Monday, June 30, 2008

Divorce and the Estate Plan

Yahoo Finance featured a story today about the importance of reviewing and updating your beneficiary forms following a divorce – you would not want to unintentionally leave an ex-spouse, or ex-partner, named as a beneficiary! Regardless of what your will says the beneficiary form controls property held in retirement accounts and life insurance policies.

Upon divorce, one would hope that the attorney handling the case would either work with you to update your will or refer you to an attorney who specializes in estate planning. Competent attorneys should alert the client about the need to review and update beneficiary forms at the same time a will is created or updated.

And remember, not just your divorce could impact your estate plan. Have the people you named as guardian for your minor children gone through a divorce or is the marriage experiencing stress, creating a less than ideal home for your child to move to if needed? If so, then amending your will to select another person or family would be a good idea.

Sunday, June 29, 2008

The Emotional Side of Estate Planning

Crafting one’s will commonly tends to be a dispassionate exercise in assigning someone’s name to an asset. Clients focus on the big items: the house, the mutual funds, the bank accounts. While obviously essential to crafting an estate plan, this limited scope is insufficient.

Have you thought about who should have your wedding band, family photo albums, your grandfather's hunting rifle? People often overlook the importance of family momentos, which can mean a lot to younger generations as well as cause disagreements after a loved one is gone. There is also the question of who should have certain responsibilities, such as the personal representative (a.k.a. executor) or guardian of your minor children. Is a family member the right choice? If so, which one? Again, who you select for these roles is important, and can ignite family tensions.

Delving into the emotional side of estate planning is not an easy task, which probably lies at the heart of why so many people avoid it. There is a wonderful book written for the general population that walks a person through the emotional aspects of doing a will.

I routinely recommend Creating the Good Will: The Most Comprehensive Guide to Both the Financial and Emotional Sides of Passing on Your Legacy to clients and seminar attendees.

Thursday, June 26, 2008

Is A Trust Right For You?

Despite being around since 12th Century England, trusts are still very much talked about subjects. Yet, despite their popularity, trusts are not necessarily for everyone. Trust creation is not an easy undertaking. So why are trusts still so popular? A reason I commonly hear from seminar participants and clients is that it helps avoid estate taxes. However, that is not true – most trusts do not help you avoid estate taxes!

The following are key advantages of trusts:
-Avoid probate. A properly funded trust is a non-probate asset, meaning that property held in the trust does not fall under the jurisdiction of the probate court. This means that the assets can be transferred upon death to the beneficiaries, avoiding probate. This saves time and probate fees. When deciding if a trust is for you, always compare what it would cost to transfer your assets through probate versus the cost of creating and funding a trust. Probate is sometimes less expensive.
-Keep matters private. Matters filed with the probate court are public record, open to inspection. Trusts however, are private transactions.
-Control. A trust allows the grantor to write instructions on the use of funds – often limiting them for health, education, and maintenance. Also the role of trustee allows the grantor to assure that the management and spending of the trust is overseen by someone other than the beneficiaries, who often are too young or inexperienced to manage the assets.

Trusts can be time consuming and expensive, but they can also accomplish significant goals. Certain circumstances call for a trust, either Living (created and funded during life) or Testamentary (created upon death via instructions in a will). Those include people who:
-own property in multiple states,
-own substantial real estate,
-would like assets controlled if both parents die; and
-those who have family members with special needs.

If you feel a trust is right for you, seek advice from legal counsel who can advise based on your specific life situation.

Wednesday, June 25, 2008

Electing Cremation in Wisconsin

In March 2008, Wisconsin Governor Jim Doyle signed into law 2007 Wisconsin Act 58 (Assembly Bill 305). Codified in Section 154.30 of the Wisconsin Statutes, the law allows an individual, during life, to appoint a representative to carry-out funeral and disposition arrangements. One important new right under the law is that it allows a person, during life, to indicate his or her desire to be cremated. Until this law passed, this was not an option, often opening the door for a person's loved ones to disregard the deceased's wishes.

Form DPH 0086, Authorization for Disposition, is available on the Department’s web site. The document allows an individual to express special directions concerning religious observances and, making suggestions about arrangements for viewing, memorial services, graveside service, or other last rite rituals.

In a time of increased interest in all things green, and frugal, this law is a wonderful addition to Wisconsin statutes. A person can now secure his or her desire to be burried, or have other funeral wishes followed, in an easy and affordable manner.