5 Ways to Leave a Legacy With Your Life Insurance

A life insurance policy can change many different people’s lives, or even entire communities, after you’re gone.

Ask someone if they want to leave a legacy after they’re gone, and they’ll almost assuredly answer yes. Ask someone if they know how to go about accomplishing such a benevolent task, and they’ll probably say, “I have no idea.”

You might be surprised to learn there’s a simple solution: your life insurance policy.

The payout from a life insurance policy (called a death benefit) can be a legacy that far outlasts your time on Earth. And it’s not only for people who want to leave a legacy to their spouse and children.

So if you think life insurance isn’t for your particular situation, think again. A life insurance policy can change many different people’s lives, or even entire communities, after you’re gone.

1. Care for Your Immediate Family First

The greatest legacy you have is your family. And life insurance can help financially protect the people you love most from the unexpected. If you have people who rely on your income for their day-to-day lives, they’re the first people you should consider when deciding if life insurance is for you and how much coverage you need.

Your legacy can live on through a death benefit that can help pay off the family home, fund college educations and provide income that helps them continue to meet their financial needs if you’re no longer there.

2. Cement Yourself as the Cool Aunt or Uncle

Your nieces and nephews probably don’t need a life insurance policy from you to ensure their day-to-day financial needs are covered. Most likely, they are covered through their parents’ life insurance.

But naming your niece or nephew as a beneficiary of your life insurance policy is a profoundly sweet move that would cement you as the cool aunt or uncle.

Leaving nieces and nephews a nest egg could continue your legacy long after you’re gone. Life insurance proceeds can help you fund that backpacking trip through Europe or contribute to their college tuition as you always intended to do.

There are many uses for life insurance that could help your extended family, which should be considered if you always planned to do so. Just make sure that you have a conversation with your brother or sister to give them a heads up, set expectations and allow them to factor the money into their family’s overall financial plans.

3. Leave a Legacy to Your Favorite Charity

With the recent election, many social media newsfeeds have been full of photos showing friends and family marching, volunteering, donating and giving back to organizations and movements they are passionate about.

If this resonates with you as well, perhaps your legacy should be giving back to your favorite organizations. Life insurance can offer a way to ensure if you’re no longer around to donate or volunteer, you can still continue giving back and advocating for what you believe in.

One of the simplest ways to give back to a charity via life insurance is to name a trust as the beneficiary of your life insurance policy. Make sure the trust has specific instructions to give a certain amount of your estate to the charity if you were to die.

4. Set Up a College Scholarship in Your Name

Another way to use your life insurance payout in an altruistic fashion is to establish a scholarship at your alma mater. A scholarship is a profound way to have your legacy, and name, live on after you are gone.

Each college has different rules and guidelines for establishing scholarships. You should contact your chosen college’s development or advancement office for help with this. Typically, you need $25,000 or more to be able to endow a scholarship at a university. The college or university will usually invest the $25,000 with their current endowment pool and issue a $1,000 scholarship yearly based on the criteria you and the college establish.

Similar to donating a portion of your life insurance benefit to a charity, it’s simplest to name a trust as your beneficiary and ensure the trust has specific instructions for the donation. You can leave instructions in your will to set up a trust or foundation, but you run the risk of your heirs misinterpreting your intent. An estate attorney can help you set up a 501(c)(3) charity, foundation or trust to help establish, fund and award the scholarships.

5. Build a City Park or Playground

Love your city? Consider leaving a legacy by creating a small park or playground. You’ll typically need to check with your city council on proposed locations and projects. The council can be an excellent help in determining the city’s need, recommending parcels of land if you don’t already have some to donate, and helping to guide you through how to make a difference.

Communities are almost always in need of a safe place for children to play. But they often lack the funds to build the playground and then maintain it. Through a trust, you can allocate a certain amount of money to create a better environment for your community.

Leave a Lasting Legacy

Many of us dream of leaving an impact on our loved ones and communities that will carry on long after we’re gone. Aside from financially protecting your family, directing a life insurance payout for altruistic means is a surefire way to leave a legacy far beyond your years.

If you’re interested in alternative ways of using life insurance to give back long after you’re gone, it’s a good idea to consult an estate attorney who can help you make the best choice for your specific situation.

Image: Juanmonino

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Americans Are Dying With an Average of $62K of Debt

What happens to your debt after death? Learn how to keep creditors away from your family in a worst-case scenario.

You’re probably going to die with some debt to your name. Most people do. In fact, 73% of consumers had outstanding debt when they were reported as dead, according to December 2016 data provided to Credit.com by credit bureau Experian. Those consumers carried an average total balance of $61,554, including mortgage debt. Without home loans, the average balance was $12,875.

The data is based on Experian’s FileOne database, which includes 220 million consumers. (There are about 242 million adults in the U.S., according to 2015 estimates from the Census Bureau.) Among the 73% of consumers who had debt when they died, about 68% had credit card balances. The next most common kind of debt was mortgage debt (37%), followed by auto loans (25%), personal loans (12%) and student loans (6%).

These were the average unpaid balances: credit cards, $4,531; auto loans, $17,111; personal loans, $14,793; and student loans, $25,391.

That’s a lot of debt, and it doesn’t just disappear when someone dies.

What Does Happen to Debt After You Die?

For the most part, your debt dies with you, but that doesn’t mean it won’t affect the people you leave behind.

“Debt belongs to the deceased person or that person’s estate,” said Darra L. Rayndon, an estate planning attorney with Clark Hill in Scottsdale, Arizona. If someone has enough assets to cover their debts, the creditors get paid, and beneficiaries receive whatever remains. But if there aren’t enough assets to satisfy debts, creditors lose out (they may get some, but not all, of what they’re owed). Family members do not then become responsible for the debt, as some people worry they might.

That’s the general idea, but things are not always that straightforward. The type of debt you have, where you live and the value of your estate significantly affects the complexity of the situation. (For example, federal student loan debt is eligible for cancellation upon a borrower’s death, but private student loan companies tend not to offer the same benefit. They can go after the borrower’s estate for payment.)

There are lots of ways things can get messy. Say your only asset is a home other people live in. That asset must be used to satisfy debts, whether it’s the mortgage on that home or a lot of credit card debt, meaning the people who live there may have to take over the mortgage, or your family may need to sell the home in order to pay creditors. Accounts with co-signers or co-applicants can also result in the debt falling on someone else’s shoulders. Community property states, where spouses share ownership of property, also handle debts acquired during a marriage a little differently.

“It’s one thing if the beneficiaries are relatives that don’t need your money, but if your beneficiaries are a surviving spouse, minor children — people like that who depend on you for their welfare, then life insurance is a great way to provide additional money in the estate to pay debts,” Rayndon said.

How to Avoid Burdening Your Family

One way to make sure debt doesn’t make a mess of your estate is to stay out of it. You can keep tabs on your debt by reviewing a free snapshot of your credit report on Credit.com, in addition to sticking to a budget that helps you live below your means. You may also want to consider getting life insurance (this explains how to know if you need it) and meeting with an estate planning attorney to make sure everything’s covered in the event of your death. If you’re worried about leaving behind debt after death, here’s more on how protect your loved ones.

Poor planning can leave your loved ones with some significant stress. For example, if you don’t have a will or designate beneficiaries for your assets, the law in your state of residence decides who gets what.

“If you don’t write a will, your state of residence will write one for you should you pass away,” said James M. Matthews, a certified financial planner and managing director of Blueprint, a financial planning firm in Charlotte, North Carolina. “Odds are the state laws and your wishes are different.”

It can also get expensive to have these matters determined by the courts, and administrative costs get paid before creditors and beneficiaries. If you’d like to provide for your loved ones after you die, you won’t want court costs and outstanding debts to eat away at your estate.

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Life After Death: How Do I Plan for My Pets?

If you want to make sure your pets are cared for after you die or are incapacitated, trusts can be very helpful. Here's how to use them.

Americans love their pets. In fact, about 65% of U.S. households – roughly 80 million total – have at least one pet. That’s according to the Insurance Information Institute, which also found that cats are slightly more popular than dogs.

For many of these households, pets are often seen as members of the family. And while we don’t have to think about sending our pets to college or listen to them complain (except maybe at mealtime or when they want to go outside), if you worry what will happen to your pets when you die or can no longer care for them, it’s best to address those possibilities in your estate plan.

One good way to plan for your pets is to create a revocable living trust and include provisions that allow your trustee to spend the money necessary to care for them. You can also make it clear to your family that your pets are important to you and that you want them with you as long as possible.

In addition, you can let your family members know that if you have to move into an assisted living facility or a nursing home, you would prefer to move to one that allows for pets or offers pet therapy at the very least. Again, a living trust can include very specific provisions regarding this. By the way, according to the National Center for Health Research, elderly individuals who cared for pets were better able to perform daily physical activities, which in turn allowed them to avoid having to move to an assisted living facility or a nursing home.

If you do not set up a living trust, you can make your wishes known to your family by writing them a letter of instruction. Although the letter will not be legally binding, it is still a good way to spell out all of your thoughts regarding what you want to happen to your pets. Reviewing all your wishes regarding your care, your pets care and your estate with your family members is wise.

Your estate plan can also help ensure that, when you die, your pets will be well cared for. For example, you can state in your will or in your revocable living trust document who you want to care for them after your death. It’s a good idea, however, to make sure that whomever you designate is willing to take on that responsibility.

Also, bear in mind that, although your pets may be like children to you, in the eyes of the law, they are property. Therefore you cannot leave them money or any other assets in order to help fund the cost of their care after your death. But, you can give money or property to the person you want to care for, which can be important because as you know, providing for a pet’s needs is not inexpensive. For many of you, leaving a sum of money in your will for that individual will suffice; if you do however, bear in mind that nothing will prevent him or her from using the money for some other purpose and/or from giving your pets away.

Is a Pet Trust Your Best Option?

An option that gives you more control over the care of your pets after your death is a pet trust. It allows you to dictate who will care for your pets (your Trustee) as well as how you want your pets to be cared for. For example, do want your cat to eat organic, grain-free cat food only? If so, you can state that in the trust document. Do you want your dog to be well-socialized and spend time at the local dog park? You can include that, too.

Not only does a pet trust allow you to maintain more control over the care of your pets than making a simple monetary gift to whomever you have chosen as their future caregiver, but it also lets you dictate what will happen to any extra money that may not be needed to care for a pet during its lifetime. (Want to learn more about finances after death? You can read this guide on 10 things you need to know.)

When you provide for your pets using your will or a trust, be sure to work with a qualified estate planning attorney. This is especially important when you are setting up a special kind of trust, like a pet trust.

Finally, one other option that may be available to you is to arrange for your pets to be cared for at an animal care facility in your area. For example, Texas A&M University runs the Stevenson Companion Animal Life-Care Center in College Station, Texas. You can search online for a similar facility in your area.

An animal care facility offers pet owners a safe home for the lifetime of their pet, but it often requires that an owner to pay a minimum donation per/pet. This kind of facility can be an excellent alternative if you don’t have any close friends or family members who are willing to care for your pets, or if you fear that caring for your pets could be a burden for your loved ones.

Melissa Donovan, JD, contributed to this article.

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4 Steps to Take Before You Buy Life Insurance

Here are four helpful tips for selecting the right life insurance policy.

Americans treat life insurance the same way they treat retirement. The vast majority know they’re not adequately prepared, yet don’t always take steps to change.

A 2015 study conducted by the nonprofit Life Happens and LIMRA (a life insurance market research firm) explains this phenomenon in vivid detail. The 2015 Life Insurance Barometer, which polled 2,032 adults, showed nearly one third of Americans believe they need more life insurance than they have. Further, 43% of Americans said they would feel the financial impact of losing their primary wage earner within six months of his or her death.

Astonishingly, 54% of those polled said it was unlikely they would buy more life insurance coverage within the next 12 months. The reason? According to LIMRA, many consumers tend to overestimate the price of life insurance, along with the difficulties of obtaining coverage.

“In addition to believing life insurance is too expensive, our research has shown that consumers are intimidated by the process of buying life insurance — 4 in 10 don’t know how much they need or what to buy,” said Todd A. Silverhart, corporate vice president and director of LIMRA Insurance Research. “Having a better understanding about the factors that influence pricing might help consumers feel more confident and encourage them to pursue getting coverage they believe they need.”

What You Can Do

Like anything else, the key to finding and obtaining the ideal life insurance policy (or policies) is educating yourself on the ins and outs of this coverage. Knowing how policies work and how much they cost is one of the first steps toward protecting your family in the event of your death.

If you’re one of the millions who know you don’t have enough life insurance coverage, here are some steps to take today:

1. Assess Your Risk and Be Specific

Bismarck, North Dakota, financial advisor Benjamin Brandt suggests taking a look at your lifestyle to see which risks you’re trying to hedge against. Do you have unfunded retirement needs? Young children? Mortgage debt? (You can see where your finances stand by viewing two of your free credit scores on Credit.com.)

“If your risks have a specific beginning and ending, consider term life insurance,” says Brandt. Because term life insurance offers coverage for a predetermined length of time, you can customize your policy so it covers a stretch of time when you need it the most. If you plan to retire in just 15 years, for example, you may be fine with a 15-year term life insurance policy that would replace your income if you died.

Whole life insurance provides lifelong life insurance coverage with cash value you can borrow against, but at a more significant cost. Before you buy any policy, you should make sure you understand the difference, how long your coverage will remain in place, and how each type of life insurance might work in your favor.

2. Determine How Much Income You Need to Replace

It’s tempting to try to use a simple formula to determine how much coverage you need. Although you might hear that four times your annual income is a good rule of thumb, this is not enough coverage for most people.

North Carolina financial advisor Peter Huminski of Thorium Wealth Management offers this trick to come up with a smarter amount.

“Multiply your annual income by seven to 10 years,” says Huminski. “The more debt you have or the more responsibilities you hope to cover (such as young children’s needs, for example), the more years you should use for this formula.”

If you earn $100,000 per year, for example, you could estimate you need $1 million in coverage as an absolute minimum.

3. Take a Close Look at Your Liabilities

“The number one reason that people give for purchasing life insurance is to provide income for their family in case of death of the primary income earner,” says financial advisor David G. Niggel of Key Wealth Partners in Lancaster, Pennsylvania.

However, many people fail to look beyond what they earn to what they actually owe.
For example, you might think you need $50,000 in life insurance coverage to replace your salary for the next 20 years — or a $1 million dollar policy. But if you have a $200,000 mortgage, $100,000 in student loan debt, and kids nearing college themselves, you need a whole lot more.

“In order to calculate a minimum amount, you will need to know your income, mortgage balances, debts (such as credit card, auto loans, student loans) and future college tuition expenses,” says Niggel. “This calculation will give you a good starting number that you can discuss with your financial advisor and make any adjustments necessary to fulfill your goals and family wishes.”

4. Shop Around

Just because your college buddy sells life insurance doesn’t mean he should be your first and only contact. Because of the many ways life insurance firms price their individual policies, you could pay considerably more if you don’t shop around.

“Consider working with an independent insurance professional or finding a quote engine online,” says Minnesota financial advisor Jamie Pomeroy. “They will help you look at dozens of different insurance companies and help you determine which company offers the least expensive quote with the highest rated company — and one that has a clear underwriting process.”

This simple act of shopping the life insurance market can potentially save you lots of money in lower premiums over the long haul, says Pomeroy. And due to the wonders of the internet, you can conduct plenty of price comparisons without even leaving your home.

Final Thoughts

Buying life insurance isn’t rocket science, but it does require some work. Not only do you need to analyze your family’s needs, you must compare policies and shop around for the best deal.

Also know that certain factors such as your health and your credit may affect your premiums — and even prevent you from buying coverage. Just like you can’t buy homeowner’s insurance once your house is already on fire, you may not get the life insurance policy you want if you’re chronically ill or have lifestyle factors that might lead to early death.

Either way, the only way to know where you stand is to figure out what you need, shop around and fill out a life insurance application once you’re ready. With good health and credit, you may qualify for an inexpensive life insurance policy that could help you sleep better at night.

The author has an insurance license and has relationships with multiple insurance companies. However, these relationships do not result in any preferential editorial treatment.

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7 Documents You Need to Fill Out Before You Die

Here's a list of all the important estate planning documents you'll want to compile.

Estate planning is the process of establishing a framework to manage your assets upon death, disability or incapacity. It involves creating documents that outline your wishes. While estate planning is not a pleasant task, it is critical that you implement it before you need it.

Here are seven critical documents necessary to cover the aspects of a well-devised estate plan.

1. Last Will & Testament

The fundamental purpose of a will is to outline who will receive your assets upon your death. Another important purpose of a will is to specify guardianship for your minor children. A guardian is one who takes legal responsibility for the care of your minor or incapacitated children after you are gone. It is important to understand that a will does not become effective until the date of death. So it does not provide any benefits during your lifetime. A will can be changed at any time (assuming you are not mentally incapacitated). It can be amended by using a codicil or revoked by writing a new will. A will can also create a trust upon your death (more on this below). If your estate is large enough (over $5.49 million in 2017), you may also need to incorporate federal estate tax planning into your documents.

2. Trust

A trust is a legal instrument that provides ongoing management for your assets. It can be inter vivos (also known as a Living Trust, which exists during your lifetime) or Testamentary (one that is created by your will upon your death). It is a good idea to leave assets in trust if the beneficiaries are minors, incapacitated, or if they are simply not fiscally responsible. The trust document names a trustee who has the responsibility of managing the assets in the trust and determines when and how much of the trust assets to distribute (subject to the terms you have written in the trust). You may want to name a trustee while your child is under a certain age, say 25 or 30. Then, once your child reaches that specific age, they can either act as their own trustee, or the trust can terminate and distribute all of the assets to your child outright.

3. Power of Attorney

A Power of Attorney allows you to empower someone else to act on your behalf for legal and financial decisions. It can be a Durable Power of Attorney, which becomes effective immediately, or a Springing Power of Attorney, which becomes effective upon a stipulated event, typically when you are disabled or mentally incompetent. It is critical that you completely trust the person to whom you provide this power, as he or she can legally act on your behalf.

4. Healthcare Power of Attorney

A Healthcare Power of Attorney (also known as a Medical Power of Attorney) gives a trusted individual the authority to make decisions about your medical treatment should you be unable to do so on your own. No financial authority is granted in this document, only medical power. So you could provide one person the Durable Power of Attorney and another person the Healthcare Power of Attorney if you desire.

5. Living Will

While the Healthcare Power of Attorney authorizes another to make medical decisions on your behalf, a Living Will (also known as a Directive to Physicians) sets out your predetermined wishes regarding end-of-life care should you become terminally ill or permanently unconscious. Essentially it takes the decision to withhold life out of the hands of your medical providers and the ones you love so that they are not burdened by it and so that you can be assured your wishes are respected.

6. HIPAA Release

One of the important provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) is the obligation that medical records be kept confidential. While this is definitely an important requirement, it can have severe unintended consequences. Without the legal authority to share medical records, your family may not be able to obtain important information regarding your medical condition and treatment if you were to become incapacitated. A HIPAA release allows your medical providers to share and discuss your medical situation with whomever you specify in the document.

7. Letter of Intent

A Letter of Intent is a simple, non-binding personal letter to the ones you love expressing your desires and special requests. It may include information regarding burial or cremation, or a specific bequest of collectibles or personal items. While it does not typically have legal authority, it can help to clear up confusion regarding your personal preferences.

Estate planning can be complex and the laws vary widely by state. This article is general in nature and is not meant to provide legal advice. I recommend that you engage the services of an estate planning attorney to discuss your wishes and prepare the appropriate documents.

[Editor’s Note: You can find more on estate planning here. There are also some tips to ensure your debt after death doesn’t harm your family here. Also, it’s a good idea to get your free annual credit reports every year so there are no surprise debts that need to be addressed. You can get a free credit report summary every 14 days on Credit.com.]

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What Your Family Needs to Know About Your IRA Distributions


Things become complicated upon an IRA owner’s death. If the account holder dies before his required beginning date, or RBD, there is no required minimum due for that year. If, however, the participant dies after his RBD, the beneficiaries must take his final required minimum distribution (RMD) before December 31 of the year of death. If it is not taken, the 50% penalty applies.

After the year of death, the beneficiaries now are obligated to take their own RMDs annually. While the requirement for lifetime minimum distributions is commonly recognized, many people are unaware that RMDs continue after death. If the correct RMD is not taken, the same 50% penalty is assessed on the beneficiaries.

The rules for these required distributions are determined by two broad factors:

  1.  Whether the participant had reached his RBD before death
  2. The type of beneficiary: spouse, non-spouse, trust or estate

Roth IRAs do not require lifetime RMDs. However, upon the death of a Roth IRA owner, the beneficiaries are required to take RMDs or face the same stiff 50% penalty.

Death Before the Required Beginning Date

First, we will assume that RMDs have not yet started prior to the participant’s death (he died before reaching age 70½, leaving his wife as the beneficiary). In this scenario, the spouse would have three options:

  1. Treat the IRA as her own and follow the RMD rules for her own IRA
  2. Start distributions when the participant would have turned age 70½ using her current age each year to determine the correct life expectancy factor from Table I
  3. Take any amount each year, but take the entire balance December 31 of the fifth year following the spouse’s death (known as the five-year rule)

If the goal is to defer taxes as long as possible, the five-year rule is probably not ideal since the entire account will be liquidated and all taxes paid within five years, which may be significantly shorter than the life expectancy of the beneficiary. However, if no distributions are made in the year after death, this option becomes the default.

It is important to remember that RMDs are just that: required minimum distributions. Any of the affected parties can always take out more than the minimum required. So electing an option that provides for the lowest minimum distribution offers the best planning opportunities. It provides the absolute least that must be taken without penalty, without compromising the option to take more at any time.

A non-spouse has two options if RMDs have not yet started prior to the IRA owner’s death:

  1. Distribute the balance by using the Table I factor corresponding to the beneficiary’s age on December 31 in the year following the owner’s death. Each subsequent year, she would reduce the previous year’s factor by one (rather than using the factor for the new current age each year)
  2. Assets can be distributed using the five-year rule.

The only option available to trust or estate beneficiaries when RMDs have not yet commenced is the five-year rule. The estate is automatically the presumed beneficiary if there is no beneficiary listed. So, it is critical that the participant names both a beneficiary and a contingent beneficiary in order to preserve the tax deferral available using the life expectancy option above.

Death After the Required Beginning Date

If, however, the participant had already started RMDs prior to death, a separate set of rules apply. Again, the spouse enjoys the most flexibility. Her options include:

  1. Treat the IRA as her own (like the previous scenario)
  2. Distribute the balance over her life using her current age each year to determine the factor used in Table I
  3. Distribute the account based on participant’s age as of his birthday in the year of death (if he died prior to his birthday, add one year to his age) using Table I. Then each subsequent year, reduce the previous life expectancy factor by one.

While a spouse has several options to continue pre-death RMDs, a non-spouse is left with only one option. They must use the younger of:

  1. Their age at year end following the year of the owner’s death or
  2. The owner’s age at birthday in year of death

To calculate the RMD, divide the account balance by the life expectancy factor that corresponds to that age in Table I. Each subsequent year, reduce the previous life expectancy factor by one (as opposed to looking up the new current age each year).

If multiple beneficiaries are named, it is best to establish separate accounts for each beneficiary at death so that each can utilize their own life expectancy factor. A single beneficiary account will force all of the beneficiaries to use the oldest beneficiary’s age to determine RMDs for all of them. This will force higher RMDs than necessary for the younger beneficiaries, which will accelerate taxation.

A trust or estate beneficiary has the same single option as a non-spouse, with one modification. Since a trust is not a natural person with a life expectancy, it cannot use the beneficiary’s age but is forced to use the participant’s age as of his birthday in the year of death to find the corresponding Table 1 life expectancy factor. Some Trusts can be drafted to include a “look-through provision” that names a qualified individual beneficiary or beneficiaries that qualify as individuals. However, if the estate is named, or no beneficiary is named at all, this rule applies.

In my many years as a Certified Financial Planner practitioner, I have come across situations where individuals were provided inaccurate advice from bankers, stockbrokers and even financial planners. IRA distribution planning is very complex. It requires a high level of expertise in order to make the best decisions that minimize taxes and penalties and provide the most flexibility for the individuals affected. Since the general information provided in this article is not intended to be nor should it be treated as tax, legal, investment, accounting, or other professional advice, I highly recommend that you consult with a Certified Public Accountant and a Certified Financial Planner professional before making any of these critical financial decisions.

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The Lesson We Can All Learn From the Librarian Who Left a Fortune to His Former Employer


A former University of New Hampshire librarian’s $4 million gift to the school has gotten a lot of notice recently because of the way the school chose to use the funds. All the attention serves as a nice reminder that estate planning is important, especially if you’re particular about the way you want your money used.

Robert Morin, who worked at the university’s Dimond Library for almost 50 years, gave his entire estate to the school when he died in 2015. Morin designated that $100,000 go to the library, but he did not specify how the remaining money be spent, according to a statement by UNH.

The school said earlier this month, according to numerous reports, that it plans to spend $2.5 million of the proceeds on a student career center, and another $1 million on a video scoreboard for the school’s football stadium. That final choice upset some folks, who aired their frustration on social media.

The opponents said using 10 times the amount dedicated to the library for a scoreboard goes against Morin’s interests, and particularly his austere lifestyle, which is what allowed him to save up such a large sum of money.

But if Morin had wanted his generous contribution used in a particular way, wouldn’t he have just dictated that in his will or trust, as he did with the amount designated to the library?

Most likely so, which got us thinking about just how much flexibility we all have in dictating our wishes when it comes to leaving money to family, friends and even organizations and charities.

Brad Wiewel, a Credit.com contributor and board-certified Texas estate planning attorney at The Wiewel Law Firm, said a person’s will or living trust can basically dictate anything “that’s not illegal, kind of to use a phrase, unholy.”

“You can put in there pretty much anything you want to,” Wiewel said. “This guy could give it to anything, like a campaign that is anti-smoking, but I don’t know that they would let him say, ‘I want to give this to encourage smoking. That might be against public policy.”

Same holds true for known terrorist groups, hate groups, and so on, Wiewel explained.

Some things you should keep in mind when determining who will receive proceeds from your estate and how much they will receive include:

Stating Specific Amounts

Be careful when stating specific dollar amounts in your will or trust, Wiewel said, especially when combining charities and family as beneficiaries. Your estate can lose value over time, so that $100,000 you want to leave to the Boy Scouts can be great when your estate is valued at $1 million, but if it drops to just $150,000, your family will be left with very little.

That’s why it’s a good idea when leaving part of your estate to a charity or other entity to use a percentage of the estate instead of a specific dollar amount. Along with that, Wiewel recommends a caveat that the amount is not to exceed a certain dollar amount.

That’s not only because stating a particular percentage could hurt other beneficiaries, but a charity, for example, could be required to do an audit of the estate to determine they received the full percentage dictated, which can become costly and time-consuming.

“It’s easier to say, ‘We don’t want to go through an audit, we’re going to give you $100,000 because this is the lesser of; here you go, have a good day,’ ” Wiewel said.

Name Charities as Beneficiaries Instead

Instead of mixing charities and family members in your will, consider making a charity a beneficiary of a retirement account instead. That way, the money will go to them tax-free, Wiewel explained, and, should you wish to change which charity receives your donation, you can simply change the beneficiary on your IRA or 401K account instead of having to rewrite your will.

As with most estate-planning issues, it’s a good idea to seek the counsel of a professional rather than attempting to do it yourself, particularly if you have substantial assets and/or multiple beneficiaries. And as you look at getting your estate in order, it’s also a good idea to ensure your loved ones don’t have to deal with identity thieves who’ve opened credit accounts in your name without your knowledge. You can keep track of these things by regularly checking your credit reports, which you can get for free every year at AnnualCreditReport.com, and by closely watching your credit scores, a drastic change in which can be the first sign that you’ve been a victim of identity theft. You can get your two free credit scores, updated every 14 days, on Credit.com.

Image: Edward Bock

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Does a College Student Need an Estate Plan?


When parents drop their children off at college they often celebrate the start of a new chapter in their lives and breathe a sigh of relief because, after helping guide their child through high school, paying their tuition, and outfitting their dorm room or apartment, they figure that they have done all that they can do.

But maybe not. You see, if your child is 18 or older, he or she is now an adult in the eyes of the law. (In most states, children become legal adults at age 18). This means that you no longer have the same rights in regard to your child as you did when he or she was a legal minor. For example, you no longer have a right to basic information about his or her health and medical needs, and you’re now excluded from making important medical decisions on your child’s behalf should he or she get injured or become ill while at college. No matter how immature or uniformed your child may be, your adult child is entitled to make those decisions, not you.

In addition, once your child becomes a legal adult, you cannot have access to his or her personal bank account unless you are a co-signer on the account. And perhaps even more importantly, if your child has obtained his or her own credit card, you can’t monitor how much your child is charging or what he or she is using the card for.

The good news is that there are steps your child can take that will allow you to stay involved in his or her medical and financial life once away at college. For example, your child can prepare the following simple medical-related estate planning documents.

1. Medical Power of Attorney & Living Will

Your child can appoint you as his or her health care decision maker by filling out a document called a Medical Power of Attorney. That way, should your child become debilitated due to an accident or illness and can’t make his or her own health care decisions, you can make them.

When your child prepares a Living Will, he or she spells out the terms under which he or she would want life-support measures stopped should he or she be near death with no hope of recovery. Knowing your child’s wishes is likely to make it a little easier for you to cope with a parent’s worst nightmare.

If your child is attending college out-of-state, these documents should be drawn up by an attorney in the state where the college is located. Also, many states combine a Medical Power of Attorney and a Living Will into a single document called an “Advanced Health Care Directive.”

Note: It’s essential that every adult have a Medical Power of Attorney and a Living Will or an Advanced Care Directive. If you don’t, meet with an estate planning attorney for assistance drawing them up. (Full Disclosure: I am one.) 

2. HIPAA Release

HIPAA is the acronym for the federal Health Insurance Portability and Accountability Act. This law helps maintain the privacy of an individual’s medical information and so it is virtually impossible for you to obtain any information about your college student’s medical diagnosis or prognosis unless your name is on his or her HIPAA Release form. Your child may want to add your spouse or partner to the form, too. You can obtain a HIPPA release form for your child to complete from his or her doctor or from your estate planning attorney.

3. Durable Power of Attorney

If you want to remain involved in your child’s financial life once he or she leaves for college, ask your child to prepare a Durable Power of Attorney and to designate you (and/or your spouse or partner) as his or her current financial agent. As your child’s agent you may be able to write checks on his or her account should the need arise or if he or she becomes incapacitated. It will also be easier for you monitor your child’s credit card and debit card purchases. However, you will need your child’s log-in information to do this, but since the money to pay your child’s expenses while he or she is in college is probably coming from you, your child may feel that it’s wise to cooperate and share this information with you.

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Help! I Don’t Trust My Son With My Money


Q. I don’t trust my older son with money. My younger one is fine. Is it unfair to put restrictions on the inheritance the older one gets eventually? I’m 70.
— Trying to plan

A. You’re not alone.

Many parents face the same dilemma, and not all people are good with money.

“Some children, regardless of age, need help managing their finances,” said Mary Scrupski, the director of estate planning with Prestige Wealth Management Group in Flemington and Millburn. “Also, sometimes children who are generally good with money make mistakes if they inherit a large sum of money all at once.”

If your gut is telling you that your older son needs restrictions, then it might be a good idea to investigate your options, Scrupski said.

Whether it is “unfair” really depends on your point of view.

“If you do it to protect him from himself, then there is nothing `unfair’ about it,” she said. “You might be actually helping him rather than treating him unfairly.”

Scrupski said if you are concerned about a child’s ability to handle an inheritance, you can always leave their inheritance in trust for their benefit.

If you decide to do this, you will need to name someone as trustee.

“You might not want to name your younger son as trustee for his older brother even if he is better at financial affairs,” Scrupski said. “This might cause family friction even under the best circumstances.”

Instead, you could name a trusted family friend or advisor as trustee. Also, there are financial institutions that provide trust services, she said.

Scrupski said the terms of the trust can be tailored to your older son’s needs.

“For example, you could write a trust that gives your son a fixed percentage of the assets each year,” she said. “That way, there would not be much discretion on the part of the trustee whether or not to make a distribution.”

Alternatively, Scrupski said, you could leave it up to the trustee to decide the amount and timing of distributions.

“Trusts are very flexible vehicles and can provide protection for beneficiaries who are unable to manage finances,” she said.

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How to Have ‘The Talk’ With Your Family About Your Will


Most people never disclose the details of their estate plan to their children, who may also be their successor trustees, executors, and agents. As a result, after they die, the children are left to guess about their deceased family member’s true intentions because of the sterile, legal language used in their parent’s will or living trust.

It’s also true that many children are not even sure that their deceased parent wrote a will, much less know where it is located, and in fact, there are countless stories of children who were unable to find Mom or Dad’s will. Furthermore, even if a parent’s will, or trust document, can be located, there is a good chance that some of its provisions will be out-of-date and that it was based on the status of the family at the time it was written but not necessarily as it is today.

Too often, therefore, after a parent dies, there is a lot misunderstanding and conflict among the deceased’s surviving children because they are left to try to decipher the final wishes of their parent based on long-ago conversations, cryptic notes, family traditions, false assumptions and their own perceptions about what is fair. This can be a recipe for disaster.

To avoid leaving such a legacy to your children, it’s a good idea to have a family meeting, which could be held at your home or at your lawyer’s office. You may want to ask your key advisers to attend the meeting too. The tone of the meeting should be somewhat formal but friendly as well. After all, you aren’t dead yet!

Here are some of the topics I recommend discussing at your family meeting:

  • The legal documents in your estate plan (Trust, Will, Power of Attorney, Health Care Directive, etc.) and the purpose of each.
  • Where these documents are stored and how your family can access them quickly after your death or disability.
  • The responsibilities of the executors, successor trustees, personal representatives, and agents charged with administering your estate and the steps that must be taken to complete the administration process. During this discussion, be sure to assure your family members that they have the right to know what is going on during each stage of this process and explain to those who will serve as your agents that they have a responsibility to keep everyone informed throughout the process.
  • The purpose and responsibilities of your professional advisers.
  • If desired, why you made the decisions you did in your estate plan. For instance, why you designated one child as your agent instead of another and why you named your agents in a certain order or instructed them to work as a team.
  • How your assets, such as a 401K, will be distributed and protected for future generations.
  • Why certain “difficult” assets may need to be handled in a special way, like your home, family business or one-of-a-kind family heirlooms.
  • Why you’ve put one child’s inheritance in a trust rather than leaving it to him or her outright in your will, and why your decision to do so is wise and loving rather than arbitrary.

By the way, most parents do not address the size or composition of their estate during a family meeting because they typically like to keep that information confidential, even when they are talking with their children.

You can also use your family meeting to:

  • Build and strengthen ties within your family and build relationships between your key advisers and your children.
  • Convey your family values to younger generations.
  • Answer questions so that everyone feels comfortable with your estate plan and how you arrived at your decisions.

Some parents worry that talking with their children about their estate plan will create conflicts and hurt feelings. But that’s exactly what may happen if you leave behind a plan that your children know nothing about, and as a result it’s possible that one of more of them may try to undermine the plan after your death.

Educating them now can help your children understand the rationale behind your estate planning decisions and that they are purposeful, carefully considered and based on good counsel. Also, if any conflicts or misunderstandings related to your plan do arise, you will have an opportunity to try to resolve them. And finally, you’ll be able to change your plan if you want based on your children’s comments and reactions to it.

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