“Our nation owes a debt to its fallen heroes that we can never fully repay.” – President Barack Obama
Thank you to the brave men and women who have made the ultimate sacrifice for our freedom and join us as we remember and honor our nation’s heroes on Memorial Day.
Today reminds us that legacies matter. Not only to our friends and our families, but also our communities and society writ large. Whether you are a veteran or just starting out in the military, planning your estate is an important first step to leaving your legacy.
Estate Planning Affects Everyone
Estate planning is important regardless of your financial situation. In fact, it may be more important if you have a smaller estate because the final expenses could have a much greater impact on your estate. Wasting even a single asset may cause your loved ones to suffer from a lack of financial resources.
Your estate plan can be relatively simple and inexpensive, such as preparing a will to distribute basic accounts and assets, or designating beneficiaries for your life insurance policy(s) and retirement account(s). If your estate is larger or you have more assets, the estate planning process may be more complex and expensive. In any case, you will probably need the help of professionals, including an estate planning attorney, a financial planner, an accountant, and possibly an insurance professional.
Issues to Consider
Your estate plan should be geared to your circumstances. Some factors that may impact your estate plan include whether:
How Do You Begin Planning Your Estate?
The process usually begins with an analysis of what you own. The type of assets and property you own can affect how you plan your estate. Next, formulate goals and objectives for your estate plan. Decide whom you want to inherit from your estate. Consider whether you want to place any restrictions or conditions on an inheritance (e.g., specify a replacement should a named beneficiary predecease you; control distributions to minors or someone you consider a spendthrift).
Consider how taxes might impact your estate. Taxes that may factor into your estate plan include federal and/or state gift and estate taxes, state inheritance taxes, and federal and/or state income taxes.
Additional goals and objectives you might consider include whether you want to:
Common Estate Planning Tools
Many strategies and tools are available to help you carry out your estate plan. In most cases, these tools are governed by specific state law, as well as federal law in some instances. Therefore, you should consult with a knowledgeable estate planning attorney to ensure that your legal documents and estate plan comply with the appropriate laws. The following is a brief description of several common tools and strategies:
Whether you are receiving military retirement pay, a private pension, or income from the military or private employment, your death could cause serious financial hardship to your family. A major part of estate planning is developing strategies and contingencies to provide for your family after your death. Servicemembers have several benefits including life insurance, death gratuity, and survivor benefits that may be available to help survivors should the unthinkable happen.
Legacies are part of the ongoing foundation of life. We are grateful to our servicemembers for the impact they have on our communities and our nation. If we can ever be of service to you or your family, we stand ready to assist.
Prepared by Broadridge Advisor Solutions. Copyright 2021. Edited by BFSG, LLC.
Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s web site or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please see important disclosure information here.
As CERTIFIED FINANCIAL PLANNER™ professionals, we get to discuss everyone’s two favorite topics, death and taxes. The reality is that no one wants to discuss their death and this is the greatest hurdle to overcome and the reason so many people do not have an estate plan. Below are some other common roadblocks that can reduce the quality of your estate plan.
1. Not Discussing Finances with Your Heirs
Some interesting studies have shown inherited wealth typically does not make it past the first generation of heirs. The wealth that does make it and is passed to several generations have one common trait, the heirs were well prepared to handle the inheritance properly. The reason for this is the parents did a great job of communicating and teaching the proper values to their kids. This does not mean telling them everything they will receive but instead communicating your values and wishes for them to follow.
2. Thinking This Will Never Happen To Me
It is human nature to see something happen to a friend or on the news and think that could never happen to me. Many individuals do not want to consider their mortality and instead live with a feeling of invincibility. This trait is most common in men for sure but it can impact anyone. Delaying your estate plan is a recipe for disaster and this is a common reason why this occurs.
3. Deciding Who Gets What and How Much
Family dynamics are difficult to navigate, even for the closest of families. As you begin the process, uncomfortable truths will begin to emerge and are difficult to navigate. Who gets family heirlooms? Are there items that have strong emotional ties to you or heirs? The best way to get started is to make a list and start with the easiest assets and slowly work your way down.
4. Not Clearly Defining Your Goals or Objectives.
As you develop the estate plan, it is important to clearly define how you want to leave your legacy. Is there an alma mater or charity you want to leave money to? Do you have a child with substance abuse problems and how do you leave money to them in a way that doesn’t fuel their addiction? If you have a child that is well off and another that is struggling financially do you not split the assets evenly? How do you protect your kids from themselves, their potential ex-spouses, or creditors? It is important to have an estate plan that navigates difficult issues by clearly stating how your estate is to be handled in those circumstances.
5. Paying For and Working With An Attorney
People seem to have a fear of working with an attorney, just like many people have a fear of going to the doctor. Nobody sees an attorney for the fun of it and many people dread the topics discussed and also the seriousness of the topic typically begins to creep in. The other part of this is everyone knows working with an attorney is not cheap. While creating a good estate plan is not cheap, it will pay for itself tenfold by reducing hassles and costs for your estate when the documents are finally needed.
We also recommend you watch the replay of our Summer Webinar Series “Estate and Legacy Planning” which discusses estate planning basics, the documents you will need, and common estate plan designs.