Exit Gracefully

Follow these safeguards to make sure wealth is transferred to the next generation

how large an estate you actually have.

Decide where your wealth will go.
Do you want your assets distributed to family members, friends, or charities, and what is the best way to do that? Here, your attorney’s expertise in determining how to execute your wishes is key. For example, says Douglass, “If a person says, I really want to leave something to my children, but one of them has a credit problem, that lets you know that child’s share needs to be left in a trust.”

Decide whom you want to be in charge.
You’ll need an executor, who makes sure your estate is administered properly in accordance with your will; trustees, who are responsible for all financial decisions and the administration of any trusts that are set up; and guardians for minor children, whom your children will actually live with and will serve as the guardians of any property.

Prepare your will.
Once you have all the biographical background information, your assets and liabilities, an understanding of how you’d like to distribute your assets, and who will be in charge of that process, then you are in a position to prepare a will. “The will should be prepared, taking into account the client’s desires as well as the most tax advantageous planning you can do,” says Douglass.
Prepare powers of attorney.
In addition to the will, these documents are crucial to the estate plan. The financial power of attorney and medical power of attorney protect your estate by allowing someone you trust to handle your financial matters and make medical decisions for you if you are incapacitated or disabled. As part of their plan, Dahari and Michelle Brooks have executed powers of attorney so they will be able to act on each other’s behalf.

Buy adequate insurance.
Make sure to purchase disability insurance as income replacement in case of injury or illness. Douglass says life insurance provides immediate cash to use for administration costs, such as the funeral, hiring an attorney, or carrying the mortgage until you can sell the house. It can also provide income replacement for the family breadwinner (the general rule is a death benefit equal to a minimum of 10 years of income).

Think about trusts.
An experienced attorney can help you create trusts that serve multiple purposes, from asset protection while you are alive to long-term financial security for your loved ones after your death. Douglass also suggests considering an irrevocable life insurance trust.

Clarify your beneficiaries.
Life insurance, annuity, and retirement accounts will go to the people you list on the beneficiary designation forms, NOT to the names on your will. “Your estate planning attorney needs to coordinate all of your beneficiary designations,” says Douglass, and “make sure all your property is titled in accordance with the overall estate plan.”

Keep the plan current.
Douglass suggests updating your plan every three years, whenever you experience a change of life circumstance, or if you hear about changes in laws governing estate planning and taxation.

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