Friday, December 7, 2012

Estate Planning, You and Your Family


Dealing with family is already a tricky situation in most households, but when you add dealing with financial situations with your family things can get even more stressful. For the most part, people do not like to discuss their finances with anyone. Sometimes, they don’t even want to discuss it with themselves. So how do you bring up the subject of estate planning and finances with the people who your estate affects or vice versa?
Well this can tricky, but not impossible. If for example your parent’s estate affects you, help them understand this by talking frankly with them about your concerns. You may ask a question like, when was the last time you revised your will? If they say 20 years ago, definitely encourage them to revise it and soon as their assets may go to someone who they do not like.

Case and point: This is a story I came across recently. It is not the first time I saw this happen, nor the last I am sure.  A gentleman recently passed away. He had divorced his first wife over 20 years ago and remarried the love of his life with which he had 3 wonderful children. Unfortunately, he took out a life insurance policy during the time he was married to his first wife and she was obviously the beneficiary of this policy. He never reviewed his estate since and thus never changed who the beneficiary was.

Now that he has passed away, the money in that policy, which was rather substantial will now go to his estranged ex-wife who he has not spoken to in 20 years. This woman literally hit the lottery! Unfortunately, his current wife and love of his life, now has to sell the family home because she does not have enough money to continue to make that kind of mortgage payment without 2 incomes.

So if your parents say, our estate is fine and it is none of your business, perhaps you may want to share the above story with them.

The same goes for you if you have any people who depend on you for their financial survival or if you have any assets at all. Even a small 401, car or bank account count as assets. Remember, when you pass these assets will go to someone. If there is no plan in place, then chances are the majority of it may go to the state, your creditors and whatever is left over to your immediate family.  We never know how long we will be on this earth, so it is best to make sure all of your affairs are in place now, even if you are young because you just never know.