On Valentine’s Day, most people buy chocolates and flowers, and go out for a fancy meal – all great ways to show you care. While not as romantic as a candlelight dinner for two, making sure your loved ones will be well cared for if you are not around is even more important. Putting a thoughtful estate plan in place is a selfless act of love that benefits those you leave behind.
Here are 10 ways to show your love.
An “I love you” will is a great starting point. An “I love you will” is a simple will that leaves everything to your spouse, and otherwise to your children. This is the type of straightforward will that many clients ask for. While it’s not the best solution for everyone – since it does not contain trust or tax planning – it can be better than no will at all.
You can trust a trust. A trust is a smart way to ensure your loved ones are financially secure after your passing. It can hold money in trust for them and allow a trustee to give out the funds to them slowly over time. It can also protect them from future creditors, and if they marry and divorce down the road.
Don’t burden your estate with estate taxes. If your estate is subject to state and federal estate taxes, you will be able to plan in order to eliminate or minimize the potential estate taxes. This is usually done through trust planning, but may also involve lifetime gifting or other planning. Your attorney can help you look for ways to save your beneficiaries money with appropriate tax planning.
Consider a lifetime gift. Gifting can get assets to your loved ones to use now while saving on estate taxes down the road. If you want to gift now, consider a gifting trust which can offer protection of the assets, while allowing your loved ones access to them.
Update your health care proxy. Some of the most stressful times for families are when someone has a health scare. Do not wait for that to occur. Make sure you have an updated health care proxy naming someone to make decisions for you if you cannot make them yourself. It will bring structure to an otherwise chaotic and difficult time.
Make sure your power of attorney is current. If you are incapacitated, it will allow your loved ones to access your funds and pay bills during a stressful time.
Confirm your life insurance beneficiary designations are up to date. This may take some work. It will require finding your policy and speaking to your life insurance agent about who the beneficiary of the policy is. Do not rely on a verbal confirmation. Obtain a written communication from the insurance company.
Check your life insurance coverage. After you review your policy beneficiaries, speak with your life insurance advisor to make sure your life insurance coverage is adequate. You want to make sure your loved ones can maintain their lifestyle if you are no longer around.
Don’t forget beneficiaries on your retirement accounts. Beneficiary designations often fall through the cracks. Look at your retirement account beneficiaries, and make sure they fit in with the rest of your estate plan. For instance, if you have a large retirement account, who will be responsible for the increased estate tax liability?
Properly invest your assets. Speak with your financial advisor at least yearly, if not more frequently, to make sure you are on track to meet your financial goals for yourself and for your legacy planning.
There are many ways to say “I love you,” and proper estate planning is definitely one of them.