Americans are notoriously hesitant to think about—let alone act on—end-of-life financial needs. That’s understandable given the taboo nature of dealing with one's own eventual demise, says The Street in its recent article, “5 Great Estate Planning Tips for the Rest of Your Life.”
A 2015 Everplans study found that 69% of Americans say they’ve seriously thought about drafting a will, but just 34% follow through and do it. Another 95% of the study participant 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 in 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 your estate plan is anything less than a will and some instructions, and you're a head of household with dependents counting on you, then you need to create a solid plan with a trusted estate planning lawyer, call 847-490-5330 today to speak with Rowley Law.
Reference: The Street (February 22, 2017) “5 Great Estate Planning Tips for the Rest of Your Life”