A guest post by Chris Holdheide
Recently back a few months ago I was watching a movie; it wasn’t one that ended well. It was a movie about a young couple who had a child and were killed one evening coming home from a night out leaving the child an orphan.
This movie didn’t sit well with me because as I watched the movie I realized I was potentially in the same position as the couple in the movie because I had done none of the proper estate planning to ensure that my children wouldn’t fall into this same predicament.
Fast forward a few weeks later and I was sitting in a lawyer’s office putting an estate plan together for my wife and I which ended up being a real eye opener for us. So in this article I’m going give you the estate planning tips I learned and how they can save you and your family from all sorts of financial havoc.
Deed Your Mortgage To Both Spouses
The first thing I realized while setting up my estate plan is that our mortgage was not deeded to both spouses. In fact it was only deeded to my wife’s name. This means that if my wife were to pass on for one reason or another I would have to jump through all kinds of hoops to get it back possibly leaving my kids and I homeless.
It also means you would have to go through probate as well which means you could end up paying some pretty hefty lawyer fees as a result. Instead, you could avoid this entire mess by paying your estate attorney a small fee to change the deed to include both spouses.
Joint With Rights To Survivorship
The next thing I learned was any and all savings account should be set up as a joint with right to survivor, meaning as long as you set it up this way the account will go directly to the other spouse on the account without having to go through probate.
It doesn’t matter if it’s your kids savings account or one you rarely contribute to but by setting up your account s this way you won’t risk money getting tied up especially if you would happen to need it. So take the time to look now so you won’t have to worry about it later.
Check Your Beneficiaries
Once you’ve checked your savings accounts you need to check your beneficiaries on all of your retirement accounts and life insurance contracts. As a former insurance agent myself the best life insurance advice I can give someone is to choose their beneficiaries wisely and to change them when necessary.
When it comes to these types of accounts the beneficiary always wins. If their name is on the contract you won’t be able to do anything to change it. Common mistakes I typically see are divorced couples leaving an old spouse as a beneficiary or a young adult keeping their parents as beneficiaries and not switching them to their spouse or loved ones. These mistakes can cause a lot of problems so take the time to check them over now.
Don’t Give Too Much Power
Fourth, you need to be aware as to how much power you are designating to the people in your will. This came to my attention when my attorney pointed out that we were giving a lot of the control to one particular couple. Instead they recommended that we split some of the different powers up.
For example, when it came to who our children should go to we chose the family member that was the most financially stable. On the other hand we gave all the financial responsibilities of the children to another family member, and finally we gave the power to another family member for our living wills to pull the plug if we were to ever end up in comma. By doing this we would ensure that one person would not have all the control.
Double Check Your Will
Next, you need to double check your will. This is something I’m glad I did. A few days after we had completed our will my wife was reading it over again and found a mistake naming the wrong person for a specific designation.
Luckily our attorney was able to correct the issue and he didn’t even charge us to fix it. However if this mistake would have gone unnoticed it could have caused a lot of problems, so take a few minutes out of your day after your lawyer has given you the final documents and check them over because people do make mistakes.
Inform Those In Your Will
Finally, one of the most important things you must do while planning your estate is to inform those who are going to be in your will of their role and what will have to do. A good way to do this is invite them out for dinner and to ask them in a relaxed atmosphere that isn’t too overwhelming for them. After all someone who may become the permanent parental figure to your children or know that someday they may have to pull the plug would appreciate knowing these things ahead of time instead being thrown into them at the last minute.
On top of that also inform those in your will where they can get it if the situation would arise. Some will keep it in a fireproof safe at home, or a lock box at the bank. However if you can’t find it a lot of times you can go back to the lawyer who originally drew up the documents to get a copy if you need to.
In the end when it comes down to it your children are what matter most in life and without a good estate plan in place you are going to leave a court to decide what happens to your loved ones after you are gone. So take the time now to save your spouse and children from these issues and set up your estate plan now before it’s too late.
What do you think of these moves as part of estate planning? Have you had any negative experiences in any of these areas?