As Valentine’s Day approaches you’ll see all kinds of gift guides telling you if you get these gifts, your significant other will love you that much more. I’m here to present a different kind of gift guide: one with important gifts that you cannot buy from a store. These gifts are all a part of estate planning in one way or another. At this point, you’re thinking what does some legal/financial thing like estate planning have to do with a holiday that celebrates love? On the outset, not much. But, dive into the reasons behind proper estate planning and most often I find love is at the foundation for most folks.
Read on for a gift guide you definitely won’t find in a magazine!
For your Spouse: Review your Beneficiary Designations
Your estate plan is essential for the majority of your assets, but it doesn’t cover some important accounts that are passed along via beneficiary designations. Such accounts can include savings and checking accounts, life insurance, annuities, 401(k)s, pensions, and IRA accounts. Whoever is listed as the beneficiary on these accounts overrides what’s written in a will (if the two are different). That means keeping these beneficiary designations are super important. Let’s say you listed your first spouse as a beneficiary on your life insurance, ended up getting divorced, got remarried to a great person you have many happy years together and then you pass away. Unfortunately, you never changed the beneficiary designation and the ex-spouse inherits the money. More than likely you would have wanted the account assets to go to your current spouse. (More valuable than some heart-shaped Valentine’s jewelry, right?!)
It’s good practice to review all of your beneficiary designations if there have been any life events that would necessitate a change, addition, or update, such as a birth, death, or change of capacity in a beneficiary.
For the Entire Clan: Talk About your Estate Plan Decisions
It’s important to discuss your estate planning decisions with your family members both before and after the plan is executed. In drafting the estate plan you’ll need to indicate to your qualified estate planning attorney whom you’re entrusting the important roles of executor, attorney-in-fact, guardian, and other designated representatives to. Before naming someone in a legal document you should discuss the role with them first to be sure they are willing, able, and informed to the duties of the role.
After the estate plan is executed you’ll want to discuss your estate planning decisions with loved ones, family members, and beneficiaries, especially when your choices may take them by surprise. How can a discussion be a gift, per se? Explaining your wishes is a way of expressing your love by heading off any confusion your family and friends may feel upon needing to execute your plan.
This is yet another reason to have an attorney draft your plan—your estate planner can help you communicate your wishes to your loved ones.
For your Kiddos: Nomination of Guardian
This is the kind of “gift” your child(ren) will hopefully never need to experience. One of the most critically important features of an estate plan is establishing guardianship for any minors (i.e., children under the age of 18) in your care. Why? In the tragic and terrible chance that something was to happen to you resulting in immense incapacitation or death, who do you want to care for your children? Nominating a guardian in your will allows you to select the people you know will love, care, and look out for the best interests of your child.
Unless guardianship has been established, an Iowa Court must choose guardians. Unfortunately, with no clear choice as to what the former caregivers would have preferred, the Court must basically make its own and best determination as to who the parents would have preferred and what would be in the best interest of the children. The Court may or may not, choose who the former caregivers would have named.
For your Favorite Charity: Charitable Bequest
Valentine’s Day doesn’t just have to be mean about personal relationships! It can also be a day for sharing the “love” for charities you care deeply for. In making or updating your estate plan think about what charities are near and dear to your heart? Which organizations and how much would you want to leave to them? You can include your church, alma mater, local cause, or international organization in your estate plan as beneficiaries. It doesn’t cost anything extra, other than assets from your estate. Want a clearer picture of how a charitable bequest could help your favorite charity? Talk to the nonprofit’s leaders or fundraising staffers. I’ll bet they’ll tell you the result of your charitable bequest, no matter how big or small, can make an important impact.
Love can take on many forms and express itself through many different types of gifts and actions that show you care. Choose this Valentine’s Day to express your affection (be it for a significant other, your children, or a charity) with a “gift” that shows a clear investment in the relationship. And, speaking of amore, I would love to discuss any aspect of this gift guide with you! Contact me at any time.