Your Will Isn’t the End of Your Estate Planning
A Will is Just the Starting Point for a Good Estate Plan

Your Will Isn’t the End of Your Estate Planning

Even if your financial life is pretty simple, you should have a will. However, there’s more work to be done than just doing a will. Assets must be properly titled, so that assets are distributed as intended upon death. Having a will is just a start.

Forbes’ recent article, “For Estate Plan To Work As Intended, Assets Must Be Properly Titled” notes that with the exception of the choice of potential guardians for children, the most important function of a will is to make certain that the transfer of assets to beneficiaries is the way you intended.

However, not all assets are disposed of by a will—they pass to beneficiaries regardless of the intentions stated in the will. Your will only controls the disposition of assets that fall within your probated estate.

An example of when a designated beneficiary controls the disposition of a financial asset is life insurance. Other examples are retirement accounts, such as a 401(k) or an IRA. When there’s a named beneficiary, assets will be distributed accordingly, which may be different than the intentions stated in a will.

The title of real estate controls its disposition. When property is jointly owned, how it is titled determines if the decedent’s interest in the property passes to the surviving partner, becomes part of the decedent’s estate, or passes to a third party. Titling of jointly owned property can be complicated in community property states.

In the same light, a revocable trust is an inter vivos or living trust that’s created during the grantor’s life, as part of an estate plan.

Such a trust can be used to ensure privacy, avoid the expenses and delays in the probate process and provide for continuity of asset management. A critical part of the planning is that the grantor must transfer (or retitle) assets to the trust.

Wills are very important in estate planning. To ensure that your estate plan fulfills your intentions, talk to an estate planning attorney about the proper titling of your assets.

Find out if a living trust gives you a better estate planning solution than just a will.

Reference: Forbes (May 20, 2019) “For Estate Plan To Work As Intended, Assets Must Be Properly Titled”

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The Estate Planning Conversation To Have with Your Parents
Discusing Your Parents' Estate Planning Starts With Discussing Your Own

The Estate Planning Conversation To Have with Your Parents

Sometimes the way to ease into a conversation with aging parents about money and their estate planning plans for the future, is to start by discussing your own. You want to know about their estate plan or retirement finances? Start by explaining your own estate plan, how you’ve decided to set up your estate and then ask what they’ve done for themselves.

The conversation may feel awkward the first time you start it, says the Daily Local News in the article “Ask your folks about their financial plans,” but you need to get to where everyone is comfortable having the conversation. Your parents’ plans might impact yours, and visa versa. So, it’s good to talk, “early and often” about how they are planning for retirement and the high costs of retirement, including health care.

If something happens to their parents, the children are the most likely ones to step in and take charge, whether it’s caring for a surviving spouse or stepparent or of the entire estate. The more you know in advance, the better equipped you’ll be.

Your first real job is a good opening to talk about saving for retirement. Ask them what they did, or do, about 401(k) contributions. This will give you insight into how well-prepared and knowledgeable they are about retirement savings. If you’re house hunting, that’s an excellent opportunity to get them talking about their retirement plan. Do you need to buy a home with a possible “in-law” suite in mind? It’s not a bad question to ask. It shows that you are thinking about their future needs.

Untangling an estate when there’s no will and no advance planning has been done, can tear a family apart. That’s the last thing you or your parents want. Talking openly with them about money, trusts, wills, life insurance and advance medical directives, will give you an idea of what they have or have not done to plan for the future. It may spur them on to move forward with plans that they’ve procrastinated on.

Even if you learn that they haven’t done any planning and don’t have a will, that is better than not knowing until it’s too late. If you learn that this is the case, you can start educating them about what will happen, if they don’t meet with an estate planning attorney. You can offer to take them to meet your estate planning attorney or offer to get them a few names so that they can decide who they are most comfortable with.

Starting a family and setting up your own estate plan is another opportunity to ask your parents what they did and what their thoughts are about your plans. Their family may have never done any estate planning, and they might have more than a few family horror stories to share. In that case, you can help them change the family’s dynamic, by helping them to take a different path.

Learn how a trust is a fantastic estate planning solution.

Reference: Barchart (April 16, 2019) “Ask your folks about their financial plans”

Are You Spending Your Children’s Inheritance?
Spending Your Children's Inheritance or Preserving the Nest Egg

Are You Spending Your Children’s Inheritance?

Once you get to retirement, it’s important to identify what your goals are for your nest egg. Do you intend to spend it down enjoying your golden years, pursuing passions and activities that bring you and your spouse joy, or do you want to leave an inheritance to loved ones? The question, whether to spend your children’s inheritance, is posed in the article “Will You Spend Your Retirement Savings or Leave It Behind? The Answer May Surprise You,” from the Warwick Advertiser.

For many people, the goal of retirement is to do all the things that had to be put off while working. That might include a hobby that requires time and resources, travelling, purchasing a vacation home, or fulfilling a dream of going back to school. If that’s your retirement dream, bear in mind that these dreams all come with costs. Spending in the early stages of retirement often goes up, as retirees are still healthy enough to do everything on their bucket lists.

Given the reality of longer life expectancies, it’s important for retirees to understand that they may be living from their retirement investments for three or more decades. That means that you’ll need to have enough money to cover routine expenses plus health care and most likely, long-term health care services. Make sure your financial planning takes these factors into account.

Once you know how much money you’ll need for your costs of living and health care, plus inflation, then what’s left behind is your retirement fun money.

Knowing how to work within the constraints of a budget, is actually more important during retirement. You can’t just go back to work for a few decades, if you find yourself running short. You still may need to pick up a part-time gig on the side. However, that income is quite lower than a full-time position at the peak of your earning career.

What if leaving a legacy is more important to you than buying a second home? Just like the plan for retirement fun, you’ll need to do some financial planning to make this goal come to fruition. Remember that your legacy will include whatever is left at the time of your death, as well as what you may give while you are living.

Giving your children or grandchildren their inheritance while you are alive, is a way to enjoy the gift twice — once when you give and a second time when you see what they do with your gift. You might want to help the family reach their own financial milestone, like covering the cost of a college degree, helping with a deposit on a home or helping to pay off a mortgage.

Charitable giving may also be part of your legacy. If there is a charity, foundation, or alma mater that aligns with your values, you may choose to set aside a portion of your estate for a donation.

Regardless of whether you are planning on spending everything, giving away your assets to family members, or to a preferred charity, an estate plan is necessary to ensure that your wishes will be followed.

Your estate plan needs to include written instructions on how you want your assets to be distributed. That usually happens through a will, and trusts are often part of an estate plan. Make sure that you know what your beneficiary designations are—these are the people who are named in your insurance policies, investment accounts, IRAs, 401(k), or other retirement accounts. They will receive the assets as noted in the beneficiary designations, regardless of what your will says.

Learn more about preserving the nest egg.

Reference: Warwick Advertiser (April 18, 2019) “Will You Spend Your Retirement Savings or Leave It Behind? The Answer May Surprise You”