It’s a common misconception to think that if you don’t have children, you don’t need to worry about estate planning. But the fact is, it can be even MORE important to do estate planning if you have no children.
Some of the common thoughts behind this mistaken belief may take one of these forms:
“If I die, everything will pass to my spouse anyway, so why bother?”
“I’m single with little wealth, so who cares who gets my few meager assets?”
“Estate planning is an expensive hassle and it doesn’t even benefit me because I’ll be dead, so I’m better off letting a judge handle things.”
This kind of thinking ignores several basic facts about both estate planning and life in general. Regardless of your marital status, if you don’t have children, you face potential estate-planning complications which those with children do not. And this is true whether you’re wealthy or have very limited assets.
Without proper estate planning, you’re not only jeopardizing your personal property, but you’re putting your life at risk, too. And that’s not even mentioning the potential conflict and expense you’re leaving for your surviving family and friends to deal with.
So if you’re childless, consider these three inconvenient truths before you decide to forego estate planning.
Someone will get your stuff
Whether you’re rich, poor, or somewhere in between, in the event of your death everything you own will be passed on to someone. Without a will or trust, your assets will go through probate, where a judge and state law will decide who gets everything you own. In the event no family steps forward, your assets will become property of your state government.
Why give the state everything you worked your life to build? And even if you have little financial wealth, you undoubtedly own a few sentimental items, including pets, that you’d like to pass to a close friend or favorite charity.
However, it’s rare for someone to die without any family members stepping forward. It’s far more likely that some relative you haven’t spoken with in years will come out of the woodwork to stake a claim. Without a will or trust, state laws establish which family member has the priority inheritance. If you’re unmarried with no children, this hierarchy typically puts parents first, then siblings, then more distant relatives like nieces, nephews, uncles, aunts, and cousins.
Depending on your family, this could have a potentially dangerous—even deadly—outcome. For instance, what if your closest living relative is your estranged brother with serious addiction issues? Or what if your assets are passed on to a niece who’s still a child and likely to squander the inheritance?
And if your estate does contain significant wealth and assets, this could lead to a costly and contentious court battle, with all of your relatives hiring expensive lawyers to fight over your estate—which is exactly what’s happening with Prince’s family right now.
Finally, even if you have a spouse and your assets are passed to him or her, there’s no guarantee they’ll live much longer than you. In the event of their death without a will or a trust, everything goes to his or her family, regardless of the fact that you can’t stand your in-laws.
You really don’t want your spouse’s sister, brother, parents (or the new spouse he or she marries after you die) inheriting what you’ve worked so hard for, do you?
Next week, we’ll continue with part two in this series on the value of estate planning for those without children: how you could be leaving YOURself at risk.
Today, we live in an uber-connected world, where nearly every type of financial transaction—shopping, banking, investment management—can be made online using a computer or mobile device.
In light of this, it’s critically important to have the appropriate safeguards in place to reduce the risk of fraud and identity theft, especially for your senior parents. Because your parents are probably not as savvy about digital technology and may be losing some of their powers of discernment as they age, it’s quite likely up to you to help them protect themselves—and ultimately your inheritance.
Along with traditional estate planning strategies to ensure you’re parents’ planning is handled in the event of their incapacity or death, you should take the following four precautions to ensure the safety of their identity and finances while they’re still alive and well.
1) Secure their computer: Your first step should be to make sure all computers they use are protected by robust security software bundled with anti-virus, anti-spam, and spyware detection features. Always go with the latest version of software, and make sure it’s configured to provide automatic updates, including security patches.
2) Use strong passwords and PINs: Create strong passwords and PINs that contain numbers, letters, and symbols, and change them regularly (once every six months). Don’t use the same password for multiple accounts—each account should have its own unique password. Never share passwords, don’t store them on a computer, and keep them in a secure location.
Since diligently keeping up with passwords can be a hassle, invest in a password manager, such as LastPass, which generates and stores strong, complicated passwords and can be used to share passwords with you and other family members.
Consider activating 2 Factor Authorization (2FA) on your parents’ accounts by using your cell phone number as the authenticating phone number or even Google Authenticator, and then teach your parents how to use it.
3) Regularly monitor their credit score and reports: Because thieves can use your loved ones’ personal information to set up new credit cards and other accounts, with bills that won’t get mailed to their home, be sure to regularly check their credit score and report for any suspicious activity. We like to use CreditKarma.com or TotalCreditCheck.com.
4) Use their own computer and avoid public wireless: Because public computers can be rigged to capture passwords and other personal data, seniors should always use their own computer or device to make financial transactions.
Even using one’s own computer can be risky if it’s done on a public wi-fi network, as found in airports, hotels, and restaurants. Many public wireless hotspots reduce their security settings, so people can more easily access and use these networks, which makes it easier to intercept personal information.
While taking these precautions is vital, it’s only the first step to ensure your elderly parents’ financial resources are protected. Consult with us as your Personal Family Lawyer® to develop comprehensive estate planning strategies to safeguard not only their finances, but all of their tangible and intangible assets—as well as your own.
Last week, we shared the first part of our series on selecting and naming the right guardians for your children. If you haven’t read it yet, you can do so here. Here in part two, we discuss the final three steps in the process.
When you’ve come up with all of the potential candidates for guardian, narrow down the list to your top five people. There’s no guarantee that your ideal candidate(s) will be willing to serve as guardian, so having more than one or two is a practical necessity.
To aid in this process, you should consider things, such as who really loves your children and who do your kids really get along with? Will this person be physically, mentally, and emotionally able to raise your kids to adulthood? The most important thing is to choose SOMEONE, even if you aren’t 100% sure about them, since you can always select a new guardian later.
Then rank your choices from top choice down to last. Again, backups are critical in case your first choice cannot serve.
5. Sit down with top candidates and discuss what’s involved
When it comes to asking someone to be your child’s guardian, you need to provide crystal-clear guidance about what’s involved. The discussion should cover all of your expectations about how you want your kids raised. Speak openly about finances, discipline, education, spirituality, and any needs that are unique to your children.
Once the discussion is complete, give them a few days to carefully consider the choice, even if they seem immediately gung-ho about doing it. Depending on the age of your kids, this could be a more than decade-long commitment. If they don’t carefully think it over, the responsibility can easily turn into resentment.
6. Legally document your plan
It’s essential to legally document your choice as soon as possible. Verbal commitments mean nothing in the eyes of the law. This is especially true when you name a friend over a family member.
For a quick and easy way to legally document your plan, visit our free website shown below. The entire process takes only 15-20 minutes, so you can immediately get this urgent matter taken care of.
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After you’ve used our website to name your legal guardians, you can then work with us as your Personal Family Lawyer® to create a more comprehensive plan that includes all of the necessary legal documents to ensure the well-being of your children and the assets you’re leaving behind, no matter what happens.
With us as your Personal Family Lawyer®, you’ll have a trusted advisor who can help you navigate all of the legal, insurance, financial, and tax issues involved with estate planning. Indeed, we can put a plan in place that not only protects and provides for your children, but your entire family.
One of your most important responsibilities as a parent is to select and legally document guardians for your children. This doesn’t mean just naming godparents or trusting the grandparents will step in if necessary. It means consciously deciding who would raise your children if you cannot. And then it means legally documenting your choices and making sure the people you’ve chosen know what to do if they’re ever called upon.
However, most people have no idea how to even start this process, much less create a legally binding plan. Because of this, many parents simply never get around to doing it. And those who do often make one of several common mistakes—even if they’ve worked with a lawyer.
Why? Because most lawyers haven’t been trained properly to help parents with this vital issue.
As a result, unless you’ve worked with us or another trained Personal Family Lawyer®, it’s likely your children are extremely vulnerable to being taken out of your home and placed in the care of strangers. This might be temporary, while the authorities figure out what to do, or they could end up being raised to adulthood by someone you’d never choose.
Even if you don’t have any minor children at home, please consider sharing this article with any friends or family who do—it’s that important. While it’s rare for something to happen to both parents of a minor child, it does occur, and the consequences are simply too severe to not take a few simple steps to select and legally name guardians the right way.
To help with this process, we’ve outlined some basic steps to select and name a legal guardian. Regardless of whether you own any other assets or wealth, it’s vital to complete this process immediately, so you know that who you care about most—your kids—will be cared for the way you want, no matter what.
⇒ We’ve even created an easy-to-use website, where you can go through these steps to create legal documents naming guardians for the long-term care of your children, absolutely free. Do it here now: estateplanpros.kidsprotectionplan.com
1. Define your ideal candidate
The first step in selecting a guardian is to come up with a list outlining the qualities and attributes you and your partner value most when it comes to the long-term care of your children. The list can mirror your own parenting philosophy and style, as well as list the qualities that would make up your absolute “dream” guardian.
In addition to qualities like parental values, discipline style, religious/spiritual background, kindness, and honesty, you also need to consider more practical matters. Is the person young enough and physically capable of raising your kids to adulthood? Do they have a family of their own, and if so, would adding your kids to the mix be too much?
Geography should also come into play—do they live nearby, and if not, would it be a major hardship to relocate your children? Is their home in a location you would feel comfortable having your kids grow up in?
One thing you may think you should consider is financial stability, and that’s a frequent misconception. However, the people you name as legal guardians for your children are the people making decisions for their healthcare and their education, but they don’t need to be the ones managing your children’s financial needs.
Ideally, you’ll leave behind ample financial resources for your children and the people raising them. You can do this by establishing a trust for those resources and naming a financial guardian, or trustee, to oversee them. Please contact us for help with that, as there are many options to consider.
2. Make a list of candidates
Based on those parenting qualities, start compiling a list of people in your life who match your ideals. Be sure to consider not only family, but also close friends.
Though you may feel obligated to choose a family member, this decision is about what’s best for your children’s future, not trying to protect someone’s feelings. And if you’re having trouble coming up with enough suitable candidates, try coming up with people who you would definitely NOT want as guardians, and work backwards from there.
Or consider the person a judge would likely select if you didn’t make your own choice and whether there are any other people you’d prefer to raise your children.
3. Select first responders (temporary guardians)
In addition to legally naming long-term guardians, you also need to choose someone in your local area to be a “first responder,” or temporary guardian. This is someone who lives near you and who’s willing to immediately go to your children during a time of crisis and take care of them until the long-term guardian is notified and appointed by the court pursuant to your long-term guardianship nomination.
If your children are in the care of someone like a babysitter without legal authority to have custody of them, the police will have no choice but to call Child Protective Services and take your children into the care of the authorities. From there, you children could be placed in the care of strangers until your named long-term guardian shows up, or until the court decides on an appropriate guardian.
This is an area where plans that only name a legal guardian through a Will typically fail. Beyond naming just a long-term guardian, you need a short-term, temporary guardian who’s named as the first responder and knows exactly what to do if something happens to you.
Once you’ve chosen your long-term guardian, it’s imperative that all temporary caretakers know exactly how to contact them. This precaution is not just about your death—it also covers your incapacity and any other situation when you’re unable to return home for a lengthy period of time.
Next week, we’ll continue with part two in this series on selecting and naming the right guardians for your kids.
Whether you consider yourself wealthy or not, you need to think about how (and when) you’ll talk with your children about money, whether they’re little kids, tweens, teens, or already adults.
The Wall Street Journal article “The Best Way for Wealthy Parents to Talk to Children About Family Money” offers guidelines for how and when “the money talk” should take place. Based on interviews with multiple financial experts, the article suggests these discussions should happen in three stages during the child’s lifetime.
Here, we’re showing you how each of these three stages apply to your family wealth as a whole, regardless of how much—or how little—money you have at the moment:
Tweens and teens
The tween years (ages 10-12) are a good time to start talking with your children about your family wealth. At this age, the discussion should be aimed at letting your children know that family wealth is not just the amount of money that your family has, but involves all of the family resources.
Time, energy, attention, and money (TEAM) are the resources that make up your family wealth. With this in mind, use one day over a coming weekend to create a Family Wealth Inventory with your tween or teen children. Inventory all of the family’s TEAM resources, along with other intangibles, such as values, insights, as well as stories and experiences you want considered as part of the Family Wealth bank.
This is an ideal time to tell them the family story, talking about how you and their other relatives worked your way to the family wealth you have now, how decisions have been made from one generation to the next regarding family wealth, and how you hope decisions will be made in the future.
Around ages 10 to 12, you can also start talking to your children about the fact that one day you won’t be here, your intentions surrounding what you plan to pass on to them (beyond just money) and how you plan to pass it on, as well as what they choose to do with the inheritance they’re receiving.
Again, the inheritance they’re receiving is not just the money you’re leaving—it also involves your family genetics, epigenetics, values, ancestry, connections, knowledge, and much more.
In their 20s
If you haven’t yet begun talking to your children about your family wealth, you should start now. And if you’ve already begun the conversations, make sure to continue talking to them during this important stage of their life.
Once they’ve moved out of the home, they need to begin thinking about their own family wealth, including setting up their own legal documents, so if something happens to them, you won’t get stuck in court or conflict. They also need to know whether you plan to offer them financial assistance during their lifetime, along with what the parameters of this assistance are and why you’ve set things up this way.
Additionally, this is an ideal time to start discussing your own plans for retirement and whether or not you’ll need any financial support from them later on in their life.
If you haven’t already shared your estate plan with your children—including where to find it, why you’ve made the decisions you’ve made, and introduced them to your family lawyer—this is the time to do that as well.
In their 30s and 40s
By their 30s, your children should be ready to be fully involved in your family wealth. This would be the perfect time to have a family meeting facilitated by us, if you haven’t done so already.
You can kick-start the talk by reading from a letter you’ve written that outlines the hopes you have for your family wealth, both now and in the future. Since you’ll likely be nearing or in retirement at this stage, it’s important that you eventually discuss the actual value of the family’s wealth and detail your wishes about passing it on. At this age, you never know how much time you have left to prepare your children to effectively manage the money you’ve spent your entire life accumulating.
By now, you definitely want your children to know if they should plan to provide financial support for you. At the same time, you may want to start looking at how you can pass on what you do have during your lifetime, instead of waiting until death, so you can invest in creating more family wealth with your children together.
With high school graduation coming up, many parents will soon watch their children become adults (at least in the eyes of the law) and leave home to pursue their education and career goals.
Turning 18, graduating high school, and moving out is a huge accomplishment. And it also comes with some serious responsibilities that probably aren’t at the forefront of their (or your) mind right now. Once your children become legal adults, many areas that were once under your control are now solely up to them.
Here’s the big one: Before they turned 18, you had access to their financial accounts and had the power to make all of their healthcare decisions. After they turn 18, however, you’re no longer able to do either.
Before your kids head out into the world, you should discuss and have them sign the following estate planning documents, so if they become incapacitated, you can easily access their medical records and financial accounts without having to go to court. Signing these documents will ensure that if they ever do need your help and guidance, you’ll have the legal authority to easily provide it.
Advance Health Care Directive
An Advance Health Care Directive allows your child to name an agent (like you), who has the power to make healthcare decisions for them if they’re incapacitated and cannot make such decisions for themselves. For example, this authority allows you to make medical decisions if your child is knocked unconscious in a car accident or falls into a coma due to an illness.
An Advance Health Care Directive also details how they want medical decisions made for them, not just who makes them. Your child may have certain wishes for their end-of-life care, so it’s important you discuss these decisions with them and have such provisions documented. For example, an Advance Health Care Directive allows the child to decide when and if they want life support removed if they ever require it. (Other states call this a “Living Will”) Since these are literally life-or-death decisions, you should document them in an Advance Health Care Directive to ensure they’re properly carried out.
That said, while an Advance Health Care Directive would give you authority to view your child’s medical records and make treatment decisions, that authority may only goes into effect if the child becomes incapacitated. This means that unless your child is incapacitated, you do not have the authority to view their medical records, which are considered private under HIPAA.
Passed in 1996, the “Health Insurance Portability and Accountability Act,” or HIPPA, requires health care providers and insurance companies to protect the privacy of a patient’s health records. Once your child becomes 18, no one—even parents—is legally authorized to access his or her medical records without prior written permission.
But this is easily remedied by having your child sign a HIPPA authorization that grants you the authority to access his or her medical records. This can be critical if you ever need to make informed decisions about your child’s medical care.
Durable Power of Attorney
In the event your child becomes incapacitated, you’ll also need a durable power of attorney to access his or her financial accounts. You’ll also need it to manage your child’s health care plan. I recently talked to a family whose 26 year old son was in a bad motorcycle accident. He was between jobs, no medical insurance, and too old to be on his parent’s plan. All his parents wanted to do was get him on a good insurance plan right away, but without a Durable Power of Attorney, they were reduced to looking at filing a conservatorship action, a lengthy and expensive process.
While medical power of attorney will authorize you to make healthcare-related decisions on their behalf, durable power of attorney will give you the authority to manage their financial and legal matters, such as paying bills, applying for Social Security benefits, and/or managing banking and other financial accounts.
If your child is getting ready to leave the nest to attend college or pursue some other life goal, you can trust us as your Personal Family Lawyer® to help your child articulate and legally protect their healthcare and end-of-life wishes. With us in your corner, you’ll have peace of mind that your child will be well taken care of in the event of an unforeseen accident or illness.
A last will and testament is the most commonly thought of document when it comes to an estate plan. But, really, it’s a very small part of an integrated plan that ensures your family stays out of Court and out of conflict when something happens to you.
Don’t think you can just write your own Will and that will help your family. Instead, consider the reality that trying to do so could actually create far more trouble for them down the road. They need you to get professional support from someone who can help you look at what you own, who you love, what would happen to you, what you own, and everyone you love, if and when something happens to you.
Death is unavoidable. And incapacity may happen before that. Facing these matters head-on leads you (and your loved ones) to having the best life possible. Otherwise, it’s the people you love who get stuck with everything you weren’t willing to take care of now.
Unfortunately, if you go it alone, you may miss important facets of what happens in the event of your incapacity or death. For example, you may think that a Will is sufficient, when what you really need is a trust to keep your family out of Court.
Or, you may think your kids are adequately protected because you have a Will, but you may really need a full Kids Protection Plan® and without it your kids could end up in the care of strangers, even if just temporarily. Before you do anything, get educated and empowered to do what’s right.
The right plan for you begins with knowing what you have. Then, being clear on what is necessary to keep your family out of court and conflict and keep your assets out of the State Department of Unclaimed Property. If you are ready to write your Will, that’s great. And, come see us first.
The biggest mistake you can make is not facing the reality of death, the second biggest mistake is facing it alone. If you need help getting started, consult with a Personal Family Lawyer®. We’ll help you through the process so you can make sure your loved ones are protected and your wishes are honored.
It’s sad but true that many pets end up in shelters after their owner dies or becomes incapacitated. In fact, the Humane Society estimates that between 100,00 to 500,000 pets are placed in shelters each year for exactly this reason, and a large number of these animals are ultimately euthanized.
Whether we like it or not, the law considers pets to be nothing more than personal property just like cars, furniture, and electronic devices. In light of this cold reality, it’s vital that you provide for your pet’s future care through estate planning, so when you die or if you become incapacitated, your beloved friend won’t wind up in a shelter or worse.
The following tips offer helpful advice to ensure your faithful companion receives the best possible care when you’re no longer able to do it yourself.
Identify a new caregiver for your pet
Selecting a trustworthy caregiver is the first—and most important—step in protecting your pet(s) through estate planning. Many people assume their children, relatives, or friends will be suitable guardians, and these folks may even tell you as much in conversation. But the reality is, properly caring for most pets is a major commitment of time, emotion, and finances.
It’s best to come up with a list of potential candidates, and then have a frank talk with each of them, discussing the extent of care your pet requires and whether they have any personal issues (allergies, housing, other pets) that might prevent them from providing the necessary care.
If you don’t know any suitable caregivers, charitable groups, such as the Safe Haven® Surviving Pet Care Program, can provide for your pet in the event of your death or incapacity.
Get it in writing
Once you’ve chosen a guardian—along with one or two alternates in case something happens to your top choice—outline all of your pet’s care requirements, listing its health issues, dietary concerns, medications, etc. These requirements should be indicated within a properly drafted legal document to ensure that your wishes are properly carried out and enforceable.
As your Personal Family Lawyer®, we can help you create a legally binding agreement detailing your pet’s specific needs, which can be easily added to your other estate planning documents.
Provide funding for your pet’s continued care
All pets have basic food, shelter, and medical needs, and these needs can be quite expensive, depending on the animal’s age and health. And if you’re like most pet owners, you probably want your pet to receive more than just the bare necessities, so it’s imperative that you leave enough money to cover all such expenses.
Be sure to not only provide clear, detailed instructions on how your pet should be taken care of in your estate plan, but also include the necessary funding to cover these costs. And be sure you think about all of your pet’s future needs, including any extra services—grooming, boarding, and walking services—when calculating these expenses.
Set up a pet trust
Because pet care can be quite complicated and costly, the best way to ensure your wishes are properly carried out is to set up a pet trust.
While it’s possible to leave care instructions and funding for your pet in a will, a will cannot guarantee the new caregiver will use the funds properly or even that they’ll care for your pet at all. Indeed, a person who’s left your pet in a will can simply drop the animal off at a local shelter and keep the money for themselves.
A pet trust, on the other hand, allows you to lay out detailed rules for exactly how the trust’s funds can be used. To ensure your wishes are accurately carried out, you should name someone other than the caregiver as trustee, so this person can manage the funds and make sure they’re only used as spelled out by the rules you’ve created.
While leaving assets in a pet trust is fairly simple, creating a properly drafted trust that includes all of the necessary terms can be quite complex. Given this, you should work with us as your Personal Family Lawyer®, to be certain that all of the necessary elements are in place to ensure your pet will continue to receive the love and care it deserves if you aren’t around to do it.
Discussing death can be awkward, and many people would prefer just to ignore estate planning altogether. However, ignoring—or even putting off—such planning can be a huge mistake, as these celebrity stories will highlight.
The next time one of your relatives tells you they don’t want to talk about estate planning, share these famous celebrities’ stories to get the conversation started. Such cautionary tales offer first-hand evidence of just how critical it is to engage in estate planning, even if it’s uncomfortable.
The Marley Family Battle
You would think that with millions of dollars in assets—including royalties offering revenue for the indefinite future—at stake, more famous musicians would at least have a will in place. But sadly, you’d be wrong. Legendary stars like Bob Marley, Prince, and Jimi Hendrix failed to write down their wishes on paper at all.
Not having an estate plan can be a nightmare for your surviving family. Indeed, Marley’s heirs are still battling one another in court three decades later. If you do nothing else before you die, at least be courteous enough to your loved ones to document your wishes and keep them out of court and out of conflict.
Paul Walker Died Fast and Furious at Just 40
While Fast and Furious actor Paul Walker was just 40 when he died in a tragic car accident, he had enough forethought to implement some basic estate planning. His will left his $25 million estate to his teenage daughter in a trust and appointed his mother as her legal guardian until 18.
But isn’t 18 far too young for a child to receive an inheritance of any size? Walker would have been far better advised to leave his assets in an ongoing trust, with financial education built in to give his daughter her best shot at a life well lived, even without him in the picture.
Most inheritors, like lottery winners, are not properly educated about what to do after receiving an inheritance, so they often lose their inheritance within just a few years, even when it’s millions.
Indeed, none of us has any clue when we’ll die, only that it will happen, so no matter how young you are or how much money you have—and especially if you have any children—don’t put off estate planning for another day. You truly never know when it’ll be needed.
Heath Ledger Didn’t Update His Estate Planning
Even though actor Heath Ledger created a will shortly after becoming famous, he failed to update it for more than five years. The will left his entire fortune to his parents and sister, so when he died unexpectedly in 2008, his young daughter received nothing, as she hadn’t been added to the will. Fortunately, his parents made sure their granddaughter was provided for, but that might not always be the case.
Creating an estate planning strategy is just the start—be sure to regularly update your documents, especially following births, deaths, divorces, new marriages, acquiring new assets, or retiring. Many estate plans fail because most lawyers don’t have built-in systems for updating your estate plans, but we do—mostly because we don’t want this to happen to your family.
Paul Newman Cut Out His Daughters Too
Though it’s a good idea to regularly update your estate plan, be sure your heirs know exactly what your intentions are when making such updates, or your family might experience significant shock by not knowing why you did what you did.
The final update to Paul Newman’s will, which was made just a few months before his death in 2008, left his daughters with no ownership or control of Newman’s Own Foundation, his legendary charity associated with the Newman’s Own food brand. Prior versions of Newman’s will— and indeed his own personal assurances to his family—indicated they’d have membership on the foundation’s board following his death.
Instead, the final version of his will left control of the foundation to his business partner Robert Forrester. Some allege that during his final months when Newman was mentally unstable, he was secretly persuaded to change his estate plan to leave control of the Newman’s Own brand and foundation to Forrester. Newman’s daughters are currently fighting Forrester in court over the rights they believe they’re entitled to receive.
While changes to your estate plan may seem perfectly clear to you, make sure your family is on the same page by clearly communicating your intentions. In fact, if you are making significant changes to your plan, and your children are adults, we often recommend a full family meeting to go over everything with all impacted parties, and we often facilitate such meetings for our clients.
Muhammad Ali Made His Wishes Clear
Boxing great Muhammad Ali wanted multi-day festivities to be held in his honor, including a large festival, an Islamic funeral, and a dazzling public memorial at the KFC headquarters in Louisville, KY. Given such elaborate plans, he worked with his lawyers for years, ensuring his wishes would be properly carried out.
While you probably won’t need a multi-day festivity to celebrate your life, you may have wishes regarding how your life should be memorialized when you pass or how your care should be handled if you’re incapacitated. If you eat a special diet or want certain friends by your side while incapacitated, you have to make these wishes clearly known in writing or they very well might not happen. At the same time, you should spell out exactly how you want your remains cared for and what kind of memorial service, if any, you prefer.
As your Personal Family Lawyer®, we can help ensure your final wishes are carried out exactly how you want. But more importantly, we’ll help protect your family and keep them out of conflict and out of court in the event of your death or incapacitation. With a Personal Family Lawyer® on your side, you’ll have access to the exact same estate planning strategies and protections that A-List celebrities use, so don’t wait another day—contact us now to get started!
While purchasing life insurance may seem pretty straightforward, it’s actually quite complex, especially with so many different types available.
In order to offer some clarity on the different types of policies out there, we’ve broken down the most popular kinds of life insurance here and discussed the pros and cons that come with each one.
Term life insurance
Term life insurance is the simplest—and typically least expensive—type of coverage. Term policies are purchased for a set period of time (the term), and if you die during that time, your beneficiary is paid the death benefit.
Terms can vary widely—10, 15, 25, 30 years or longer—and if it’s a Level Term policy, the premium and death benefit remain the same throughout the duration. If you survive the term and want to retain coverage, you must re-qualify for a policy at your new age and health status.
In addition to Level Term, other variations include “Annual Renewable Term,” in which the death benefit is unchanged throughout the term, but the insurance is renewed annually, often with an increase in premiums. With a “Decreasing Term” policy, the death benefits decrease each year until they reach zero, but the premium remains the same.
Decreasing Term life insurance is often used to cover a mortgage, student loan, or other long-term debt, so the policy expires at the time the mortgage/debt is paid off.
Whole life insurance
Whole life, or permanent, insurance pays a death benefit whenever you die, no matter how long you live. With a whole life policy, both the death benefit and premium stay the same for your entire life span.
However, depending on when you purchase coverage, the premium can vary widely depending on how much the policy’s death benefit is worth. So, for example, purchasing whole life in your senior years can be extremely expensive and possibly not even available at all.
What’s more, your whole life policy premiums will be much higher than your term life insurance premiums because the insurance company knows the policy will pay out when you die, no matter how long you live.
Indeed, the premium for whole life policies can be among the most costly of all types of life insurance coverage, including similar types of “permanent” policies discussed below. This is simply the price paid for the guaranteed death benefit and a level premium.
Universal life insurance
Universal life is a variation on whole life—it covers you for your entire lifespan, but also contains a “cash-value” component. Rather than putting 100% of your premium toward your death benefit, part of your premium is put into a separate cash-value account that earns interest and is tax-deferred.
The insurance company invests the cash-value funds in various investment vehicles of its choice, and provided the market performs well, you can access those extra funds for things like paying the policy’s premiums, paying off debt, or supplementing your later-in-life fixed income. Some insurance companies will even let you take tax-free loans against the policy’s cash value.
That said, the cash-value account is set at an interest rate that can adjust to reflect the market’s current rates, so if the interest rate of the cash value account decreases to the minimum rate, your premium would need to increase to offset the account’s reduced value.
While universal life premiums are typically more costly than term policies, universal life also allows you to adjust the death benefit within certain guidelines. This added flexibility allows you to choose how much of one’s premium funds will go toward the death benefit and how much goes into the cash value, offering you the ability to adjust the death benefit as your financial circumstances change.
Variable universal life insurance
Variable universal life insurance is quite similar to normal universal life except that variable policies allow you to choose how your cash-value funds are invested, rather than the insurance company. This offers you more control over the cash-value investment and potentially higher returns.
However, if the invested cash-value funds perform poorly or the market tanks, your policy could be at risk. Given a major drop in the cash-value account investments, you may have to pay increased premiums just to keep the policy in force. Moreover, the fees and expenses associated with the cash value investments for variable policies may be much higher than you would pay if you simply invested the funds on your own.
Because understanding life insurance can be confusing, it’s best to get the advice of a trusted advisor before you meet with an insurance agent, who might try to talk you into more coverage than you need in order to earn a larger commission. By sitting down with us as your Personal Family Lawyer®, we can work with you and your insurance advisors to offer truly unbiased advice about which policy type is best for your family and life circumstances.
Contact us today, and we’ll walk you step-by-step through the different life insurance options and help you with your other legal, financial, and tax decisions to ensure your family is planned for and protected no matter what happens.