The Adamses realize that they may have to add new provisions including key man insurance, which provides business owners with funds to hire a replacement, pay off debt, or buy time until the business assets can be liquidated and the business closed should one of the owners die. The Adamses are also exploring long-term care options and disability insurance.
“Our business has grown, our entire financial plan has changed,” says Todd, “so we are looking to meet with our financial planner to reassess our insurance needs.
HOW THEY DID IT
• Get professional advice. “Find an attorney that specializes in estate planning,” says Todd. Working with a professional will not only help you get started, it will also ensure that your plan is valid under current state law. After asking family and friends for recommendations, the Adamses spoke with several attorneys and developed a short list.
• Select guardianship with care. “Sometimes you look at people and think they may be the perfect person to raise your children,” says Montrie, “but they may already have enough children or other obligations. Who you think might be best is not always best.” Although it is for the Adamses, the person you select as guardian does not have to be trustee and executor. You can select one person to care for your child, someone else to manage the checkbook, and another person to carry out your will.
• Get organized. Make sure to designate beneficiaries on your savings accounts and other assets not outlined in your will. Organize your personal and financial records and prepare a written summary. Keep the information in a safe place and be sure the right people know where it is. The Adamses store their documents in a bank safe-deposit box, which contains their homeownership documents and bank, securities, and retirement account statements. They have reviewed the documents with Todd’s sister.
• Pay attention to your state’s tax structure. Estate tax is imposed on the transfer of property at your death. Currently only estates and lifetime gifts that exceed $1 million are taxed. For more information, visit www.irs.gov.