This time of year, our thoughts turn to those that we hold dearest, yet sometimes we think more in the present, and less about the future. Unfortunately, that kind of thinking creates inaction, which could jeopardize those that we love most.  By taking a few critical estate planning steps, we might better protect our loved ones.  Here are a few steps that could aid in that process:

1.  Will

A valid will assures that upon death the decedent’s property is distributed according to his/her wishes.  If one were to die without a will (intestate), the state determines the distribution through its intestacy statute.  Under Connecticut’s statute, your spouse would take the 1st $100K, plus half of the remainder of your estate.  Your children, regardless of their age, would receive the other half.  Most parents with minor children would not want those young children to receive funds outright.  Having a will could prevent this outcome.  In addition, a will provides you the ability to name a guardian for your children.  Without a will, the court would determine that appointment.

2.Life Insurance

While life insurance can be used for many reasons, its most common use is to provide the family with a lump sum payment at the insured’s death.  While many parents struggle to save for college education, a surprising number fail to carry life insurance.  Purchasing a policy when young keeps the premiums at their most affordable.  Owning life insurance can offer your family the security that they will be provided for when you are no longer living.  With proper planning, a life insurance policy may be able to pay for your children’s education, maintain the family’s home, and ensure the family’s stability during an unstable time.

3.Memorandum

Frequently, surviving family members can squabble over who should receive mom’s engagement ring or other treasured items.  While the will is the appropriate vehicle to bequeath personal property, it is not the best method for passing on specific items.  A far better approach is to use a Memorandum.  While not legally binding, the Memorandum allows the Testator (the person who makes the will), to specifically state his or her wishes, and reduces tension during an already tense period.

4.Trust

A trust can be used for many reasons, but one of its most common uses in estate planning today is for a child with special needs.  Unlike a will, which distributes assets upon death, the trust may continue to manage assets long after the parent has passed away.  A Special Needs Trust can be a sound solution for a parent worried about a disabled child.

5.Durable Power of Attorney

A durable power of attorney allows one to appoint an agent to act on his/her financial behalf, in the case of incapacity.  While a durable power of attorney does not expire, many financial institutions will not accept one that is older than a year.  Therefore, it’s best to “update” the document periodically.

6.Health Care Proxy & Living Will

One can appoint an agent to make health care decisions, in the case of one’s incapacity, through a health care proxy.  A living will allows one to give instructions as to what medical measures should be taken, in the case of one’s incapacity.  These two items can be incorporated into the same document.

So, enjoy the present, but please consider your loved ones’ futures and take the proper estate planning steps to protect them.*

*As always, please consult your attorney/advisor.

Brenda Brinz VanDeWeghe, J.D.
President, BBV Consulting, LLC, Hamden, CT
BrendaTalkingMoney@sbcglobal.net

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