Estate Planning 101: Seven Moves to Make Now
Waiting too long can be a big mistake.
Ted Sarenski, a financial planner in Syracuse, N.Y., tells the story of one such literary cache by way of reminding people to not only get organized about estate plans but to not keep them secret from loved ones.
It seems an elderly Pennsylvania man hung on to so many personal items that it took his children a year to go through the clutter after he died. His many books were targeted for charity or the garbage.
Then a book popped off a shelf and money fell out. By the time his kids went through the others, they tallied up about $15,000.
"People do strange things with documents and cash," says Sarenski, who's also an official with the American Institute of Certified Public Accountants. "Give that next generation an idea they might find some hidden treasure, if that's what you're doing."
Sharing your plans is possible only after you make them, of course. Here are some essential priorities to focus on concerning estate planning:
1. Start Your Plan Now
Many people think of an estate plan as something for when you're elderly or on your deathbed. But everyone needs one. An estate plan is a way to manage and protect your assets while you are alive as well, as to conserve and control their distribution after your death.
The end of the year provides an ideal time to finally get into gear on a task that typically languishes on the bottom of to-do lists -- if it's there at all.
"No one really wants to think about estate planning," says Donna Morgan, an estate planning attorney at Mayer Brown in Chicago. "But it's much more pleasant to think about when you're in good health. You can make better decisions and not be so upset by the issues when it all seems so theoretical and academic."
2. Update Your Beneficiaries
Check to see that your beneficiary designations are correct on your company pension plan, life insurance policy, 401(k), IRA or other retirement accounts.
Failing to update them is perhaps the most common error in estate planning. Ex-spouses or parents who are no longer alive remain listed all too often, leaving your money to go where it wasn't intended. Your children or siblings may get what your deceased parents would have. But you probably don't want to have to count on a probate court and state law to decide how it's divvied up.
Putting an extra name on an account is a similar mistake. When an elderly parent puts a child on a bank or mutual fund account for convenience sake, the child can take what's left when the parent dies. Account titling takes precedence over a will or trust so, in this case, siblings might be left without an inheritance.
"These mistakes can cost you and your beneficiaries a lot of money," says Leonard Wright, a San Diego accountant.
3. Name a Guardian
The hardest decision for many couples is naming a guardian for their minor children -- his parents, her parents, a sibling, friends? It's a weighty request to make of any loved one, and not being chosen could cause hurt feelings too. So frequently couples do nothing.
Don't dodge a decision with such important consequences.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter