Written by Robert T. Nickerson
If you frequent our website and social media page, then you are already aware that plenty of celebrities have not planned out their estate well. This has resulted in their families facing legal trouble and hardship, which only gets worse if their net worth was significant. Now here's a fun fact; did you know that Abraham Lincoln didn't have an estate plan either? Yep, a lawyer by trade and the president never had an estate plan drawn up before his assassination.
Even if one of them most popular presidents made mistake, you don't have to. Everyone should have an end of life plan. You want to have a good retirement and an ease of mind, right? Here are four things you can do to improve your estate plan.
1. Review Beneficiary Designations
Did you know that a lot of accounts can pass to heirs without the need of going to probate? This is done through a Beneficiary Designation form. It is a piece of paper that can take something like Life Insurance contracts, 401Ks, and IRA and state who you want to inherent access to those accounts. It's easy to name people, backups, and even split accounts by dollar amount between the people you want to be beneficiaries.
Check to see if those documents are updated with the beneficiaries you want.
2. Have Proper life Insurance
What does life insurance do? It's to give the family a safety net when a loved one passes and provide an temporary income to compensate for the loss of life. It comes in handy if you need more time to figure out the finances in case some are still working.
This is especially helpful in retirement. Let's say a loved one spent the majority of time putting money into a retirement account along with social security and another income source, it makes sense to have life insurance to help with the blow.
It can also help in the event of a funeral. It can cost a lot of money to provide a grave and a tombstone. It can even cost money for the urn should they be cremated. Having life insurance can provide funds for a proper memorial.
Check to see if the loved one has some kind of life insurance.
3. Avoid Probate with Trusts
Probate can give you a lot of trouble if you don't have the proper wills and trusts in place. A will is something that everyone needs, but a trust is a lot more. They can provide similar executions that a deed does, but it can help control assets for those that the loved one cares for, but that individual is not able to care for themselves.
A lot of people will get a revocable trust, which allows the trustee to manage the assets of a loved one and follow through on proper instructions. Though an irrevocable trust is more complicated, it can help within an annual tax liability and protect certain estate taxes. Because their more expensive, I'd advise you to speak to an attorney before making any of these kinds of decisions.
4. Incorporate Charitable Giving
For a lot of people, they want to leave a legacy by donating to a church, ala mater, charity or an organization they care about. This is why it's possible to set up your assets to be passed to a charitable goal.
Estate plans can be easily set up to include charitable giving. This gives you the chance to create gifts for charitable remainder annuity trusts (CRAT) to allow part of your assets to go to a beneficiary and the rest to a charity. This can even be included in an IRA, which allows assets to be passed onto both loved ones and charities.
In the end, no estate plan is like another and should be looked at carefully. I can't stress enough that estate plans are not about money; their about protecting the rest of your family and making sure the transition process is as smooth as possible.
Jeffrey C. Nickerson - Estate Planning Attorney - My Passion is Special Needs Planning!