14th Feb 2017
Nobody wants to think about their death. However, since there is a 100% chance that we will one day leave this world, we must make provisions for those we leave behind. Most people draft a will and think that will leave everything settled. They meet with their lawyers, draw up an official will and then don’t think about it ever again.
However, in reality, the majority of us will leave behind estates that are valued under $5 million, which may not seem like a lot, but once you factor in funeral expenses, estate taxes and the like, that doesn’t leave much for your loved ones.
So what can you do to ensure that your loved ones are getting what you promised in your will? There are other things you can do besides simply preparing a last will and testament to protect your belongings and investments.
There are certain scenarios on which you will need more than a will to cover your assets and provide for your loved ones. Some of these situations are as follows:
- You are in the possession of enough assets to be subject to either (or both) federal or estate taxes upon your death
- The total gross market value of your estate is greater than $150k.
- You have specific provisions in your will
- You have a child or ward with special needs
- Your assets such as stocks, bonds, etc. have greatly appreciated since your original purchase
- In the event or divorce and/or children from previous marriages
- You have reason to believe that someone may try to contest your will
- You want to avoid the probate process
Other factors to consider when planning for the event of your death include:
- Power of Attorney: POA legally enables someone to speak and act on your behalf should you die or become too incapacitated to communicate. Choose your power of attorney wisely, as this person will be your representation in the event of your death or should you are deemed incompetent.
- Trusts: If you place your assets in a trust it will save your beneficiaries the hassle and expense of probate. As well, you can set up terms in the trust that will prevent your heirs from blowing through your inheritance unwisely or unjustly.
- Health Care Proxy: If you designated a health care proxy, they will be able to make medical decisions for you if you are unable to make them on your own.
- Living Will: This document will be your specific guidelines as to whether or not you wish to have life-saving attempts, etc in the event of an accident or the like.
- Beneficiaries: If you designate beneficiaries, any retirement accounts, life insurance policies and payable-on-death accounts will be directly transferred to the beneficiary without having to be subject to probate.
- Details for Final Arrangements: As morbid as it may seem, thinking ahead and planning some of the details for your burial can save your loved ones a lot of time, money and grief during their time of mourning. You should include details such as would you prefer to be buried or cremated, where you would like to be laid to rest and other personal details.
- Letter of Intent: For those who have dependants, a letter of intent will give detailed information as to the care of your children. It includes all pertinent information such as the following:
- Social security information
- Birth dates
- Health information: allergies, medical conditions, vaccination records, etc
- Educational information
- And any information you feel is important for the designated guardians of your dependants such as family traditions, extracurricular activity information, and so forth.
The Importance of Beneficiaries
Unbeknownst to most, the majority of assets such as retirement plans, IRA’s, life insurance benefits, etc. are only able to be left to a designated beneficiary. In fact, a beneficiary designation automatically trumps a last will and testament, no matter how recently the will has been drafted.
Basically, a will is an overall plan…A general outline of your intent for what will happen to your assets after your passing. However, the specifics and details of each provision are covered in great depth and detail in items such trusts and living wills. Also, as mentioned above, it is imperative to cover areas such as power of attorney and a health care proxy in the event that you are unable to make a decision of your own volition.
As you can see, there is a great deal to think about when it comes to providing for your loved ones after your demise. There are some things you can do to make this transition and time of grief easier for everyone.
You should ensure that all of your documents are current and up to date. No one can predict their time of death so it is imperative to keep your documents as current as possible. In the event of divorce or death of one or more of your designated beneficiaries, you need to make sure that all relevant provisions are made. Also make sure that all contact information, social security numbers and other critical information is up to date. Any discrepancies can cause a delay in the proceedings. This includes any and all life insurance policies, IRA’s, trusts, living wills and so forth.
If you have any questions about your last will and testament, beneficiary issues or any other matters related to estate planning, feel free to turn to Tomkins Law for legal advice. We have years of experience when it comes to estate planning. Contact us at 1-714-385-0044 for a free consultation. Planning for your death is a difficult topic and should not be handled lightly. Count on our expert advice for help in these matters.