Show #391 Airing Sunday, 6/17/07
A good estate plan that truly protects you and your family requires a holistic review of your entire personal, financial, health and legal situation. Pulling a document off the Internet and filling in the blanks is not a good plan. Buying a book and tearing out the form is not a good plan. Seeing a lawyer who prepares a will or trust for you without asking about your health, your spouse, your children and grandchildren, your in-laws, your income and expenses, and, most important, your hopes and dreams, that is not a good plan.
So what is a good plan? When you prepare for your senior year in high school, you must take the SAT. To prepare your estate plan as a senior, you should also take an SAT test: the SAFE Assessment Tool, to keep your family safe and secure. So pull out your paper and pencils, and see if your estate plan can pass the test.
Question number one: how is your and your spouse's health? Health is very important in planning your estate. For example, if your spouse has just been diagnosed with Alzheimer's, preparing Financial and Health Care Durable Powers of Attorney is essential. And you may need to adopt a plan to protect assets from expensive nursing home care in the future.
Next, Is this a first or second marriage, and do you or your spouse have kids from a prior marriage? Why is this important to know? If you leave assets to your spouse who is not the parent of your kids, your children may wind up with nothing. Your surviving spouse, at his or her death, may leave everything (including what's left of your assets) to his or her own children from a prior marriage.
Next is the essay portion of the exam. You should create a brief profile of each of your children and their spouses. Here's why:
Most people leave their hard earned savings directly to their children or grandchildren. But if your kids have alcohol, drug, gambling or creditor problems, leaving them an inheritance directly, without special planning, is probably a bad idea. And if your child married a loser, you may want to take steps to make sure the child's spouse doesn't wind up with your money.
You'll also be asked to describe the types of assets you own, not just the total amount. Different assets require different planning. For example, IRAs, 401(k)s and other tax deferred investments are wonderful because they offer great tax benefits. With careful planning, you can pass along these tax breaks to your kids and grand kids.
And finally, What are your most important estate planning goals? Now, you may think that the answer is the same for everyone: to pass your legacy to heirs with the least problems and the least costs.
But everyone's goals are not the same. For some, it's avoiding taxes and probate. For others, it's avoiding nursing home costs. For some, the chief goal is to take care of a disabled child. For some, it's to make sure a no-good spouse gets nothing. People have many different goals, and each one necessitates different planning arrangements.
So, how'd you do on our abbreviated SAT? To take the complete exam, and to learn the basics needed to create a plan that truly protects your family, you can get a copy of my new book "Why Wills Won't Work to Protect Your Assets." It's available at any bookstore or on our website, www.golden.tv.
