Readiness

Anticipation for what's ahead can be the best.  Looking forward to that family picnic, date, vacation, promotion at work.  We plan, prepare, ponder; often putting more time in advance of the event than the event itself.


Failure to plan is merely planning to fail.
 -- Winston Churchill

Then again, we are all different.  Some live life according to whim, others plan to surgical precision, and the rest somewhere in between.  I’m willing to bet, though, when it comes to something like your vacation, you make time to think it through.  How much vacation time to you have?  Do you know where you’ll be spending it this year?  Have some ideas as to where you’ll go in the future?  How much you’ll spend?  Mulling it over in your head as it approaches?  Who will go with you?  If you have kids, will they go with you?  Do your pets need someone to take care of them, or will you put them in the kennel?

Find these questions easy to answer?  Well, if not, it’s a good process to consider.

What about for when you will be gone?  As the reality of death is unpleasant, I propose that it doesn't have to be.  Being prepared can take that sting away, not only for yourself in wincing anticipation, but all about you.  Are you ready for what's next?  Are those close to you, or even if single and no children is an apt descriptor for your life, what of those that depend on you, are they in any way prepared?  Have you put as much thought into that leave of absence, if you’ll forgive the misuse of the phrase, as you have a fun vacation?

Don’t worry.  You’re in a common position if you haven’t yet taken “make a will” off your to do list.  Many people spend more time planning their vacations more than they do planning their estates. It’s easy to understand since we are all hoping there will be at least one more holiday to plan sooner.  Further, going to ski, visit a friend, go hang out on a beach is far more fun to ponder.  Estate planning is far more important.  It requires more time and effort, and yet often gets the shrift.  We rationalise that other matters require our attention.  However, without a comprehensive estate plan, all you have worked so hard for, through education, work, and investments can be lost or end up with unintended beneficiaries.

Here’s the ugly truth, meteor or not, you will have an estate. Even if you plan on spending every last penny, without notice as to what day that will be, you will be on once side or another of net worth.  If you take the time now, to prepare for the transfer of assets, you get to choose.  You, not a default choice by statute, will have a hand in selecting not only who gets what, but how the transfers will occur such that you minimize taxes due, and making sure you have sufficient liquidity to meet nondischargable debts and obligations.

Often, the phrase estate planning  elicits assumptions that it is for the very wealthy.  However, this just isn’t the case.  What is imperative to understand is that your estate plan be consistent with how you lived your life, such that your financial and philanthropic goals are met after you’re gone.

At what point do you have to worry about an estate tax?  Well, that’s a moving target.  If you were “lucky” and passed away in 2010, there was no estate tax due to a full repeal that was in effect that year.  For 2011, however, the estate taxes apply to estates over $5 million.  Sounds like a lot, but with insurance and a large asset, it’s not that difficult to reach that mark.

So, before you can begin to decide who gets what, and how, you need to know what you’re worth.  That, if you’re living right, should be a moving target.  Thus, for an estate plan to be worth the weight of words on the page, it too must change to meet your ever changing financial picture, and the ever changing tax landscape.  This information I provide here is merely to inform, not to provide the legal advice.  To being your estate planning process, be sure to consult with an estate attorney and financial professional licensed in your state.

Know Your Worth

I have long said that one's self-worth is not reduced to the number of zeros on a paycheck.  It's in the character of our actions.  Well, whether you live your life with fastidious attention to your affairs, or let the chips fall where they may, you ought to be consistent with what you leave behind.  If you do nothing, the state makes certain one-size-fits all presumptions about who gets what you leave behind, whether personal or real property, or even your children, your pets.

That said, without addressing your estate, the Commonwealth of Kentucky will be happy to look over a balance sheet and list of belongings.  Your life will be reduced to a balance sheet and impersonal distribution of what you leave behind, all for want of deciding for yourself.

There are some things you can gather before that first “one hour free” consultation we attorneys are so apt to offer.  Make a list of all the things you own, and what you owe.  Your estate will include all things titled to you, that do not “pass by operation of law” at the time of your passing.  For instance, if you have life insurance, you will have named someone to receive the proceeds.  The proceeds from life insurance are paid directly to a beneficiary.  Once you know make that list of what you own and what you owe, your “net worth” is easily determined by subtracting the debts from the assets.  The law plays a role in determining what and how you own your assets.  It varies state-to-state, but shared property changes not only your net worth, but also how ownership transfers after you pass.

Only when you have arrived on your net worth, what you own, how, and what debt is owed can you estimate how much tax your estate will have to pay.  You see, you may want your beneficiaries to receive, say, your house, but unless you have the liquidity to pay off any debt(s) owed and for the taxes, will they receive it free and clear.

So, have questions on how to get started.  Don’t fret.  It’s what I do.  :like: my Facebook page and contact me for a confidential meeting.