What do Abraham Lincoln, Bob Marley and Prince have in common? (Besides being respected and beloved, that is.)
They all died without a will.
Why would such celebrated men—all with complicated family and business relationships, not to mention plenty of experts around to advise them—delay or avoid putting their last wishes down on paper?
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Their reasoning, no doubt, was the same as it is for most people: They were busy. They were caught up in day-to-day life. They didn't want to think about it or take the time to sit down and just do it.
People tend to overestimate both the time and effort that go into putting together a will. They also underestimate the problems that can result if they don't have a plan in place.
In my opinion, while you're likely to hear loads about income and investments, you may not hear about things like taxes, health care, asset protection and leaving a legacy for family, friends and charity. It just doesn't happen.
How can you help make sure your transfer of wealth goes smoothly when you die? Here are four basic strategies to discuss with a licensed attorney and your financial adviser to help you avoid an estate-planning mishap.
1. Make sure you have a simple will in place.
This is the first line of defense. A will dictates your wishes and how you want your assets distributed when you die. Most people think wills are expensive, but for not much money, you can have a licensed attorney design your will exactly as you want it.
2. Create a living trust.
This legal document can protect your assets and avoid the probate process. (A will doesn't necessarily do that.) A lot of people think they don't need a living trust, but it can help ensure your assets are managed according to your wishes, even if you are no longer able to manage them yourself. It puts in place your health care surrogate and your power of attorney—the people who will be making decisions about your physical and financial life.
Famous or not, a trust can help you maintain your privacy—something you'll lose if your documents and family squabbles end up in probate court.
3. Properly title your accounts.
At the very least, make sure you have a trust in place or a "transfer on death" designation (which allows assets to pass directly to the beneficiaries named by the owner). Without one of these titles, an individual investment account is in danger of going to probate. Even with a joint account, when the second person dies, the money is at risk without a title. Similarly, people often don't properly name beneficiaries and contingent beneficiaries on IRAs and other tax-qualified accounts.
4. Put life insurance into play.
Life insurance policies are used to provide a death benefit for your loved ones and can add to the legacy you wish to pass down.
These policies can help cover final expenses, of course, such as funeral, burial and medical bills. An IRA owner facing a required minimum distribution (RMD) who doesn't need the income and wants to leave that money to beneficiaries may want to consider using those RMDs to purchase a life insurance policy.
If you're contemplating buying insurance, you probably are at a stage in life when you should be thinking about all four of these strategies. So set aside time now — for yourself and for your family—and meet with a qualified financial adviser who can work in concert with a licensed attorney. Once your plans are in place, review them every few years or so.
Don't wait.
Because when you're planning for the future, it's not just about your money; it's also about where you want that money to go after you're gone.
C. Grant Conness is co-founder of Global Wealth Management), an Investment Adviser Representative at Global Financial Private Capital and insurance professional. He has passed the Series 7, 63 and 65 securities exams.
Kim Franke-Folstad contributed to this article.
Disclaimer
The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.
-
What are Harris and Trump's Positions on Capital Gains Taxes?The Tax Letter Harris and Trump have different views on taxing capital gains. See what each candidate wants to do if elected to the White House.
-
Women's Wealth Growing: How to Handle It Like a ProEven as women play catch-up because of the gender pay gap and caregiving responsibilities, they're winning financially.
-
Women's Wealth Growing: How to Handle It Like a Pro
Even as women play catch-up because of the gender pay gap and caregiving responsibilities, they're winning financially.
-
Tips for Honing Your Bond Investing StrategyBuilding a good, high-quality foundation is critical when selecting a mix of bond funds that match your risk tolerance and return objectives.
-
How to Rank Your Financial PrioritiesCircumstances are different for everyone, but this adviser with 20-plus years of experience shares some insights on getting your financial priorities in order.
-
When Does a Nest Egg Become a Ticking Tax Bomb?Retirement savers with big bucks in traditional IRAs and pretax 401(k)s could face huge tax bills when RMDs kick in. One potential solution? A Roth 401(k).
-
Medicare or Medicare Advantage: Which Is Right for You?From overall costs to availability of care, here's what to know about the differences between traditional Medicare and Medicare Advantage plans.
-
Wealth Is More Than Just Your Money: How to Manage It AllIn addition to handling your financial wealth, consider ways to manage your non-financial assets: health, knowledge, time and relationships.
-
You're 60 Years Old With $1 Million Saved: Can You Retire?The answer depends on several factors. The key is to create a plan that combines all aspects of retirement — income, taxes, health care and legacy planning.
-
Come as You Are: Wealth Management for Gen XGen X is stuck in the middle of kids and aging parents, but retirement's not far off. Time to prioritize, with help from Nirvana, The Eagles and David Bowie.
