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Benefit Consulting Group (BCG) is a full-service investment advisory firm offering you highly customized and sophisticated financial advice, investment solutions and brokerage services to help you meet your financial goals and objectives.
Estate Planning—Not Just for the Wealthy
You don’t have to be rich to utilize the benefits of estate planning. Everyone should have a plan, regardless of how simple, that will ensure your goals for family and finances are met after you die. Of course, the bigger and more complex your estate becomes, the more important it becomes to be sure that you your assets are protected and disbursed according to your desires rather than leaving them for the state to handle—at great cost.
Estate planning falls into two categories: financial and legal. To ensure that every item has been considered and that it will stand up in court, you should consult a qualified financial planner with extensive experience in estate planning, and work together with an attorney who specializes in estate planning. Every estate plan should include at minimum a will, assignment of power of attorney, and a living will or healthcare proxy (also called a medical power of attorney. But even small estates may benefit in a host of other ways. Following is a list of the basic elements of a sound estate plan.
Twelve Things You Should Consider For Your Estate Planning
- Prepare a will. In the absence of a will when you die, you may be leaving your estate in the hands of the state which can be very costly and could take a long time to clear what’s left of your estate through probate court. Dying without a will (intestate) also leaves your heirs with no say over how your assets are divided which can cause great stress amongst your heirs. Another important function of a will for parents with young children is that if makes clear how your children will be cared for should their parents die.
- Complete a living will. Consider what would happen if you were not able to function mentally but remained alive. For example, would you want your entire estate to be exhausted trying to keep you alive even if you were unconscious with no chance for recovering? By completing healthcare directives and healthcare power of attorney, you are able to clearly define your wishes under various situations where you are not able to make decisions for yourself and who will carry out those decisions.
- Designate a financial power of attorney. As with a living will, you want to be sure that your wishes are carried out after you die or if you become unable to think for yourself. A durable power of attorney legally recognizes an individual (does not have to be an attorney) who you have designated to oversee your estate. This is particularly important if you have minor children.
- Discuss your estate plans with your family. Working with an estate planner can help you to more easily discuss uncomfortable topics such as how you wish your assets to be divided. Knowing in advance can prevent many problems.
- Complete a detailed inventory of your assets. Even people with modest estates are surprised to see a list of their possessions. It could be as simple as remembering your grandmother’s wedding band that you think would be cherished by a daughter or niece, or as complex as listing all of the contents of multiple home. Your assets will include insurance policies, investments, real estate, and bank accounts in addition to your physical property.
- Consider establishing a trust. An estate attorney can tell you if a trust will benefit your estate. For example, depending on your assets, holding your property or a portion of your property in a living trust could prevent your heirs from having to go through probate court, a time consuming and expensive means of determining the disposition of assets.
- Employ life insurance. Many people think of life insurance only as something they pay for to leave a check to someone else when they die. The fact is, life insurance is a very flexible financial tool that can provide funds during your lifetime, protection for your assets and your estate, and of course, funds for your heirs when you’re no longer there for them. A BCG estate planning or life insurance specialist can provide tremendous insight into how life insurance can benefit you.
- Be sure you have named beneficiaries. Over time, your beneficiaries on insurance policies and investment accounts may change. When you take an inventory of your assets, it is a good time to review and update your designated beneficiaries. Your estate planner can help you by reviewing and providing the proper forms.
- Plan for estate taxes. Federal estate taxes, sometimes called the “death tax,” can be financially ruinous in certain circumstances such when passing on a business. Your heirs could be forced to liquidate the company in order to pay the estate tax. Your estate is also responsible for paying estate tax (approximately 50%) on the portion of your estate above $3.5 million (2009), and potentially on any amount above $1 million in 2011 unless Congress intervenes. A BCG estate planning specialist or your estate planning attorney can offer strategies to help you avoid such occurrences.
- Plan for charitable gifts. Giving money to charities or even to family members while you are living can be an excellent strategy to help you avoid estate taxes and reduce income taxes. Plus, you can enjoy the effects of helping others while you are alive.
- Plan for your final arrangements. Nothing is as stressful as losing a loved one and it adds considerable stress when they are left with the task of deciding on such things as organ donation, funeral plans and expenses, collecting important papers, inventorying possessions, or deciding on who gets what. A BCG estate planning specialist is well experienced at helping you establish a clear-cut process for handling all final arrangement, and removing the stress from those you leave behind.
- Store your important documents. As often happens when someone dies, a spouse or family members scramble to find insurance policies, power of attorney papers and other documents that are needed to make decisions quickly. Add to the frustration that heirs are typically distraught over losing a loved one. By organizing and keeping copies of all your important documents in one location, you can potentially save losses that might occur by delaying stock sales or purchases, or losing track of assets. BCG provides a convenient, secure place to store your important documents—Virtual Vault—that you can access 24/7 from anywhere you have access to the Internet.
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