Posts tagged ‘last will and testament’
‘nest egg’ planning – an important end-of-year goal
The end-of-the-year rush is in full swing. You’re busy shopping for holiday gifts, planning and attending gatherings with family and friends and (hopefully) simply enjoying the magic of the season . . . so why make time in the midst of all this to think about your nest egg?
Because it’s the *ideal* time to focus on the simple steps to take to properly preserve and protect your nest egg. You can chart a course, follow it (at whatever pace YOU choose) and in the process check off some very important items from your to-do list. The bottom line: the greatest gift you can give your family is to put an organized and thoughtful estate plan into place – one that protects your nest egg.
We’ll go through the steps incrementally, starting out with the first seven estate planning items on the checklist. (My next post will cover insurance planning, which ties in directly to a thoughtful estate plan for most people.)
- Make (or update) your will document. If you don’t already have a will document, now is the time to put one in place. This isn’t a complicated or expensive task. I’ve written previously about why everyone should have a will – check out these posts for more information HERE and HERE. And if you already have a will, you should review it on an annual basis to make sure that it continues to carry out your wishes. Obviously, if you’ve had a change in life circumstances in 2010 – marriage, divorce, new child, etc. – then a review of your will is imperative.
- Create (or update) your powers of attorney and living will. Everyone should have two powers of attorney in place, if you reside in Tennessee: a general durable power of attorney and a power of attorney for healthcare. With these two documents, your family will be able to manage your affairs in the event you’re disabled. Without these documents, a conservatorship may be necessary – go here to read my article on this topic. And as with your will documents, the powers of attorney should be reviewed annually – make sure that the people you’ve designated are still appropriate for this position. As well, terms for the documents do change, so check with your estate planning attorney to see if your documents require substantive revision. A living will sets out your end-of-life health care preferences and is important information for health care providers and your family.
- Create a letter of instruction. This letter goes hand-in-hand with your will and powers of attorney documents. In this letter, you provide invaluable information to your heirs: where important documents are located, where your financial accounts are located, special burial wishes, and the like. I’ve written before about compiling this information for your heirs – you can read this article here.
- Calculate (or review) your net worth. The amount of your estate – e.g. the value of all of your assets – determines in large part what kind of estate planning you can/should do to protect your nest egg for your heirs. You should review your net worth annually and consult with your tax and/or estate planning advisors to determine if your plan requires any substantive changes in order to achieve your goals.
- Consider creation of a trust. Your annual review of net worth may lead to a recommendation that you establish a trust – either living (created and funded in the present) or testamentary (created and funded following your death). A trust often can be an effective vehicle for transferring wealth and protecting assets.
- Consider funeral pre-planning. This is a simple step to take, and can save cost and time for your family. It’s as simple as contacting local funeral homes and requesting pre-planning information.
- Arrange for the orderly transfer of business assets. If you are a small business owner, planning for the smooth operation (or sale) of your business in your absence requires more than a simple reference in your will document. Your entity documents (or legal agreements with business partners) should address what happens to the business upon death, and should be reviewed annually to confirm that the plan continues to meet such goals. As well, you should consider the purchase of life insurance as a vehicle for funding the transfer of business assets at death.
Take the above steps, one-at-a-time and at your own pace. But just do it. In my next post, I’ll add a few more to-do items to the list. And in the meantime, feel free to call (615.595.7776) or email (cnm@csquaredlaw.com) if you have question about your year-end planning.
As I write this post, my satellite weather station reports the temperature at 19 degrees, with a ‘feels like’ temperature of six degrees. I hope you’re staying warm and enjoying this holiday season!
With *warm* regards,
Caitlin Moon
Even more reasons to have a last will + testament . . .
In my last post, I reviewed the law in Tennessee on intestate succession – e.g., what happens to your estate (your stuff) when you die without a will. This ‘default’ plan for distributing your estate likely is reason enough to create a last will and testament.
But there are more reasons, just in case you were wondering . . .
In discussing with clients why they want to create a well-thought-out will document, I universally get agreement with the proposition that a properly-drafted will should both save the time and effort of the person/people who are dealing with the estate’s probate process AND it should eliminate as much probate-related expense as possible. Both of these are worthy goals, and are easy to achieve. But planning is necessary!
In Tennesssee, there are a lot of ‘hoops’ one must jump through when administering an estate that didn’t plan properly for probate – whether an intestate estate (no will at all) or an estate of someone who simply had a poorly-drafted will document.
One of the hoops – that can require significant time on the part of the executor, or significant expense on the part of the estate if professionals must be hired to complete this requirement: an accounting of the estate’s contents. The personal representative has to file a statement of all receipts, disbursements and distributions of principal and income for the accounting period and the remaining assets held in the estate – both initially, when the estate is opened, and annually until the estate is closed. See Tennessee Code 30-2-601 et seq.
The accounting can be effectively waived in a properly-drafted will, thus saving your executor a great deal of time and your estate the expense.
Another hoop is the estate inventory. Unless properly waived in a will, then the personal representative has to make a “complete and accurate inventory of the probate estate of the deceased.” This is then filed with the probate court clerk. See Tennessee Code 30-2-301 et seq.
Again, this hoop requires a significant expenditure of time on the part of the personal representative – and/or expense if professionals must be paid to complete this work.
I once worked on behalf of a family whose matriarch had died rather unexpectedly. Her will was drafted decades earlier, and didn’t waive inventory. It turned out that she had thousands of antique items – she’d been an avid collector for years. The family was ready to simply divvy everything up and sell what no one wanted, and had even reached agreement on these points. But a full inventory was still required, which took a LONG time to document. The cost was real in terms of time, but also in terms of emotional involvement. The family members weren’t well-served by dealing with this administrative task while in the midst of mourning their loss.
Creating an effective will document, whether your circumstances are simple or complicated, can be a fast and easy process. Just do it.
