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When You’re Drafting a Will and Making Other End-of-Life Plans, Remember These Five Keys to Basic Estate Planning

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The statistic may be a year old or so, but we doubt if things have changed that much since last April. According to reports from CNBC and elsewhere, only about one-third of Americans have written estate planning documents in place. The biggest reason for failing to put even a basic plan into effect? Resp0ndents say “they just haven’t gotten around to it.”

That dismal figure helps explain why we here at AgingOptions and Life Point Law put so much emphasis on the importance of estate planning: we keep hoping that sooner or later even our most hesitant readers are going to get around to taking this essential step. With that in mind, we’re suggesting you consider this more recent CNBC article in which reporter Sarah O’Brien provides five helpful pointers about estate planning. We’re calling them “five keys.” They’re practical and basic points to bear in mind as you set about the task of planning for the proper disposition of your estate.

A thorough estate plan is a gift for your family, legal experts agree. Moreover, as we’ve said before, estate planning is not just for the wealthy, but for just about everybody. Sarah O’Brien provides some helpful and concise food for thought.

Don’t Leave Family Members in the Lurch

“Contemplating your own death may not be on the list of things you’re eager to do,” O’Brien begins. “Yet for your family or other loved ones who would find themselves trying to sort out your affairs while also dealing with the emotional fallout from losing you, your having a so-called estate plan is important, experts say. And this is the case whether you are wealthy or not.”

Lisa Kirchenbauer, founder and president of Omega Wealth Management in Virginia, agrees. She told CNBC’s O’Brien, “When you get your things in order, it’s a gift you’re giving your family.”

At its most basic, an estate plan simply spells out who will make decisions about your estate and who will inherit what you own. And while “estate” sounds grand, it really just means your possessions and other assets.

“Experts say most estate plans don’t need to be complicated,” O’Brien writes. “But to make sure your wishes are carried out, they do need to be done correctly — which may make it worth consulting with a local attorney who specializes in estate planning.”

The following are five key things to know in considering crafting your estate plan.

Key #1: A Will May Leave Major Gaps

The “Last Will and Testament” is potentially the most recognizable element of your estate plan thanks to its role in countless books and films. Your will is considered basic equipment. “It lets you identify who you want to receive certain property and allows you to name a guardian for dependent children,” O’Brien writes. “If you don’t have a will in place when you die, the courts may decide who gets what or who is appointed guardian.”

But the will is not the complete picture, and there are certain assets that aren’t included in it. These include retirement accounts—such as 401(k) and individual retirement accounts—as well as life insurance policies and annuities. Because of this, the beneficiaries listed on those accounts will supersede any instructions in your will.

South Carolina-based CFP Stephen Maggard warns, “If your ex-spouse is listed on the beneficiary designation, your ex-spouse will get the money regardless of what your will says.” Needless to say, this can come as a shock.

O’Brien adds, “Be aware that many 401(k) plans require your current spouse to be the beneficiary unless they legally agree otherwise. Regular bank accounts, too, can have beneficiaries listed on a payable-on-death form, which your bank can supply. Same goes for brokerage accounts. If no beneficiary is listed on these various accounts or the named person has already died (and there is no contingent beneficiary listed), the assets automatically go into probate.”

Probate is the process by which all of your debt is paid off, and the remaining assets that are subject to it are distributed to heirs. “This can last several months to a year or more, depending on state laws and the complexity of your estate,” O’Brien writes.

Key #2: Choose Your Executor and Other Key People Carefully

Your executor is the person who will carry out your wishes and handle your estate after your death. As such, it’s a big job with big responsibilities attached, and your choice of executor needs to be considered carefully.

O’ Brien writes, “Things such as liquidating or closing accounts, ensuring your assets go to the proper beneficiaries, paying any debts not discharged (i.e., taxes owed) and even selling your home could be among the duties overseen by the executor.”

She adds, “Additionally, an estate plan should include other end-of-life documents, including a living will. This outlines the health care you want and don’t want if you become unable to communicate those desires yourself. You also can assign powers of attorney to trusted individuals so they can make decisions on your behalf if you become incapacitated at some point.”

Of note, the person who is given the responsibility for decisions overseeing your health care is very often different from the person you name to handle your financial affairs. Alternatives and backups are always a good idea, just in case someone is unable or unwilling to fulfill their role. 

Key #3: With Some Assets, It’s Better to Give After You’re Gone

It may seem counter-intuitive, but if you have certain assets—such as stocks, bonds, or real estate—and you are thinking of giving them to your heirs while you are still alive, you might want to reconsider.

“When these assets are sold, any increase from the so-called cost basis (the value when the asset was acquired) and the sale price is subject to capital gains taxes,” O’Brien explains. “However, upon your death, your heirs who inherit those assets get a ‘step-up in basis.’ In other words, the market value of the asset at your death becomes the cost basis for the heir — which generally means any appreciation prior to that is untaxed. And when the heir sells the asset, any gains (or losses) are based on the new cost basis.”

Alternatively, if you gift those appreciated assets to your heirs before your passing, they would assume the original cost basis and could potentially be slapped with an outsized tax bill when the assets are eventually sold. 

“We find ourselves often recommending that clients give adult children cash instead,” Maggard says.

Key #4: You May Benefit from Setting Up a Trust

There are plenty of reasons why you may not want to give certain of your heirs immediate access to a sudden amount of cash, especially if they are very young or have problems handling money. In cases like this, you can consider creating a trust to be the beneficiary of a certain asset. 

“A trust holds assets on behalf of your beneficiary or beneficiaries, and is a legal entity dictated by the documents creating it,” O’Brien writes. “If you go that route, the assets are left to the trust instead of directly to your heirs. They can only receive money according to how (or when) you’ve stipulated in the trust documents.”

There are many other, more sophisticated uses for a trust, including the Safe Harbor Trust which we featured on the Blog a few weeks ago. We hope you’ll contact us so we can demonstrate some of the many uses for this powerful estate planning tool.

Key #5: Your Estate Plan is NOT “One and Done”

Every major life change is a perfect occasion to review your estate plan, especially the birth of a child or a change in marriage status. “You’ll want to confirm that your named executor (or trustee, if you set up a trust) is still an appropriate choice,” O’Brien writes. “Additionally, check all listed beneficiaries on your financial accounts to make sure no updates are needed.”

Moving to a new state? Be sure that your estate plan follows the new state’s laws.

In every new season of life, you want to make sure that your estate plan perfectly reflects your wishes as closely as possible to ensure a much easier transition for your loved ones.

Breaking News: Rajiv’s New Book is Here!

We have big news! The long-awaited book by Rajiv Nagaich, called Your Retirement: Dream or Disaster, has been released and is now available to the public.  As a friend of AgingOptions, we know you’ll want to get your copy and spread the word.

You’ve heard Rajiv say it repeatedly: 70 percent of retirement plans will fail. If you know someone whose retirement turned into a nightmare when they were forced into a nursing home, went broke paying for care, or became a burden to their families – and you want to make sure it doesn’t happen to you – then this book is must-read.

Through stories, examples, and personal insights, Rajiv takes us along on his journey of expanding awareness about a problem that few are willing to talk about, yet it’s one that results in millions of Americans sleepwalking their way into their worst nightmares about aging. Rajiv lays bare the shortcomings of traditional retirement planning advice, exposes the biases many professionals have about what is best for older adults, and much more.

Rajiv then offers a solution: LifePlanning, his groundbreaking approach to retirement planning. Rajiv explains the essential planning steps and, most importantly, how to develop the framework for these elements to work in concert toward your most deeply held retirement goals.

Your retirement can be the exciting and fulfilling life you’ve always wanted it to be. Start by reading and sharing Rajiv’s important new book. And remember, Age On, everyone!

(originally reported at

Need assistance planning for your successful retirement? Give us a call! 1.877.762.4464

Learn how 70% of retirement plan fails and find out how you can avoid this

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