Archive for estate planning

Planning Your Estate

by Scott Blakemore
for Jackson Magazine

What is your dream sportscar? Corvette, Mustang, Porsche, Ferrari, Lamborghini, Bugatti, McLaren? Now, imagine you own it and decide to give it to your son or daughter … but they don’t know how to drive … because you never taught them. You just hand them the keys and say, “Good Luck!”  

I think we can agree this strategy is a little crazy and unwise.  However, when you and your spouse are deceased, and your heirs inherit your estate without understanding how it was managed and for what purpose – it is the equivalent of handing a sportscar to an untrained driver.    

I speak with clients daily about retirement cash flows, portfolio allocations, distribution timing, and taxes.  And while those things need to be understood and managed for a successful retirement, planning for the transition of an estate is equally crucial – especially if you’re concerned your heirs may not be ready to manage it or worse, you fear it might destroy them.

I know talking about death can be uncomfortable, and kids rarely want to discuss a future where their parents are gone.  But that day will come whether we like it or not. Talking about death with your children is like talking about sex – always a bit awkward, but the earlier the better.

So how do you prepare to talk to your children about your estate?  Here are several simple ideas to get the conversation started and a few that dig a little deeper.

First, the easier items to implement:

  • Talk about your funeral.  Write down your wishes and share them with your family.
  • Keep your bank, investment account(s) and insurance beneficiaries up to date.
  • Introduce your family to your Financial Advisor, CPA and/or Attorney.
  • Use Estate planning tools.  Let the family know if you have a Will or Trust as well as Durable and Health Care Power of Attorney (POA) documents.  Make sure your designated representative is willing to serve, understands your wishes, and knows where your documents are located.

Second, the more involved items to consider:

  • Have an annual family meeting to discuss any changes you have made to your financial or estate plan.  Be sure to allow time for questions.
  • Bring heirs into the conversation with organizations where you volunteer or provide financial support.
  • Create a family foundation or donor advised fund to give together during your lifetime. This is a great teaching tool.  

These items will obviously require some work.  However, with your heirs being part of the discussion, and doing the work alongside you, you can be confident they not only hear and see your values but participate in them as well.  They will experience the legacy you are trying to create while learning valuable lessons about managing the resources that will one day be under their stewardship.  

Remember, learning to drive isn’t accomplished through watching a YouTube video, and neither should learning how to manage an inheritance. I encourage you to work through the fear and discomfort and invite your children into the conversation to create a legacy impacting them and our world for good.  



What to Expect With Probate

Probate is the legal process of distributing a deceased person’s estate according to their last will and testament and paying off any debt owed to their creditors. This process typically lasts four to six months but depends largely on the complexity of the will and size of the estate.

In order to begin the process, there must be an individual named as the executor of the will. In many cases, the decedent’s will explicitly appoints an executor. An application must then be submitted with the will and the death certificate in the county in which the decedent lived during the time of death. In some cases, such as an unexpected death, there may be no executor named in the will or no will at all. This would require a court-supervised probate process to appoint one.

Prove validity of the will
Once an executor has been named, they must supply the courts with evidence that the will is valid. In most states, this requires two witnesses, which the law prefers to not be heirs under the will. This ensures the will was made in proper capacity and was done freely. 

Initial hearing 
An initial hearing is a formality to begin the legal process and usually doesn’t require attendance. Formal legal notice must be sent to all beneficiaries named in the will prior to the hearing. This step can lengthen if beneficiaries dispute the executor’s appointment or others included in the will.

Alert creditors
In order to move forward with the distribution of assets to beneficiaries, all debts and liabilities due on the estate must first be paid. This involves alerting all creditors of the decedent’s passing and posting a death notice in the local newspaper for any unknown creditors.

Posting bond
In some cases, executors may be required to post a bond before handling an estate. This is because an executor is considered a fiduciary of the estate and the bond helps prevent fraud or mismanagement of assets. The bail amount will vary depending on the size of the estate and will be returned once the estate is closed without issues.

Evaluating the estate
While the probate is being processed by the courts, a bank account should be opened in the name of the estate. Assets should be gathered and funneled into this bank account so they can be used to pay off any liabilities to creditors. A list of these assets must be provided to the court, which may need to be appraised to determine the value of the estate. Court approval may be needed before selling assets to pay off liabilities.

Distributing assets 
The process of distributing assets to beneficiaries can vary from case to case and may be subject to court approval. Due to potential time constraints, such as money for students currently enrolled in college, the process may need to be expedited.

Dividing assets
For hard assets that can’t be evenly distributed, such as homes and cars, a meeting with family members will determine how the asset with be handled. This commonly results in selling the asset and evenly distributing the proceeds. If an individual wants to take ownership of a hard asset, they must facilitate how to fairly compensate others.

The Importance of Having A Will

According to a 2014 survey, 51 percent of Americans age 55-64 (and 62 percent of Americans age 45-54) don’t have a will. The reasons for not maintaining a will can range from a lack of urgency to a paralyzing fear of death. Not only is having a will necessary, the effects of dying without having a will—called dying “intestate”—may be worse than you expect.

The Dangers of Dying Intestate
Estate Shrinkage
It is normal for estates to lose some of their value to final costs, such as burial/funeral expenses and outstanding debts. However, lengthy court procedures and legal fees attributed to resolving inheritance disbursement can quickly erode a large part of an estate’s net worth. Wills are created for the benefit of survivors; not having one reduces the amount that passes to the heirs.

Family Disputes and Disagreements
Disagreements regarding an estate can easily cause rifts in families. Arguments over who deserves specific heirlooms or property can be exacerbated when the wishes of the decedent are not directly known. In extreme circumstances, these kinds of disputes can last for decades, making a will essential—especially when families are large or relationships are strained.

Drafting a Will
Inexpensive and Quick Process
Creating a will is not expensive, with some estimates putting the cost at just a few hundred dollars if done through a lawyer. Additionally, there are legal websites that allow individuals to draft their own wills at a fraction of that cost. Whichever method is used, creating a will typically takes less time to complete than most people think.

Benefits of a Will
Control over Assets
The decedent may have specific desires regarding which of their family members get their possessions. Instead of the distribution of assets being decided by another family member or possibly the legal system, having a will allows the decedent to fully control where all assets will be distributed.

Choose Executor of Will
If there is no will, and subsequently no executor named, the individual that is chosen by the probate court may not act according to the decedent’s desires. Choosing the executor of a will ensures that the individual that the decedent thinks will best serve his or her wishes will be in charge of key decisions, handling conflicts and proper care of 
the estate. 

Custody of Children
If the decedent has children, but has not named a new guardian in a will, the courts will decide who gets custody of their children. Although judges consider living situations and familial relations while trying to act in the best interest of children, they can’t possibly know every detail about each family’s unique situation and there is no guarantee that a court-appointed guardian will be the same person the decedent’s would have wanted.

Now is the Time
Peace of Mind
Thinking about death may be frightening, but the thought of leaving confusion, lack of clarity and potential disputes behind can be even more unsettling. Creating a will allows individuals to know that, when they pass away, all of their wishes will be honored and their loved ones will be free from the burden of figuring out the details of an estate.

Keep it Updated
If you already have a will, consider revisiting and, if necessary, updating it. There may have been financial, legal or personal life changes that are not yet reflected by the current version of your will. Not having a will can create confusion, but having an outdated will that gives rights to a former spouse or estranged family members can be disastrous for intended heirs.


Remember that past performance may not indicate future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, strategy, or product referenced directly or indirectly in this newsletter will be profitable, equal any corresponding historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. You should not assume that any information contained in this newsletter serves as the receipt of personalized investment advice. If a reader has questions regarding the applicability of any specific issue discussed to their individual situation, they are encouraged to consult with a professional adviser. 

This article was written by Advicent Solutions, an entity unrelated to Guidestream Financial, Inc.. The information contained in this article is not intended to be tax, investment, or legal advice, and it may not be relied on for the purpose of avoiding any tax penalties. Guidestream Financial, Inc. does not provide tax or legal advice. You are encouraged to consult with your tax advisor or attorney regarding specific tax issues. © 2014 Advicent Solutions. All rights reserved.

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