Contrary to what the insurance companies would have you believe insurance agents are not estate planners. They provide life insurance products that assist in the completion of the estate planning process. Lawyers are the professionals that you should see to complete an estate plan which, in some cases, would also involve your accountants and insurance and investment professional.
Estate planning is simply a method of facilitating who gets what when you die and who manages what for your benefit while you are living. It also provides instruction if and when you are unable to speak for yourself and who you want to speak for you. You can also name someone other than a family member to manage your money if you are unable to do so for yourself. Most people think of a bank as custodian.
While some think that tax reduction is a primary aim of estate planning- it isn’t. True, there are methods and means of reducing estate tax legitimately but estate planning solely for tax reduction is not the main purpose. Estate planning is to provide an orderly method of disposing of all the stuff we’ve accumulated in our lifetime. If, for example, you own a Mercedes and a Dodge pickup you want the right people to get the right vehicle without creating a fuss. If you simple say give my cars to Joe and Pete there could be a disagreement stemming from who gets what.
Estate planning shouldn’t be considered only as something people do in contemplation of death. Estate planning should also be considered as a living benefit. It is an important element for those people that may live for a very long time but are disabled through sickness or accident. They could have a stroke, develop Alzheimer's or be paralyzed and those charged with caring for them need instructions on what to do for them and how to do it. There are greater odds of this happening in the middle life years than death.
Estate planning also isn’t something just the elderly do. Making a will, deciding who should be guardians of underage children and making sure that there is enough insurance, cash or liquidity to take care of necessary living expenses for spouse and children is a responsibility for those married and with children under the age of majority.
In the early years of marriage often there is no money or assets to leave. The answer in that situation a substantial term life insurance policy can be all the estate planning one would need. Add a will that provides instruction for guardianship and instructions on who should administer the funds for expenses and seemingly complicated estate plan gets boiled down to basics.
An estate plan is not something you do once and put on a shelf. It is, to be effective, something revisited and brought up to date every few years to reflect lifestyle and wealth changes.
To get an estate planning checklist call your lawyer or if you need a referral call me and I’ll be pleased to provide the names of a qualified professional in your neck of the woods.
Questions call Paul @ 877 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.
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