Featured in Ijamsville Stroll Magazine: Estate Planning

Happy Labor Day everybody!   I hope this finds you well and looking forward to the start of fall!

 I’m getting back to the personal side of finance and your financial affairs.  As a refresher there are five main areas of personal finance – cash flow management (or budgeting), investment management, tax management, risk management (insurance), and estate planning.  Today I’m writing about estate planning.

 Most people think of wills and trust when thinking of estate planning.  While those are key components in an estate plan, it’s important to understand what constitutes estate planning.

 Estate planning is the act of planning for the time when you can not handle your financial affairs due to incapacitation or death.  

 One of the most important decisions you will ever make is who will make decisions for you if you are incapacitated.  Many a family has endured the pain of not being able to make decisions for a family member that becomes incapacitated.  The document is called a Power of Attorney.  It can be broad and in force right away or limited in scope and only come into play if you become incapacitated.

 As you get older, you tend to think of what happens if you get hit by the bus crossing the road, so to speak.  How does my stuff get into the hands of the people I want to have things (and out of the hands of people I don’t want to have!)  Property passes from one generation to another by 1. Titling 2. Beneficiary Designation and 3. Operation of Law (Wills and Trust).  

 Titling is the legal registration of an account.  If you own a joint checking account with your husband, more than likely it is titled “joint tenants with right of survivorship” or JTWROS which means if something happens to your husband, you get the account.

 Beneficiary designation is an option that comes with many accounts.  You designate who gets the proceeds if something happens to you.   And it’s automatic.

 Operation of Law is where the wills and trust come into play. Property that is not titled, or is titled in an individual’s name, passes by a will.  

 Estate planning is an exercise that does require the use of a lawyer to draft legal documents.  But before going, be sure to give some thought to the ideas above.  Your financial advisor or accountant may be a good place to start before reaching out to a lawyer.

 NEXT MONTH – real life financial horror stories!!