As we prepare for the holiday season, most of us are also planning to spend more time than usual with family. If you are at or near the time of retirement, then estate planning might be on your mind. The decisions we make about our assets don’t just affect our lives, they directly impact our children, grandchildren, spouses, and the lives of people we love.
While it’s often been said you should never talk about money at a party, talking with your family members about your money decisions is a good idea. These decisions will affect them, and it’s important they hear from you just what your intentions are. Here are four tips to help you talk about estate planning now so that you can avoid drama and misunderstanding in the future.
TIP #1: UNDERSTAND WHAT THIS IS REALLY ABOUT
Estate planning is a process you need to go through in order to ensure that your physical assets—your house, car, and your money—will be distributed in the way that you wish upon your death. But it’s more than that. It also addresses emotional and spiritual decisions. Who do you want to make medical decisions on your behalf should you no longer be able to? What do you want your end of life healthcare to look like? What do you want your funeral to look like? While these decisions might at first glance appear to be about death, they are really about something else entirely: your values. Everyone has their own value system, and this value system is what’s at the very core of estate planning. What is important to you and why? If you don’t make these decisions and communicate your intentions while you are alive, then these decisions will be made for you based on someone else’s values, or worse, your family will end up arguing in an attempt to figure it out.TIP#2: KNOW WHO YOU NEED TO TALK TO
The second most important thing to keep in mind is that estate planning isn’t about preserving things; it’s about preserving relationships. These are the relationships you have with others, but it’s also about the relationships they will have with each other once you are gone. Financial professionals in the industry have seen time and again how grief can bring out both the best and worst in people. The distribution of physical things can become emotional because it’s these things that often have big memories attached. So how do you decide what’s fair? If you don’t want your family arguing over this in your absence, then you need to make those decisions ahead of time. Start by having a conversation with your spouse, your ex-spouse, and your children to communicate your intentions.TIP#3: CHECK THESE OFF YOUR LIST
What documents are involved when doing estate planning? Good question. The rules in each state are different, and you’ll want to address different issues at different stages in your life. For example, a young family just starting out should get a will in place in order to name guardians for their children; for someone at or nearing retirement, a trust might be more suitable. Two of the most important documents to get in place are as follows: Financial Power of Attorney: this is a legal document that grants someone the authority to act on your behalf for financial issues. They will be able to access your bank accounts, pay bills, and settle financial matters, but they themselves will not be held responsible for any outstanding debts. A “durable” power of attorney remains valid and in effect even when you are alive, should you become incapacitated and unable to make financial decisions for yourself. Health Care Power of Attorney: this is a legal document which grants someone the authority to communicate decisions about all aspects of your healthcare on your behalf in case you are unable to express them during a medical emergency. You can choose one person for your healthcare decisions and a different person for your financial decisions, or you can choose the same person. Medical care providers are held to strict laws about complying with your recorded wishes.TIP#4: THE LETTER TO YOUR FAMILY
With blended families especially, it can be difficult to sit individuals down and talk to them one-on-one about your intentions. It can also be difficult to decide what you want to do. Some physical items will have more value for some family members than others. Is it best to make one-of-a-kind gifts to each child or grandchild, according to what you believe would be the most helpful to them? Or is it best to treat everyone the same and divide the assets equally, strictly according to monetary value? One of the most impactful things you can do is to create a letter of instruction for your family. This is not a legal document but rather it’s an expression of your personal wishes. It will help your family members settle your affairs by letting them know what they need to do after you have departed. While many sample letters exist online, perhaps even more important than what the letter says is its location. It will be useless unless your family members know that it exists. To that end, you might want to make your attorney aware of its presence and contents. If building a better legacy for your family is one of your financial goals, consider reaching out to one of our planning experts. We have several annuity options that offer more secure ways of preserving a legacy, and because we’re independent, you have more control over your options. Find out how an annuity can help grow your money tax-deferred and provide a tax-free death benefit for your loved ones. Got questions? Reach out to us for free, no-strings-attached advice.
