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Your First Step to a Good Estate Plan
By Mary Downey, President
Cascada
Group, LLC
No one is ever going to tell you that
estate planning is fun. But one of the bitter facts of life is that we are going
to die someday, and the better we prepare for that eventuality, the more we will
be in control of the outcome…at least the financial outcome for our heirs.
The basic tool of estate planning is, of course, the will. Surprisingly, it is
estimated that only about 30% of the people in the
United
State
have a valid will. I have heard more excuses
for not preparing a will than you can imagine, starting with the popular “I
hate dealing with lawyers” to “my estate is too small to worry about.” Let
me say one thing that is true for everyone:
Having a valid will makes settling your estate easier, faster, cheaper, and will
allow you, and not the State, to control the distribution of your assets.
If that is not sufficient reason for preparing a will, here are some facts about
what will happen if you have no will at your death:
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A surviving spouse will receive all
community property, unless your spouse at your death is not spouse #1.
Subsequent marriages may result in your children rather than your current
spouse inheriting the community property. |
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If
you hold separate property at death (property that has been excluded from
your community property), the surviving spouse will generally receive only a
one-third life estate for any real estate. The children will actually
inherit the real estate, even if the surviving spouse is the mother of those
children. |
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If
you have neither a spouse nor children who survive you, without a will the
court will decide who will receive the estate assets after reviewing the
facts. |
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Without
a will, the settlement of larger estates will require that the court oversee
the entire administration, a very time-consuming and expensive process.
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Now that I have,
hopefully, given you some good reasons for going to the trouble of making a
will, you need to consider how you wish to distribute your estate. Of course,
you will want to make sure your loved ones are provided for, but why not
consider leaving one or more charitable bequests to continue the support you
have given to worthwhile charities during your lifetime?
Recent studies indicate that over 70% of Americans make charitable gifts during
their lifetimes, but only 8% include a charitable bequest in their wills. Why is
this? I think it may be because charities are reluctant to bring up the subjects
of dying and charitable estate gifts to their donors. Perhaps you have been
supporting a charity through annual gifts. If you would like to remember that
charity in your will, there are a number of ways of doing so while still making
sure you provide for your heirs.
One of the easiest ways to make an estate gift to a charity is through a bequest
in your will. If you are writing a new will, a provision for a charitable
bequest can be included. If you already have a will and do not want to re-draft
it, a simple codicil can be written that provides a bequest to the charity or
charities of your choice. When including a charity in your will, it is important
to use the correct and complete name. If you are unsure, call the charity’s
development office and ask.
Any competent attorney can
provide the correct wording for your bequest. Your bequest may be styled in
several different ways, depending on your preference:
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It may be for a specific dollar amount, for example, $5,000; |
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It
may be for a percentage of your estate, for example, leaving 5% of your
entire estate to ABC Charity; |
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You
may also make the charity the beneficiary of the residuum of your
estate, which means after all specific bequests are paid by your executor,
if anything remains it will be given to the charity; |
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You
may include a contingent bequest, which means that should the person
to whom you leave the bequest predecease you or chooses not to accept the
bequest; the charity would receive it instead.
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Although most charities prefer unrestricted bequests so that they can use the
bequest for the most appropriate use at the time they receive it, you may state
that you want the bequest to be used for a specific purpose. I would caution
you, however, to make sure that you consult with the charity before finalizing
your will to make sure that the charity is willing and able to use the funds as
you direct. You should also be sure to provide language that allows the charity
to use the bequest for other uses if the purpose you name is no longer
appropriate. For example, if you ask that your bequest be used for a particular
program, by the time the charity receives the bequest that program may have been
changed or eliminated because it was not longer needed.
Writing a will is the first step in establishing a good estate plan. It may be
all you need or you may need to consider other estate techniques to be sure your
estate assets are distributed in the way you wish. When you start the process,
remember to review other assets that should work in concert with your will, for
example:
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Beneficiary designations on insurance
policies
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Beneficiary
designations on retirement plans
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Ownership
of investment accounts, bank accounts, etc.
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Although getting your estate plan set up may be time consuming and frustrating
during the process, the peace of mind and sense of control you will enjoy when
it is completed will more than make up for the effort!
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