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What do you want your money to do? |
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Question: I read and hear people talk about having an
estate plan. Is that something you can purchase? I get the feeling it is
mostly for people that have a lot more money than I do. Answer: Often when people come to see me, they come as a
couple. We usually talk about what they want their money to do for them, which leads to a discussion of their life’s priorities and ambitions. Quite
often during this kind of discussion, a husband will gently take his
wife’s hand and say something like, “I just want to make sure that if
something happens to me, everything will be alright for her and the
kids.” This
is a wonderful sentiment and one I want to do everything I can to help him
see fulfilled. But each time some guy says that, I have to resist the urge
to smile. “…if something were to happen to me…” he says. “If?” I imagine myself saying at that moment, “…what
do you mean if? Did you get a different factory warrantee than I did?
Don’t you really mean ‘when?’” See what I mean? But if I smile at that moment, I’m really
going to make some guy mad. So I keep a straight face. But precisely because it is not a matter of “if” but
“when,” everyone needs an estate plan. An estate plan is your plan to deal with the problems and changes that will arise at your death. Not “if” you die…when. For most of us, our “problem” is that our estate is too
small. As a result, we will leave behind problems and obligations that
somebody will need to tend to. We have unfinished business to take care of. That’s why most people should have estate plans that
include the following: 1. Written instructions. This could be as simple as
a narrative letter serving as a master plan to let your survivors know
what to do. Make sure you include a list of where all your important
documents are located. 2. A will. A will is the legal version of #1.
It sets forth your instructions concerning the way your estate should be
divided. 3. A trust. A trust allows property to be held
by one party for the benefit of another. You may have children under the
age of 18. Or your adult children may not be as mature in money matters as
you would hope. Perhaps your spouse has never dealt with money during your
marriage and will need help with you out of the picture. A trust lets someone else manage money and assets for those
you leave behind. 4. Care of minors. If you and your spouse died
together, who would take care of your minor children? In my experience,
this issue alone keeps many couples from drafting wills. They can’t
agree on who gets the kids and so never resolve the issue. Pick somebody. If you don’t, you are relying on some judge
you never met to place your children with relatives he never met. Now
that’s a gamble! 5. Care of yourself. What if you and your spouse were in
an accident and one of you didn’t die, but was in a coma for months? If
you want to leave instructions about what to do, you’ll need special
legal documents to do so. Good intentions don’t count in the emergency
room. 6. Life insurance. Because most estates are too small, not too large, there is a gap when you are gone. The only way to replace your economic human life value is through life insurance. Just make sure you find an advisor you can trust and walk
through a reasonable calculation of how much life insurance you need.
Ninety percent of us should be able to figure it out on the back of a
napkin, yet Eighty-nine percent of us don’t. So get with an advisor who
will “make you” do what you really want to do anyway. Estate planning is not just for the rich and famous. It’s
for anyone who loves somebody else and wants to make sure his or her death
doesn’t cause any more grief than it has to. Byron
Moore
is a Certified Financial Planner and works mostly on fee-based financial.
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