Everyone procrastinates sometimes, especially when facing a daunting or tedious task. While putting something off until later is okay sometimes (eg, waiting until April 13 to file your taxes), in some cases procrastination can be harmful. This is especially true when it comes to estate planning.
All too often people procrastinate and neglect their estate planning. Although it's understandable, considering the time restrictions placed on physicians daily, it's a responsibility that should be taken seriously. Neglecting your estate planning can result in future nightmares. To avoid facing such a future, make sure to include the following suggestions when planning your estate:
â€¢ Include asset protectionâ€”Your estate plan should include asset protection strategies. A few such strategies include buying an umbrella liability policy, special titling for real estate (ie, cross-contingent remainder deed), and transfers of ownership. In the case that you are sued, asset protection will do what its name implies and protect your assets.
â€¢ Designate a power of attorneyâ€”Part of an appropriate estate plan includes a power of attorney. Your power of attorney will designate who will take control of your finances should you become disabled or incompetent. If you're worried about finding the right power of attorney for you, keep in mind that they can be tailored to fit your particular needs and situation.
â€¢ Name a guardianâ€”Whether you're just starting a family or preparing to send your first born off to college soon, make sure you name a guardian. If you die without naming guardians for your child or children, the courts will make this decision for you. And it's highly unlikely that you want your offspring being raised by someone you would not have chosen.
â€¢ Set up a trustâ€”There's a chance that your child or children may inherit money at an early age. While this money can provide for future tuition payments, unfortunately it can sometimes destroy a child's ambition and work ethic. I have seen this happen often. Setting up a trust that provides for their needs without overindulging them can solve this problem.
â€¢ Predetermine estate tax liability and cash sourceâ€”It's a fact of life that sometimes we encounter unexpected road bumps. I've seen cases where a person's property had to be sold for a fraction of its true value because the taxes were due but real estate prices were depressed. To stay ahead of the game, determine your potential estate tax liability and where the cash would come from to pay that liability.
â€¢ Own long-term care insuranceâ€”To prevent bills from consuming all of your assets in the case that you and your spouse wind up in a nursing home, own a long-term care insurance policy. This is just 1 possible solution. There are also other strategies you can use to protect your assets in this situation. Consult your financial advisor to learn about other options.
â€¢ Consider special trust planningâ€”If you have a disabled or special needs child, you need to consider special trust planning. This will ensure that they don't become a ward of the state in the event of your death.
â€¢ Plan properlyâ€”It may sound redundant by now, but the importance of proper planning cannot be stressed enough. Planning properly ensures that your family won't end up paying excessive legal fees and court costs to settle your estate. You may not be able to eliminate these costs, but you can significantly reduce them through proper planning. To locate an accredited estate planner near you, go to www.naepc.org.
Stewart H. Welch III, founder of
the Welch Group, has been
rated one of the nation's top
financial advisors by Money,
Worth, and Medical Economics.
He welcomes questions or
comments from readers at 800-709-7100 or
www.welchgroup.com. Reprinted with permission
from the Birmingham Post Herald.
Parts of this article are excerpted from J. K.
Lasser's New Rules for Estate and Tax
Planning (John Wiley & Sons), coauthored
by Birmingham attorney, Harold Apolinsky,
Esq, EPLS, and myself.