3 Steps for Financial Legacy: Proper Estate Planning is Key

Guest Blog Post By Kris Miller 4/20/2012

What did Heath Ledger, Marilyn Monroe, Michael Jackson, John Wayne, Jacqueline Kennedy Onassis, Princess Diana, and Anna Nicole Smith all have in common? They all had lousy Wills – and because of this, their deaths left not just emotional turmoil for their friends and families, but also created financial uncertainty, legal battles, and expensive, long-term, court-ordered supervision of the estates, draining the assets away from the people they wanted to protect and care for. In other words, their financial legacy was one of frustration and confusion..
No matter what your net worth, whether you have assets of millions or thousands, you need to have a basic estate plan in place.  What exactly is an estate? Your estate consists of all the property you own at the time of your death, including real estate, bank accounts, stocks and other securities, life insurance policies, and personal property such as automobiles, jewelry, artwork, and household items. Having a comprehensive plan for all these items can resolve many legal questions that may arise after you die, such as:  Who gets what? Does a personal guardian need to be appointed to care for minor children? How much tax will need to be paid in order to transfer property ownership? What funeral arrangements are appropriate? In essence, a good estate plan ensures that your wishes are carried out, that your family’s future financial goals are met, and that you leave a positive and empowering financial legacy for those you love.

Realize that having a will is not enough. A will, written and signed properly, directs “who’s in charge” and “who gets what” from your assets at the date of death, but it’s of no use before you die. If you become incompetent, a will doesn’t control your assets or designate who can make healthcare decisions for you. After you die, a will doesn’t avoid probate of your estate. In fact, a will can be a one-way ticket to the endless fees and delays of probate court.

If your financial life is simple and straightforward, you may actually be able to create your estate plan by yourself. However, if you have multiple bank and investment accounts, real estate investments, or a non-traditional family situation, you may want to consult with a lawyer. Regardless of which route you pursue, here are three suggestions to get you started. I’ll share more next month. 

• Take inventory of your assets. Your assets include your bank and other investment accounts (such as money market or mutual funds), retirement savings, insurance policies, and real estate or business interests. After making a list of all your assets, ask yourself three important questions: Who do you want to inherit your assets? Who do you want handling your financial affairs if you’re ever incapacitated? Who do you want making medical decisions for you if you become unable to make them for yourself?

• Discuss your estate plans with your heirs. Inheritance can be a loaded issue. By being clear about your intentions, you help dispel potential conflicts after you’re gone. Even if your family is close and loving today, the potential for gain can, and often does, cause people to act out of character. By being open, honest, and clear with people upfront, you can minimize conflicts later.

• Create and fund a living trust. A living trust is a useful tool for managing your assets during your life and following your death, and it enables you to avoid the time and expense of the probate court. Trusts, however, only manage those assets that you officially transfer into trust. So once your trust is set up, be sure to transfer your assets into your trust. For assets with a legal title, such as real property and automobiles, you have to change the title into the name of the trust (although in some states you can keep the car registered in your name but use a “transfer on death” title so that the car is automatically registered to the person you name on the title). For non-retirement accounts, you can simply contact your bank or the portfolio manager of your accounts and request that they change the title on your accounts from your name to the name of your living trust (some banks have accounts that are “payable on death” to a specific beneficiary). For assets with no legal title, such as household goods, you simply include them in the list of trust assets in a “schedule” at the back of the trust document.

Leave Your Mark

Granted, no one likes thinking about their mortality. And there’s always something else vying for your attention, forcing you to put estate planning on the back burner. But when you take the time to plan for the inevitable, you ensure that your assets are preserved and properly executed, thus eliminating the need for your heirs to take the expensive, time-consuming path through the courts. Ultimately, good estate planning is the only true way to leave a financial legacy—one that protects your loved ones and shows them what is possible when you simply take the time to do it.

About Kris Miller

For the past 20 years, my clients have relied on Kris Miller as a PREtirement and living trust expert. Kris has become known as The Money Maestro. Credentials for Kris Miller: ChFEBS, CSA, LDA Certified Senior Advisor and Estate Planning Specialist for more than 20 years Charted Federal Employee Benefit Specialist Licensed Legal Document Assistant (Paralegal in California) Licensed to offer life insurance and long-term care insurance (State of California and Tennessee) Owner of Trusts Unlimited and The Living Trust Institute, a legal and financial document preparation service Member, Society of Senior Advisors Member, National Speakers Association Experienced speaker offering keynotes, seminars, and workshops on retirement and estate planning throughout the United States Nominated as 2010 Woman of the Year and best Customer Service by the Hemet, California, Chamber of Commerce Nominee and winner in three categories in the National American Country Music Awards and Inspirational Country Music Awards for songwriting (2008, 2009, 2010) Nominated Inspirational Music’s Songwriter of the Year