by Jac M. Arbour CFP®, ChFC®
President, J.M. Arbour Wealth Management
When you pass, who will inherit your assets? Will your assets be distributed via the probate process? (And will information about your estate therefore become public record?) What if someone should challenge your Last Will and Testament? Will the probate of your assets be an extended and costly process for your estate?
Truth be told, most of the pitfalls of estate distribution can be avoided. Your estate can be distributed to whomever you want, as efficiently as you want, and as privately as you want. What is the secret to making this happen? It’s what I call Proper Prior Planning.
When you choose your beneficiaries, think multigenerational: If the primary beneficiary you have listed should pass before you, whom do you want to be next in line? The answer to this question is your contingent beneficiary/beneficiaries. Have you listed one or more contingent beneficiaries as well?
Some of the questions involving beneficiaries can be difficult to think about, but answering them yourself and making your choices clear are gifts you can give your survivors.
What if you have listed two or more of your children as equal beneficiaries and one of them should pass before you? Do you want the surviving child (or children) to receive the deceased child’s share, or do you want the children of that deceased child to receive that percentage? Potential situations like this and many others must be spelled out in your Will or beneficiary designations on insurance contracts and financial accounts.
One of the common errors we see people make is leaving retirement accounts to children without educating them with regard to the tax ramifications. This is when accounts such as IRAs degrade into what I call “IOUs to the IRS.” The good news is, this too is avoidable.
To be prepared, ask yourself all the pertinent questions about estate distribution and develop a thorough plan. The pros at JMA will be happy to help you. And after you choose your beneficiaries, be sure to educate them about what they stand to inherit, people they will need to contact, and your personal preferences about how they will handle your assets.
Here is what I promise: If you do Proper Prior Planning, you will decrease the chances of Potentially Poor Performance!
See you all next month.
Jac Arbour, CFP®, ChFC®
Jac Arbour is the President of J.M. Arbour Wealth Management. He can be reached at 207-248-6767.
Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.