topic. But according to the article, “5 Great Estate Planning Tips for the Rest of Your Life,” from The Street, we need to get past that discomfort.
A 2015 Everplans study found that 69% of Americans say they’ve seriously thought about drafting a will, but just 34% follow through with it. Another 95% of the study participants say that they don't plan well for the handling of their estates due to the lack of knowledge and good financial tools. That’s just an excuse.
There are several "must have" estate planning components you'll need, and some creative components that really help a good estate plan. Keep reading.
Who’s your “Go-To” Guy (or Gal)? Ask yourself who will take care of your estate. This doesn’t have to be your spouse or your children. The next step is to hire an estate planning attorney. This should be someone who specializes this type of legal work. Just like a brain surgeon or a rocket scientist, you need someone with the focused knowledge, skill and experience in this area for this assignment.
Be Flexible. With changing administrations and potential changes to estate tax laws, flexibility is critical in estate planning. Talk with your estate planning attorney when significant changes occur in your life, and create the flexibility in your estate planning documents to account for future changes in tax laws.
Fund Your Trusts. A common estate planning mistake is setting up a revocable living trust and then failing to fund it. A living trust lets someone else manage your financial affairs when you die or in the event you become incapacitated. However, people often will create revocable living trusts, sign the trust documents and then never actually fund the trust with the appropriate assets. You must retitle your investments, bank accounts, and other financial assets from individual or joint accounts into the trust and transfer the deeds for real estate and other real property into the trust.
Life Insurance. Consider whether you need a death benefit to take the place of your income or protect your family if you die prematurely. Death insurance is the ticket, not life insurance. It’s low-cost term life coverage that provides a sufficient death benefit without a cash value. This type of insurance will manage the risk of dying prematurely for a set period of time. That’s it. Cash value life insurance, like whole life or variable life, is much more expensive and not the answer for those that need pure life insurance protection.
Test Drive Your Power of Attorney. Try out your POA (power of attorney) when you're still healthy to see if it would be accepted by the bank. Each financial institution has its own test for determining a power of attorney’s validity.
If you don’t have an estate plan in place, now is the time to contact an estate planning attorney and put these important items in place. Your actions now will make a huge difference for your loved ones when the time comes, whether you want to think about it or not.
Reference: The Street (February 22, 2017) “5 Great Estate Planning Tips for the Rest of Your Life”