You don’t have to be famous to put your family through a living nightmare and you don’t want to have the leading role in your own estate planning pre-retirement horror story.
Maybe you heard the true story of a beloved grandmother laying in the morgue for several weeks while her children fought over the funeral service she wanted. Or the ones about the couple who almost completed estate plans but died before signing their documents. Many ex-spouses have enjoyed extra-comfortable retirements because their former spouses forgot to change beneficiary designations on IRAs and insurance policies. Estate planning attorneys like the ones at Beck & Lenox Estate Planning and Elder Law see terrifying stories every day, with more twists and turns than Hollywood can ever imagine.
Get the Treats, Not the Tricks
Avoid becoming a cautionary tale by addressing estate planning without delay. Couples who are close to retirement often justify putting off estate planning, putting it on their “to do” list for when they retire. This is a mistake, as pre-retirement is when earnings and IRA contributions are often at their peak.
First is Last Will and Testament
Drafting a will is the start of estate planning. The will is used to outline how you want your assets to be distributed after you die. You also use a will to name an executor to manage the estate. Naming more than one person seems fair if there is more than one child, but it can lead to disaster. It’s best when one person is in charge, with an alternate if the primary cannot serve.
Funeral instructions can go in a separate letter of intent. The letter of intent can be used as a supporting document if someone in the family challenges the will, but it is not a legally enforceable document. Use it to convey your wishes for a memorial service, burial, or cremation, faith-based or whatever kind of funeral you want. The will is usually not reviewed until after the funeral, so any instructions in the will may not see the light of day until after your remains are interred or cremated. Make sure your loved ones can quickly access the letter of intent when you pass away.
Tax Planning is Part of Estate Planning
In addition to a will, your estate plan should include tax planning. We cannot emphasize enough how important it is to avoid a horror story of your own making by getting this done in pre-retirement phase. Trusts are used to convey wealth to the next generation while taking assets out of the probate estate. Trusts are also used to create income streams, make charitable donations, and set goals for beneficiaries. Estate planning attorneys often refer to trusts as exerting “dead hand control” if they include conditions for distribution to heirs.
With a revocable trust, the grantor is both the trustee and the first beneficiary of the trust. Because the revocable trust allows the grantor complete control, there are no tax benefits to a revocable trust. When the grantor dies, a revocable trust becomes an irrevocable trust, and the assets are taken out of the taxable probate estate.
Preparing for the Loss of a Spouse
The death of a spouse is life’s most stressful and challenging event in life. Having both spouses protected with a last will and testament, power of attorney, living will, and healthcare power of attorney is the only way to prepare for this inevitable sad event. Once the estate plan is in place, you can feel more comfortable knowing when the worst occurs, you did what was needed to protect yourself and your loved one.
You do not want the leading role in an Estate Planning Pre-Retirement Horror Story. Contact Beck & Lenox for help during your pre-retirement stage so you and your family won’t have nightmares later. Click here to schedule a free phone call with one of our attorneys.