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Protect your Assets for Yourself and your Loved Ones

Especially in these turbulent financial times, estate planning or the preparation and signing of a Last Will and Testament and the arrangement of your assets to pass to your loved ones, is one step you can take to provide piece of mind that your estate will pass to your heirs as you intend.

Making the arrangements for the passing of your assets at your death has never been more important.  There may not be a ready market for your assets at your death, so planning ahead for that possibility and any other uncertainty now will ensure that at your death, your estate will pass smoothly and efficiently.

Here is what you should ask yourself today:

Do you have a Last Will and Testament?

Many people do not have a Will and assume that their assets will be taken care of by a loved one or that the law will make sure the assets get to their loved ones.  That is not always the case and assets do not always pass the way we would assume.  The only way to make sure they pass how you want is to sign a Will.

Have you named beneficiaries to your IRA’s, 401(k)’s and annuities?

Even though our accounts have lost value, often times, for those nearing retirement age or already retired this may be your largest asset.  This asset can pass outside of probate very quickly if you have named a beneficiary and your custodian has certain information about your beneficiary. Your Will does not direct how this asset passes unless your estate is the beneficiary.  Have you thought about the income tax consequences of this asset to your beneficiary?  Have you discussed whether your situation can qualify for a “stretch” IRA?  Will your beneficiary by a minor?  You may want a trust in place so that your beneficiary does not receive this asset all at once when they are not prepared to manage it properly.  An estate planning attorney will review all your beneficiary designations, discuss the income consequences and suggest different choices and options to address all of these situations.

How is the deed to your real estate titled?

Aside from our retirement assets, our home is one of our most valuable assets.  The law allows deeds to real property to dictate how title will pass upon your death.  Your deed should be reviewed to make sure it will pass to the correct person and also what will happen in the event that a joint survivor predeceases you.  If your deed is titled jointly with your spouse, what will happen if you die simultaneously in a car crash?  If your deed is titled jointly with your child, what will happen if your child has financial problems of their own?  If your deed is in your sole name, your estate will have to be probated, but just by titling your deed in a Revocable Trust, the process of probate, and all the expenses associated with it can be avoided.

Will a Transfer on Death Account Work for you? 

Using Transfer on Death designations (TOD) on your deposit accounts may be a simple way to pass this asset.  Your bank can set up this designation if you direct them to do so. However, what will happen if the person that you designate predeceases you?  These accounts do not work well if you have more than one person to whom you wish to leave this account.  Transfer on Death accounts work well if you wish to leave the account to an only child. 

Do you have a Durable Power of Attorney?

If you become incapacitated and unable to care for your assets, have you made legal arrangements for someone to be responsible to pay your bills, file your tax return, invest and manage your assets?  Setting up a Durable Power of Attorney will save your family from having to go to court to have a legal guardian appointed for you if you can no longer take care of yourself.  This document can save you thousands of dollars in legal fees and court costs.  It also allows you to determine while you are able, who you think is best suited to handle your assets. 

Do you have a Delaware Advance Health Care Directive?

This document and the Durable Power of Attorney may be the single most important documents you can have because they affect you while you are still living.  A Delaware Advance Health Care Directive allows you to name a health care power of attorney to make health care decisions for you in the event that you are not able to make them yourself.  In addition, the document allows you to make end of life decisions.  When your family is asked to make these decisions they are already quite emotional.  If you have already expressed your decisions in writing, it makes their decisions so much easier.  It is important that you have this document reviewed for its effectiveness in Delaware if you have relocated from another state.  Each state has different laws in this area and our health care providers are accustomed to the Delaware form. 

Do you have enough cash readily available?

In this market, the timing of the liquidation of our investment accounts can make quite a difference in value.  You should review whether there will be cash available to pay for funeral arrangements and the immediate cost of living expenses for your loved ones.  Life insurance can be available for this as long as your beneficiary is properly named.    Relying on the equity in our homes to be available for these costs is no longer a proper plan. 

What if my beneficiaries are minors?

You can name a minor as your beneficiary of your Will or life insurance, but unless a minor’s trust-type arrangement is established to hold these proceeds, the court will have to create one, causing delay and extra costs.  In addition, thought should be given whether the age of 18 or even 21 is the appropriate age for your child to receive a large sum of money.  Trusts can be established to distribute the assets out over time or upon the accomplishments of certain goals.

Are internet forms okay?

I am currently handling an estate where the Will was downloaded from the internet.  It is missing some key language necessary to probate the estate, requiring the Executor to petition the court.  This will likely cost the estate an additional $2,000 – $3,000.  If the decedent had paid a Delaware lawyer a few hundred dollars, this cost would have been avoided.  Saving money today, usually translates to more costs for your loved ones later.  Each state has different laws, and it is important for you to seek the advice of a legal professional who practices in this area to avoid costly mistakes.

For more information, please contact Barbara Snapp Danberg at bdanberg@elzufon.com.

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