Your Financial Future
Estate planning is an important area that many people know they need to prepare for, yet death is not a subject most people want to deal with. This includes many rich and famous people who many we would believe can afford the best lawyers and planners.
One recent example would be Chadwick Boseman, star of “Black Panther” movies. He had been battling colon cancer for several years. While he had some advance warning of possible outcomes, he died without even the most basic estate planning tool, a will. This forced his widow to deal with many complex issues during the probate period, and cost lots of money in legal expenses.
Aretha Franklin passed away in 2018 without a formalized will. There were several handwritten wills uncovered that led to confusion and fighting between possible beneficiaries. Legal costs ate up large portions of her estate and assets were not distrusted until years later. Much of this could have been avoided with a well thought out and executed estate plan.
While most of us are not as famous or rich as the above two examples, that does not negate the need to make sure that our families are better protected. Many people know that they need to take action, but life is busy. We are going to do it tomorrow. Sometimes tomorrow just does not come because of some unfortunate accident or sudden illness. If someone passes away without proper preparation, the state of Pennsylvania will decide who gets your assets through a process known as intestate.
The basic legal documents in an estate plan explains who you want to get your “stuff” upon your demise. You may have already made some of those designations. Examples of this might be owning property in joint names such as joint tenants with right to survivorship. This means that whoever’s name is on the deed with yours will own the property after you are gone.
Another example would be naming a beneficiary on a qualified account, life insurance policy, annuity or some other document. That person or persons gets the assets no matter what a will says about the distribution of your property. It is important to keep these documents up to date, because they are easy to change as long as you are alive and have capacity, but impossible to change following death. For instance, if an ex-spouse was named as a beneficiary, they would receive the asset even if your intention was for someone else to get it.
Estate planning should begin with the surviving spouse. Upon a first death, income will decrease while many living expenses will not. One Social Security check will stop coming in, however property taxes, utilities, home repairs and other expenses will continue at the old high rates. One thing almost certain to go up is income taxes because you get lower personal exemption and tax brackets are much narrower. Long term care may become more of a reality because there will not be an at home spouse to help provide health care to those who need it.
So, what can you do to prepare for these difficult times? Get an education of what is involved and seek professional help to create a plan. Have current and updated legal documents in place and review things such as beneficiary designations. Create an income plan for a surviving spouse and manage taxes especially on qualified funds years before this situation arrives. Taking action today can eliminate a lot of stress for your family at a time that will already be a difficult and emotional period in their lives.