2012 is shaping up to be a monumental year on many fronts. From a political standpoint, Americans may witness the most anticipated presidential election in recent history. The U.S. Supreme Court may make a definitive ruling on the constitutionality of Obamacare, which could have a major impact on the U.S. healthcare system. Our federal estate and gift tax laws for 2013 and beyond are also likely to be the subject of extensive review and debate in 2012.
On top of all that, the year 2012 has been the subject of many prophecies and predictions that foreshadow ominous events such as environmental catastrophes and global economic meltdowns. As a result, many people are devoting substantial efforts to preparing for 2012 from a survival standpoint.
Given the potential for 2012 to be such a transformative year, it is important to seek the advice of a trusted adviser, such as a CPA, financial planner or attorney. These professionals are in the best position to provide guidance on the steps you should take to protect your family in the years ahead. Whether you have a spouse or partner that relies on you for financial support, minor children, a financially dependent adult child or a parent that lives with you, make sure you have an effective plan in place to take care of them in the event of your untimely illness, disability or death.
How You Can Protect Your Family
The steps you should take to protect your family, and the order of priority of such steps, will vary depending on your unique circumstances. Here is a list of the most important steps you may want to take to protect your spouse, partner, children, parents or other heirs:
1. Purchase life insurance in an amount that will allow your dependents to keep the family home, pursue educational goals, and receive medical care.
2. Designate beneficiaries on IRA, 401k, pension, and annuity accounts.
3. Designate pay on death or transfer on death beneficiaries on bank accounts, brokerage accounts, and stock certificates.
4. Execute estate planning deeds to hold title to property in a manner that ensures your real estate interests pass to the desired beneficiary and avoid probate.
5. Establish college funds or a minor’s trust for your children.
6. Establish a special needs trust for a disabled child.
7. Execute a financial power of attorney to authorize your spouse or partner to handle critical business or financial affairs in the event of your disability or incapacity.
8. Set aside emergency funds to pay unexpected funeral and burial expenses.
9. Create an organized set of records detailing your assets and accounts, as well as your estate planning documents, so your family can locate them in an emergency.
To get started, consult a legal or financial professional in your community that can help you prioritize your estate planning goals and create the necessary documents to implement your plan.
Making an Estate Plan to Protect Your Family
One of the greatest benefits of estate planning is it allows you to protect whatever is most important to you in life. For some, that means establishing a legacy of charitable giving. For others it means making a business succession plan to ensure the successful continuation of a company. Today, it is becoming increasingly common for people to make an estate plan to provide for their pets when they die. But the number one reason people make estate plans is to protect their family.
Several decades ago, estate planning was out of reach for many families. Factors such as the cost of hiring an attorney and lack of free information about wills, trusts, and estate taxes made estate planning inaccessible to a large segment of the population. Fortunately, all of that has changed in the 21st century.
Information on every aspect of estate planning is now available on the Internet. State bar associations and government agencies publish free estate planning forms, pamphlets, and brochures for consumers. These forms are often made available in several different languages. Free and low cost legal services are available to low income individuals and seniors through legal aid offices, pro bono projects, and community organizations. Many people also have access to basic estate planning services, such as making a will or power of attorney, through prepaid legal services plans that are part of their employee benefits. However, despite widespread availability of estate planning information and services, the majority of U.S. families are not protected by an estate plan. Have you taken steps to protect your family?
Before It's Too Late - Don't Leave Your Loved Ones Unprepared by Emily Oishi is an excellent guide to getting your affairs in order and recording your last wishes. In addition to leaving instructions for your funeral, you can create a complete record of your finances to save your estate money and reduce problems for your executor.
