Questions for Estate Planning

In life we go through three stages: accumulation, preservation, and finally the transfer of our worldly treasures. We naturally want to make money and protect what they’ve accumulated, but we sometimes forget to plan for what happens after we die. It’s extremely important because without proper planning the wrong people may end up with what we worked so hard to accumulate and preserve.

A transfer of what you have to the right people can be accomplished with a little help. Here are some questions you should answer to be sure that your desires will be carried out as smoothly as possible.

(1) Who should receive what you have? Your surviving spouse is usually a natural selection, but if you have children from a prior marriage how will you be sure both your spouse and these children benefit from your estate? Also consider how you and your spouse may want to transfer the funds when the spouse passes, especially if the surviving spouse might likely remarry? If you are single, or are married without children, do you want the money to go to charity or to a surviving parent, siblings or even nieces and nephews?

(2) What conditions or stipulations should you make on the transfer of money to your beneficiaries? It may seem harsh to put “rules” on the generous giving of funds to loved ones, but it may be irresponsible not to do so. Most people agree that allowing an 18 to 25 year-old to inherit a large amount of money in one lump sum is not smart. Maybe you should arrange for partial payments at ages 25, 30, 35, and 40. Consider giving them access for college or medical expenses only, with a lump sum distribution to take place later in life. Since it’s your money you are free to design this gift as you see fit.

(3) What little known legal issues should you be aware of? Dealing with the loss of loved ones is difficult enough without complications. A few states, such as California, have expensive and burdensome probate processes. For people in those states a Revocable Living Trust can save a lot of money at death and make the beneficiary’s life easier. In others states, like Texas, the probate process if fairly streamlined and not that expensive.

(4) Many assets do not pass through the probate process. Examples are: life insurance, annuities, jointly held bank accounts, and most retirement accounts. It is important to review beneficiary designations and pay on death provisions of such assets. It is a good idea to go account by account, to be aware of what plan is in place for the various assets you do have. Often, after a death of a spouse or even a divorce, people forget to make changes in their beneficiaries. Don’t wait until it is too late to make those changes.

(5) Who is trustworthy enough to oversee arrangements once you are gone? The selection of an “executor” or “trustee” is crucial. Some people decide to use a corporate trustee, like a bank or a trust company. Those with grown children may feel that one (or more) of their children is capable of the task. Perhaps you have a close family relative or friend at your church whom you feel is capable and willing. Give prayerful consideration to this matter, and make sure the person you select is willing to serve.

(6) What considerations are most important in terms of your value system and faith? This topic can be too complex for only one paragraph. Topics to consider include: dealing with children who have not shown the responsibility necessary to inherit large sums of money; giving to charity; skipping children and leaving an inheritance to your grandchildren; caring for a disabled spouse after you are gone, and caring for aging relatives. Speak with your spouse, and loved ones about potentially complicated factors that affect your planning. It will make the final steps that much easier.