Important Life Decisions
Life Changes Quickly
In each of our lives, change comes very quickly. You are going to face new circumstances every year.
Yet planning exists to prepare for lifeand to give your family members better lives. It is essential to create goals that help your family live better in the midst of new circumstances.
Planning for the future is a key part of a successful life. Even if you or your family are going through major changes, there are several basic steps that will help you succeed in your plans.
Step one for a successful life is to have goals. It has been said, "If you don't know where you're going, you're not likely to get there." This is very true about goals for your family and for your estate.
Often, single persons or couples meet with a professional advisor and have not considered setting specific goals. Your advisor in this circumstance will try to be helpful and suggest "typical" goals.
However, think about goal-setting as though you are purchasing a birthday gift for a family member in a clothing store. You might look at many different shirts or pants for that person. A clothing store might have 20, 30, or even 50 different sizes. One size does not fit all in the area of clothing, and it also doesn't work for your family and estate plan.
How do you find the "right size?" That shirt or slacks for a family member must fit properly. In your planning for family, it's important to decide the right time and amounts for an inheritance to be most beneficial for your children, nephews and nieces. Your other goals may include the age for heirs to receive property and reducing costs and death taxes.
What Do You Own?
Can you write down a list of all the property you own? A single person will often own items outright, although there may be a mortgage or other debt obligation against real property. However, married couples have at least three different types of potential ownership. Property could be owned individually by spouses or owned jointly. In some states, the property could be held in a type of joint ownership called community property.
Understanding your property starts with listing all of your assets including your savings account, certificates of deposit, home, IRA, 401(k) and personal assets.
Children, Nephews and Nieces
Your plan to benefit family through your estate will vary greatly, depending upon the ages and circumstances of your children and their needs. For parents with minor children, a key decision is to select a guardian. Minor children also need to have property held in trust, so there is appropriate investment and expenditure of those funds. For adult children, it's important to think through the right time, right amount and right type of inheritance. Many families find that a trust that pays income for a number of years to adult children is also a very helpful method to provide added security for them.
Wills and Trusts
Do you have a will? Is it current? You should review your will periodically and discuss your plan with your attorney. If you have a substantial estate, a will with a trust may be appropriate. Because a will does not provide for your care in a medical emergency, you will want to make sure that your estate planning includes a will, a durable power of attorney for healthcare and a living will to handle end-of-life issues.
Planning for Probate
How can you avoid probate? Generally, most individuals can avoid probate for a large portion of their assets.
The probate process is important because when a person passes away, his or her property must first be used to pay bills, expenses and debts. An executor or personal representative is appointed to gather an inventory of all assets, conserve assets for all beneficiaries and make certain to carry out the decedent's intentions as written in his or her will.
The probate process specifically applies to assets transferred under your will. However, many types of assets are transferred through other means. Trusts, IRAs and insurance are subject to the terms of the agreement or beneficiary designation. Property held in joint tenancy with right of survivorship is transferred to the survivor whose name is on title.
Pay-on-death and other types of accounts can also avoid probate. However, all parts of your entire plan need to work together. When a plan has not been carefully developed to meet your goals, there may be an expensive and heart-rending fight over property by your heirs.
A good plan will give one of the best possible gifts to your familythe gift of peace.