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Money Isn’t Everything in Estate Planning

 

How to Pass Your Stories and Values to the Future Generations

 Money may be the most talked about wealth contained within a person’s estate, but the riches of their experience and wisdom can mean even more to family members down the line. Reinforcement of family traditions can be built into your estate plan alongside your wishes regarding your money, property, and belongings. After all, what really makes a family a family is its values and traditions — not the way its finances read on paper.

It's an excellent idea to hold a family meeting in which you discuss the sorts of things that matter to you most. In addition to the value of sharing your wisdom, you can also make it more likely that your heirs will handle their inheritance correctly if they understand the reasons behind your choices. This is just one of the many reasons to have a family discussion about your legacy and your estate plan.

How to tell your story through your estate plan

It’s a delight to get to hear your elders’ stories of their fondest memories and wildest adventures, as well as the struggles they overcame to get the family where it is today. This wisdom provides meaning for a financial legacy that otherwise might just be viewed as a windfall. As part of your estate and legacy planning, you can decide to record your own personal history. Here are a few ways:

  • Audio files: With the broad range of audio formats available today, you can record in the way that’s easiest for you - anything from a handheld cassette recorder to the Voice Memos app on your iPhone. There are some easy-to-use digitizing services that can compile your stories into audio files to make available to your family and descendants.
  •  Video files: The same goes for home movies and other video recordings. Older film formats can be easily digitized and organized along with the videos from your phone. Today’s technology also makes it easier than ever to add narration (and context) to a video, making the story all the richer.
  • Photo albums: Many families have prized photo collections that catalog generations. It’s a tragedy when something like this is lost in a fire or extreme weather event, or even misplaced in a move. Creating a digital database is a favor to your family in more ways than one: Not only will they have access to these memories at any time, they can also feel secure knowing that these family treasures won’t be lost anytime soon and that multiple copies can be made for the different branches of the family.
  •  Letters and other writings: If you enjoy writing, you can also include handwritten or typed letters or stories to your family members in your legacy plan to be received and read at the time of your choosing. You can also include past letters and postcards that might be tucked away in the attic. It’s not only a personal delight to relive the memories of the past by reviewing your old letters and postcards, but it's also a great way for younger generations to get to know and sincerely appreciate your life journey and legacy.

Passing your values to the next generation

Some estate planning strategies blend your finances and personal values. For example, we might have a discussion on some of your core values in life. Whether you feel most passionate about the need for your beneficiaries to travel and gain worldly experience, continue a unique family tradition like sailing or astronomy, or support meaningful charitable or spiritual work, we can draft trusts that contain funds specifically set aside for these endeavors.

  •  Educational trusts: If you value education, you might want to set up a trust to fund undergraduate and graduate degrees, med school, study abroad, or even community classes for your family’s future generations. Because of sharp increases in educational costs within the U.S., your grandchildren will likely stand to benefit immensely from an educational trust.
  •  Incentive trusts: Similar to the way educational trusts set aside wealth for the purpose of funding a beneficiary’s schooling, incentive trusts can also help steer the course of your descendants’ lives be encouraging some paths while discouraging others. For example, an incentive trust could contain instructions for disbursements to be released when the beneficiary is working a part or full-time job. Or if family vacations were an important part of your upbringing, you could set aside funds specifically for your grandchildren to experience the same wonderful tradition you enjoyed.
  •  Charitable trusts or foundations: Charitable trusts or foundations establish a family legacy of supporting a particular cause, but they also have the added financial benefit of reducing income and estate taxes. They are an excellent way to help a charitable organization that’s central to your core values and make your name associated with that philanthropic effort for generations to come.

Are you curious about exploring a few of these options in your estate and legacy plan? Give us a call today, and we can schedule an appointment to go over your many options for showcasing your memories and values in a long-lasting way that truly benefits your heirs. 


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Do It Now: Name a Guardian for Your Minor Child(ren)

Do It Now: Name a Guardian for Your Minor Child(ren)

 

We know it’s hard. Thinking about someone else raising your children stops us all in our tracks. It feels crushing and too horrific to consider. But you must. If you don’t, a stranger will determine who raises your children if something happens to you - your child’s guardian could be a relative you despise or even a stranger you’ve never met.

 

No one will ever be you or parent exactly like you, but there is someone who could muddle through and provide for your children’s general welfare, education, and medical needs. Parents with minor children need to name someone to raise them (a guardian) in the event both parents should die before the child becomes an adult. While the likelihood of that actually happening is slim, the consequences of not naming a guardian are more than intense.

 

If no guardian is named in your will, a judge - a stranger who does not know you, your child, or your relatives and friends - will decide who will raise your child. Anyone can ask to be considered, and the judge will select the person she deems most appropriate. Families tend to fight over children, especially if there’s money involved - and worse - no one may be willing to take your child; if that happens, the judge will place your child in foster care. On the other hand, if you name a guardian, the judge will likely support your choice.

 

How to Choose a Guardian

 

Your child’s guardian can be a relative or friend. Here are factors our clients have considered when selecting guardians (and back up guardians).

 

  • How well the child and potential guardian know and enjoy each other

     

  • Parenting style, moral values, educational level, health practices, religious/spiritual beliefs

     

  • Location - if the guardian lives far away, your child would have to move from a familiar school, friends, and neighborhood

     

  • The child’s age and the age and health of the guardian-candidates:

     

    • Grandparents may have the time, and they may or may not have the energy to keep up with a toddler or teenager.

       

    • An older guardian may become ill and/or even die before the child is grown, so there would be a double loss.

       

    • A younger guardian, especially a sibling, may be concentrating on finishing college or starting a career.

       

  • Emotional preparedness:

     

    • Someone who is single or who doesn’t want children may resent having to care for your children.

       

    • Someone with a houseful of their own children may or may not want more around.

 

WARNING: Serving as guardian and raising your child is a big deal; don’t spring such a responsibility on anyone. Ask your top candidates if they would be willing to serve, and name at least one alternate in case the first choice becomes unable to serve.

 

Who’s in Charge of the Money

 

Raising your child should not be a financial burden for the guardian, and a candidate’s lack of finances should not be the deciding factor. You will need to provide enough money (from assets and/or life insurance) to provide for your child. Some parents also earmark funds to help the guardian buy a larger car or add onto their existing home, so there’s plenty of room for extra children.

 

Factors to consider:

 

  • Naming a separate person to handle this money can be a good idea. That person would be a guardian of the estate or a trustee, but not guardian of the children.

     

  • However, having the same person raise the child and handle the money can make things simpler because the guardian would not have to ask someone else for money.

     

  • But the best person to raise the child may not be the best person to handle the money and it may be tempting for them to use this money for their own purposes.

 

Compromise Will Likely be Necessary

 

Naming a guardian is a difficult decision for most parents. Keep in mind that this person will probably not raise your child because odds are that at least one parent will survive until the child is grown. By naming a guardian, however, you are being responsible and planning ahead for an unlikely, yet possible, situation. It’s important to realize that no one besides you will be the perfect parent for your child, so typically this means making compromises in some areas. Select the person you think will muddle through the best.

 

Let’s Continue this Conversation

 

We know it’s not easy, but don’t let that stop you. We’re happy to talk this through with you and legally document your wishes. Know that you can change your mind and select a different guardian anytime you’d like - and - the chances of needing the guardian named in your will is slim; but, you’re a parent and your job is to provide for and protect your children, so let’s do this - together. Call our office now for an appointment and we’ll get your children protected.

 

 


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The Pros and Cons of Probate

The Pros and Cons of Probate

In estate planning circles, the word “probate” often comes with a starkly negative connotation. Indeed, for many people — especially those with larger estates — financial planners recommend trying to keep property out of probate whenever possible. That being said, the probate system was ultimately established to protect the property of the deceased and his/her heirs, and in a few cases it may even work to an advantage. Let’s look briefly at the pros and cons of going through probate.

The Pros

For some estates, especially those in which no will was left, the system works to make sure all assets are distributed according to state law. Here are some potential advantages of probating an estate:

-     It provides a trustworthy procedure for redistributing the property of the deceased if no will was left.

-     It validates and enforces the intentions of the deceased if a will exists.

-     It ensures taxes and claimed debts are paid on the estate, so there’s a finality to the deceased person’s affairs, rather than an uncertain, lingering feeling for the beneficiaries.

-     If the deceased was in debt, probate gives only a brief window for creditors to file a claim, which can result in more debt forgiveness.

-     Probate can be advantageous for distributing smaller estates in which estate planning was unaffordable.

 

The Cons

While probate is intended to work fairly to facilitate the transfer of property after someone dies, consider bypassing the process for these reasons:

-     Probate is a matter of public record, which means personal family and financial information become public knowledge.

-     There may be considerable costs, including court, attorney, and executor fees, all of which get deducted from the value of the estate.

-     Probate can be time-consuming, holding up distribution of the assets for months, and sometimes, years.

-     Probate can be complicated and stressful for your executor and your beneficiaries.

 

Bottom line: While probate is a default mechanism that ultimately works to enforce fair distribution of even small estates, it can create undue cost and delays. For that reason, many people prefer to use strategies to keep their property out of probate when they die.

A skilled estate planning attorney can develop a strategy to help you avoid probate and make life easier for the next generation. For more information about your options, contact us today to schedule a consultation.

 


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