Mary Owens: Proper estate planning is a true act of love
For over forty years, I have been asked the same question hundreds of times, “Why do I need estate planning? My estate is fairly simple, and I will not owe any estate taxes.” This coming year in 2020, I will be answering that question and addressing the broader scope of what true estate planning entails. However, for the answer to be thoroughly communicated, it will require that the basic elements of estate planning be understood for what they are, and the myths be dispelled. The educational process you are about to undertake will be necessary for you to help properly protect yourself, your family and other loved ones who depend upon your proper understanding of the issues. Ignorance of these critical areas of life usually do not impact you directly, but instead your surviving loved ones who must then deal with the issues and drama of your poor planning or total lack of any preparation at all. If there is one New Year’s resolution that would demonstrate an act of pure love for your family, getting your estate planning affairs in proper order would be it.
The following areas of estate planning will be discussed in the coming year:
I have a will, is that enough? My will is out of date: can I change it myself and still have it be valid? Can I avoid probate with just a will?
What is probate and how does it impact my loved ones after death? How do I avoid it? I was told probate is a public process. It that true? I don’t want nosey neighbors or anyone else knowing about my affairs.
Why do I need a health care directive? My spouse and children already know my medical wishes.
I’ve been told that I need a Power of Attorney. I don’t like someone else having control over my decisions and my assets. Why is it necessary? I am young and healthy.
I own assets that have designated beneficiaries attached to them: IRA accounts, life insurance policies, an annuity, and a TOD (Transfer on Death) account. Do these avoid probate? Can creditors take any of these assets when I pass away if the balance of my estate cannot pay all of my last debts?
I own three pieces of real estate. One is titled “Joint Tenancy with Rights of Survivorship,” another is titled “Tenants in Common,” and the third is titled “Community Property.” I don’t understand the differences. Does the titling impact how I leave these assets to my heirs? How do I change the titling to what it should be if it is currently incorrect?
I have a simple estate that I am leaving to my kids. My spouse has already passed away. I live on my small pension, social security and my IRA withdrawals. I have a house payment, a car payment and a credit card bill outstanding. I have been told several times that I will cause my kids a cash flow nightmare when I pass away, but I don’t understand why. I need help understanding how to avoid this problem.
I am a young married person with children. What is essential to keeping my children and my spouse safe in case of my death, or my children safe in case of the death of both of us?
I have a will and a very small estate. Can I avoid probate? I am leaving everything to my children.
My elderly father is living with my sister. He had a large portfolio of investments just two years ago. He called me recently and said that he cannot get access to his accounts and his daughter won’t drive him to his financial advisor to find out what is going on with his money. What do I do? He was crying on the phone when he called. My sister will not return my calls.
I have a trust and other estate planning documents. I keep reading them and cannot understand a word. How do I get help understanding what I already have in place?
I am about to get remarried. We both have kids from prior marriages. What should I do to help protect my assets if we were to divorce in the future? How can I make sure they are passed on to those I want upon my death?
I have something in my trust that calls for the creation of two trusts at my death. I have a small estate. My accountant told me that splitting my estate at death will require another tax return to be filed every year until my spouse passes away. The new trust that will require the tax return is referred to by several names: exemption trust, bypass trust and a credit shelter trust. Do I need these in my estate planning? I want to keep issues as simple as possible for my spouse and kids.
The love between Tony and Martha was immense
As my previous columns illustrated, Tony and Martha attempted to fix their lack of proper estate planning, but they started too late. Tony was already very ill. He thought he had more time than he did. He died two days before he was scheduled to sign his updated documents. His life insurance was left to his ex-wife; something he never wanted to happen. He loved Martha to the depths of his soul, however, he left a complete mess that will haunt her sense of financial and emotional confidence for years to come.
This year, demonstrate your actions of love. Learn what you need to understand your circumstances. Documents alone do not solve all the issues; it also includes understanding how your bills will be paid after your death, and how your loved ones will be financially situated once that task is accomplished. Proper estate planning is a true act of love. Your loved ones are depending upon you.
Mary Owens, Principal/Branch Manager, RJFS, 426 Sutton Way, Suite 110, Grass Valley, 530-272-7500.
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