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Planning
Today for Today's LifeStyle.
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Have you ever noticed
that some discussions are easier to initiate than other discussions?
Interestingly, some of the most difficult discussions are with members of
our own family. Perhaps you can recall a few important discussions you
have had with your parents, your spouse or your children. Some of the
topics for discussion can be rather embarrassing to initiate…by either
party.
This article will review
one topic that every family needs to discuss sooner, rather than later. So, what is this topic? It is your
Life & Estate Plan.
The Challenge
Family members seem to
avoid discussions about their personal wealth, whether it is substantial
or modest. That said, have you had a frank discussion with your family
members about your wealth and your eventual post-mortem plans for it after
you are gone? For example: If you have adult children, do they understand
the How much do I inherit?, the When is it distributed to me?
and the Why are you treating me differently than my siblings?
issues regarding their inheritance? If they do not understand now, then
you might want to avoid any misunderstandings later.
A recent survey,
conducted by the AARP/Scudder Investment Program, found that the failure
to have this difficult discussion could trigger family fall-outs in the
future. The survey of Americans age 50 and over discovered that 20% of the
respondents experienced family fights over inheritance issues. However, of
the respondents reporting no conflicts, 63% said they had known
what to expect in advance and 82% of them believed they were treated
fairly.
These survey results,
together with abundant anecdotal evidence, clearly underscore the benefit
of meeting the challenge to discuss difficult inheritance issues with your
loved ones. Nevertheless, you should address other related issues to avoid
unexpected problems.
Incapacity Fiduciaries
As part of your difficult
discussions, be sure to address your plans for avoiding an expensive and
embarrassing court process in the event of your incapacity. Let your
family know who will be making your personal, health care and financial
decisions when you cannot, due to an injury or illness. Will it be one or
more family members, third-party professionals, or maybe a combination of
the two? While you are at it, be sure to discuss the game plan to handle
your potential Long-Term Care needs, including how you plan to pay for it!
Post-Mortem Fiduciaries
The reality of death can
be emotionally and even physically traumatic for the loved ones you leave
behind. Even so, many financial and non-financial matters must be resolved
promptly and correctly. Final expenses, bills and taxes will not wait to
be paid.
Your family should know
today whom the go-to person or institution would be when the time comes.
Do they? This will eliminate any unnecessary surprise and hurt feelings.
In addition, such advance notice will give your loved ones time to become
acquainted with the post-mortem fiduciaries (e.g. personal representatives
and trustees) you have selected, especially if they are third party
professionals. Similarly, any non-professionals you may have appointed
will have time to prepare for their future duties.
The Treasure Hunt
Were you incapacitated
(or worse) today, who would know where you keep all of your important
financial and legal papers? Have you created an inventory of your assets?
Have reviewed and recorded the ownership arrangements, as well as the
beneficiary designations, regarding these assets? Are the titles and
designations current? Will your final legacy to your family include an
unpleasant Treasure Hunt through your various papers and effects? To make
matters worse, how will they know when the Treasure Hunt is
completed?
A little bit of time
identifying, organizing, valuing and updating your asset inventory now
will pay big dividends when your incapacity or post-mortem fiduciaries
assume their responsibilities. [Note: During an asset inventory, more than
one person has discovered that an ex-spouse is still an unintended
co-owner or beneficiary of their assets.]
Conclusion
Like most things in life,
prior planning is the key to success. However, when it comes to your Life
& Estate Plans, the proper planning and open communication today are
essential for family harmony later.
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