by Cherrie Messore
Thirty-somethings Dave and Ashley Segal of Kenmore have been married for a couple years. They have good jobs, a nice house, three dogs…and no estate plan.
Their views on the topic differ. Dave thinks it’s too expensive. Ashley doesn’t think it’s a priority unless you have dependents. While they know it’s a future consideration, it’s not something they’ve tackled yet.
But some experts believe it’s never too early to plan. Here are five basic things that Dave and Ashley – and the rest of us – need to know about estate planning.
First of all, what is it?
Estate planning isn’t a doom and gloom exercise on the way to meeting the Grim Reaper. Nor is it reserved for wealthy folk and their trust fund babies. Estate planning is an informed and thoughtful look into your future and your legacy. And it’s making sure that whatever you have goes to whoever or wherever you want it to go.
It’s also a way of planning for the unexpected and having control over it. If you die without a will, the intestacy laws of the state of your residence may control the distribution of all or some of your assets. And it may end up not being what you intended, so it’s wise to be clear and make a plan.
It’s more than making out a will
Making out a will is a good start, but estate planning also lets you designate a person to act on your behalf if illness or an accident impedes your abilities.
Having a Health Care Proxy and Power of Attorney will give you peace of mind that your wishes will be respected and followed. You can also make important decisions about who can look after your dependents (your children, aging parents or siblings if they are in your care) and establish ways to care for them. Your life is more than just you; good planning helps your family cope during times of stress.
What’s the first step?
Cody A. Williams, assistant vice president of AXA Advisors in Williamsville, says it’s essential to write a “Family Love Letter,” a tool his firm offers.
“It helps you coordinate your assets and accounts,” he said.
This packet of information lists of all your accounts, passwords, the name of your insurance agent and all the other details a loved one may need to know. You’re responsible for filling in the details and storing it in a safe place.
“This saves your spouse or loved ones from scrambling around for important information,” said Williams.
It’s your responsibility to keep your information current. Williams said a common mistake is forgetting who you’ve named as the beneficiary of your life insurance.
“Say you’re married and then you get divorced and never changed the beneficiary from your first spouse. Your spouse at the time of your death has no legal rights to that policy,” Williams explained. “In New York State, beneficiary supersedes the majority of documents, even a will.”
When should I do it, and what does it cost?
Experts say anyone 18 or older should adopt some sort of plan. There are local attorneys who will help you through the basics – a will, power of attorney, and health care proxy - for a fairly modest fee. More complex estates, with real estate, trusts and more abundant assets require more effort and attention. Start young and keep it simple until you need it to be more complex.
Keeping your plan updated – just like updating your insurance beneficiaries – is important. One expert suggests that you update your estate plan every year when you do your taxes. Tuck a note in your tax records for an easy, annual prompt.
The hard truth, say experts, is that it’s more costly to your loved ones – in dollars and cents and personal stress – to muddle through unanswered questions, uncertainty and confusion if you haven’t made plans and shared them with a trusted advisor.
My life is more than accounts and papers. How do I plan my legacy?
“Your estate plans should reflect what’s important to you in life and your values,” said Amy Jo Lauber, president of Lauber Financial Planning in Buffalo. Your estate plan can honor this through philanthropic gifts, too.
Just as you may support various charities during your life – your school, church, arts organizations or human service agencies – your passing can also support your special interests.
“Including charitable gifts in your estate — by designating a percentage of your estate in your will and/or as beneficiaries of your retirement or life insurance plans — can help your loved ones remain connected with you through the good work those charities are doing,” said Lauber. She recommends Leave a Legacy of Western New York (Leavealegacywny.org) as a good place to learn about the benefits of charitable giving.