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Planning
Today for Today's LifeStyle.
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Prince or pauper, life’s journey eventually
comes to an end for us all. Death, it has been said, is an equal
opportunity experience. When your appointed time arrives, will your loved
ones find your personal and financial affairs in order or in disorder?
What grade will they give your Life & Estate Plan once it has passed
through the three basic stages of Estate Administration? These basic
stages are Collection & Management, Payment of Creditors, and Asset
Administration & Distribution.
Collection &
Management
The initial responsibility of your
appointed fiduciaries will be to identify, safeguard and insure your
assets. Unfortunately, if they cannot identify your assets, then it will
be impossible to safeguard and insure your assets. Have you created and
maintained an up-to-date inventory of your assets? At a minimum, your
inventory should provide sufficiently detailed information about your
assets so your fiduciaries can find them.
If you have a properly funded Revocable Living
Trust along with a current inventory of all of your assets, then you will
dramatically lighten the Collection & Management burden on your
fiduciaries. Nevertheless, even if your Life & Estate Plan does not
include a Revocable Living Trust, a current inventory will spare your
fiduciaries considerable time, aggravation and money in fulfillment of
their initial responsibility.
Pay Expenses
With your assets collected and under
management, your fiduciaries are ready to begin paying the expenses you
left behind. These expenses include satisfaction of your just debts, your
remaining tax liabilities and your various post-mortem expenses. Time is
of the essence in resolving these financial loose ends.
Your fiduciaries will be held personally liable
for failing to dot all of the i’s and cross all of the t’s when it
comes to dealing with the creditors of your estate, to include the IRS.
This potentially unending liability extends beyond third-party creditors
to your own estate beneficiaries. For example, certain post-mortem
planning techniques, such as various elections and disclaimers must be
exercised prior to filing the federal estate tax return (due within nine
months of your death). The failure to properly exercise such post-mortem
techniques may result in adverse tax and non-tax consequences.
Asset Administration
& Distribution
Assuming your fiduciaries still have
assets under management after paying your debts, taxes and expenses, then
it is time for them to fulfill their final responsibility to administer
and distribute your assets as stated in your Life & Estate Plan. This
is the moment of truth: Will your assets be protected both for and from
your loved ones…or will they be lost through their divorces, lawsuits,
bankruptcies and squandering? Without proper Life & Estate Plans for
this stage of Estate Administration, your fiduciaries may have no choice
but to deliver your assets to parties you would otherwise intend to
disinherit, rather than to your loved ones. Like trying to put toothpaste
back in its tube, once you are gone the opportunity to change your
administration and distribution plans is lost.
Alternatively, consider taking steps now to help
ensure a successful conclusion to your Life & Estate Plans. For
example, remarriage provisions may help protect your assets for your
surviving spouse and children. Long-term discretionary trust provisions
may protect your assets both for and from your heirs, even for unborn
generations in perpetuity. You worked a lifetime for your assets, but
without proper planning your financial legacy can be taken or lost in the
blink of an eye.
Aside from your tangible financial legacy, have
you considered leaving an intangible character legacy for your loved ones
as part of your Life & Estate Plan? For example, you might write
individually addressed last letters to remind your loved ones of your love
and your confidence in them to press on to their own successful
conclusions. Take time today to draft these last letters. Write the
letters in your own hand. This is a lost art in this computer age of word
processors and email. Then, in your Life & Estate Plan, instruct your
fiduciaries to mail these last letters to your loved ones after your
debts, taxes and expenses have been fully satisfied. By the way, the
inventory of your financial assets is an excellent place to keep both
these last letters and the instructions for their delivery.
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