Monday, September
6 2010
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Monday, September
6 2010
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Announcing a new acquisition!!
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What's New at Forte for the year 2008 April 2008A - Estate Planning for the Worst Possible Scenario By Forte News Department The
reason why some parents hesitate to make an estate plan is understandable. It calls into consideration your worst fears
– the possibility of your death or your kids facing life without one or the
other parent. But what
about an even worse scenario – the possibility that you and your spouse could
die at the same time or in close succession by accident or illness. One might be reminded of the situation of
actor Christopher Reeve and his wife Dana; Dana died of cancer within two years
of her husband’s death and they left a teenaged son behind. From the
standpoint of individuals, planning generally gets done with the mindset that
one parent will be left to raise any minor children and continue earning and
investing for the family. But in reality, you both should consider a plan that
accommodates the absolute worst scenario -- the loss of both parents and what
would happen to your kids’ lives and finances if that happens. Most
financial experts advise you to revise your estate plan every five years or as
lifestyle issues change. It’s important to get help for the financial aspects
of your estate plan as well as legal instructions for the support, education
and general well-being of your kids. Here are some general topics to explore
with tax and estate attorneys as well as a financial planner such as a CERTIFIED FINANCIAL PLANNER™ professional: Talk first about who would best
raise your kids: This
is clearly the most important decision you’ll make. You need to find the best
person – or couple – to raise your kids if something happens to both of you.
You know better than anyone else what hard and soft skills that will require –
they need to be people whose own lives won’t blow apart by adding your kids to
the mix. It’s also wise to name alternates in case the people you name have a
change of heart for any reason, or if something happens to them. Then talk about who will handle the
money: After you
choose your guardian and your alternate, you need to build a financial plan
that will support those decision makers in the best way possible. Many experts
advise you to split the responsibility of handling the kids and the money. This
is a personal decision, obviously, but the concept is a good one. Absorbing
someone else’s kids into a new family in a tragic situation is a tremendous
responsibility with plenty of margin for error. For some time, it will be a
full-time job. The appointment of a sharp financial trustee will allow you to
allocate resources for day-to-day living expenses, education expenses and if
there’s money left over, for investment. Start thinking through an estate
plan: For most of
us, it’s going to be a challenge simply to stretch what we have to help our
kids after we die. After all, when we go, there goes the weekly paycheck. For
individuals who own businesses or have more substantial assets, the idea is to
protect first those assets and then continue to grow them as investments. The
trustee and whatever advisers you attach to this process will be key. But the
first step is to get some general advice on managing the assets you can leave
behind or backstopping your kids’ anticipated needs with various insurance
options you can put in place now. About those insurance options:
Some married couples may elect to buy insurance together within the same
policy. These policies take the form of
either a joint first-to-die or a joint second-to-die (survivorship) design.
With first-to-die, the death benefit is paid at the death of the spouse who
dies first. With second-to-die, no death benefit is paid until both spouses are
deceased, and that makes them a useful estate-planning vehicle in the right
situation. Ask which policy choices are right for you from a qualified agent. Make sure you figure this a
worst-case scenario into your education savings plans: Elementary, secondary and college
education costs – particularly if all are in private schools -- need to be
factored into the estate picture, and a CFP® professional might be useful in
getting a savings plan in place while you’re alive that covers all possible
events. April 2008 — This column is produced
by the Financial Planning Association, the membership organization for the
financial planning community, and is provided by David W. Henion CPA, a local
member of FPA. | ||||||||||||||
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