By LouAnn Schulfer, AWMA®, AIF®
Accredited Wealth Management AdvisorSM
Accredited Investment Fiduciary®
Sometimes people ask if we do estate planning. The answer is yes, but we don’t draft trusts or wills: we leave the legal documents to the lawyers. There is so much more to be done on an ongoing basis that is part of your estate planning.
We all know the importance of updating your beneficiaries when a marriage, birth, death or divorce occurs. In addition to these significant life changing events, our lives transform over time and we can think creatively as to how we want our assets to distribute upon our expiration date.
When reviewing two of the oldest and largest life insurance contracts I’ve had in place, we discussed how the couple had paid off nearly all of their business debt, which was the initial reason we’d put the permanent policies in place. Their children have grown to adults, but the couple are both still relatively young and healthy. If one spouse passes on prematurely, it could be decades before the surviving spouse left this earth. Each of them agreed that for this reason, they would like for their children to receive some of their inheritance before the passing of the second spouse. We decided to include the children as a portion of primary beneficiaries rather than only as contingents. Percentages can be unequally elected, therefore the surviving spouse receives the majority but the children each receive a portion. Tax treatment is a significant benefit as the life insurance death benefit proceeds will be received income-tax free. This also gave the couple a feeling of greater spending together, knowing the amount of financial legacy their grown, responsible children will receive.
On an ongoing basis, your estate plan should include creative thinking, including updating your beneficiaries.
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This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.