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ESTATE PLANNING
Protect your estate, spouse and family
assets
Surveys prove that most people either do not have a will or it was completed years ago and their estate plan has not been kept current. Whether you have a will or estate plan or not, the state of Ohio (or your own state) has one for those who fail to plan. A few years back we were in the home of a family attempting to establish a living trust and the husband said he had a "cloud" on the title to his home. A few years earlier his first wife had died of cancer. They had no will. The state "will" force the estate to pass 1/8th interests on to each of the deceased spouse's parents. The husband lost 1/4th of his home. We ask if his deceased wife's parents had since signed the property back to him and he admitted he had failed to get them to sign their interest back to him. Her parents had since died and the two I/8th ( I/4th total) had passed down to his wife's parents heirs. His home was totally encumbered. He had to re-open his wife's probate, re-open his wife's parent's probate or find the heirs and get them to release the deed or buy the deed from them to clear title to his home. Young people can also create problems when they have an automobile accident and die prematurely without a will. It is a real hassle. Everyone should do their planning. The following are estate planning tools you should understand and consider when doing your planning:
• Wills: Everyone should complete a will, rich and poor alike. However, a simple will is not sufficient when you own substantial assets, savings, home, retirement funds, have children from previous marriages, have a disabled child, or own out of state property.
• Living Trust: This document is simply a contract that more thoroughly defines your estate plan and wishes. It helps avoid probate and keeps you in control should you later become incompetent. It establishes a succession plan and passes control to family members and saves a lot of time and hassle following the death of a grantor. Everyone should at least review the value of a living trust and understand them. They are a wonderful estate planning tool.
• Power of Attorney for finances: Everyone should have completed a power of attorney. It gives authority to a trusted family member or friend should you be in an accident and are not capable of paying your bills for any reason due to age, injury or incompetence. A family member who had not done their planning for a minor child recently had to pay $2,000 to probate court just to take legal rights to her own daughter after her previous husband died at age 54 of a heart attack. Don't take chances with these important issues.
• Living Wills & Health Care Power of Attorney: The writer of this article lost his 29 year old daughter in an automobile accident in 1998. She had no living will or power of attorney. My wife and I had to go through the agonizing process of wondering what she would want us to do. She was in a coma and was not expected to live and we had to make her decisions for her regarding whether to continue her life support or to stop life support. What an awful feeling we experienced as we made our decision. We did not turn off the life support until her hand was cold and life had left her. It would have been better if we had talked about these things and had known how she felt. We recommend that all of you complete these documents and talk things over with your loved ones. We speak from experience.
• Your estate plan: Planning your estate is very important. Minor children need a guardian should you die prematurely. No planning can leave your children with a disastrous situation and place the burden on other family members who must make these decisions you should have made previously. Make sure you have planned for the children. Handicapped children need even more planning and probably a living trust is your best alternative. Seek competent legal counsel on all these issues. Divorce and remarriage also may require a living trust to make sure your estate is distributed as you wish to both sides of the family and to prevent family legal battles after you are gone. Trusts are settled by the trustee not the probate court. Careful selection of your family successor trustee or trustees is an important issue when using a trust to protect your estate.
• Estate taxes: Many people fail to properly evaluate their total estate and more often than not will under value the estate. This can cost the heirs money. Life insurance is included in the valuation. Employee group insurance and certain retirement plans are also included in the total value of the estate. Executive stock options and investments can drive the estate well over the estate tax exemption. Businesses and farms can create huge estate tax problems. The fast growth of a 401 (k) can put you well over the exemption. Failure to claim your A & B spouse estate tax exemptions in your estate plan can cost the heirs thousands of dollars if not addressed at the death of the first spouse. These and other issues require that you evaluate your estate tax problem. When your estate values go over the exempt amount your family estate tax can range from 37 - 55 percent of everything you own over the exempt amount. Any family who has to pay any federal estate taxes simply has failed to plan because there are ways to eliminate this tax -even for large estates. Insurance is often use to fund the estate tax liability, however this is not your only choice. There are ways to use legal entities to eliminate any and all estate tax liabilities for any size estate.
• Seeking Help: The "Financial Learning Center" program is designed to help you learn more about retirement planning and managing your finances wisely. This program offers volunteer professional advisors to help you review your needs. This free service is provided though the ICA volunteer program as a part of your Employee Financial Assistance Program (EAFP) and is sponsored by your employer. This is your voluntary self-help support service. Contact the ICA and they will provide a volunteer advisor at no cost to you (click here). If you wish to implement an estate plan requiring legal documents, the volunteer will offer to help you and to work with an attorney volunteer to provide you with a full review of your needs. You are under no obligation to use the referral attorney. If you have a personal attorney, we suggest that you go to your attorney first and then visit with an ICA free volunteer advisor to get a "second opinion". It costs you nothing and this offers you an opportunity to learn and helps you make the right decision. You may also request other free reports offered on this web site as a part of your free EAFP services.
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