How the Loves of Your Life Impact Your Estate Plan…

Happy Valentine’s Day to you and your loved ones!  Valentine’s Day was created to remind us to cherish our loved ones, and to spend a lot of money on cards, flowers, and stuffed animals.  For our purposes, though, we will focus on the former.  We are all familiar with the old grade-school rhyme:

First Comes Love.  Then Comes Marriage.

Getting married is a major decision that, especially in California, impacts your financial situation in some occasionally unexpected ways.  Keeping in mind what assets are community assets and what assets, if properly protected, are separate assets is a key element in your estate plan.  Depending on your situation, characterizing your assets as belonging to the “community” may be beneficial for estate tax and other types of planning.  On the other hand, keeping your separate property separate may be more beneficial, especially in second marriages.  Keeping the characterization of your property in mind when you complete an estate plan and, indeed, when you pay your bills and complete other ordinary tasks within your marriage requires careful consideration and good advice!  Remember, it’s called “making it legal” for a reason.

Then Comes the Baby in the Baby Carriage.

When you have children, the nature of your estate plan will generally change.  Your plan often changes from supporting yourself to passing on assets.  Additionally, providing for college educations, preventing premature dispositions to teenagers and designating a suitable guardian to care for your children and manage their assets are all new considerations to consider.

Additionally, it is one of the most important times to keep your estate plan up to date.  Although it would be difficult to disinherit your unborn children accidentally by making a change after the birth of a child without naming the new child, it is important to keep in mind that as your children grow older, various changes may be necessary.  You may find that your children are more responsible than you planned and need not be burdened with long, drawn-out trust administration.  Conversely, you may find that you feel more comfortable with your children receiving smaller distributions over time.  Making these alterations as your children grow older can save a lot of future headaches.

That’s Not All!  That’s Not All!

Finally, you will grow older (10/4 aging) and, perhaps have grandchildren.  Determining how many generations you to which you would like to extend your estate may be a matter of the size of your estate, the number of children and grandchildren you have, or the closeness of your family as it grows.  Over time, any of these factors may change significantly.

Planning for your old age will also become an increasingly important priority.  As you move from what, in financial strategy parlance, is the “wealth creation” phase to the “wealth preservation” phase, verifying your incapacity documents, and your Medi-Cal or V.A. benefit planning documents will ensure that years of financial savvy is not wasted on large medical bills and conservatorship proceedings.

I often stress the importance of reviewing your estate planning documents regularly.  Knowing what is in your documents and whether it continues to meet your needs and goals may be the best Valentine’s gift you can give to show your family how much you love them. By keeping your documents up to date your passing can be relatively free of legal stresses so that they have time to grieve.

Estate Planning: The Price of Organization, Rewards, Gifts, and Wondrous Tax Things…

FREE REPORT:  This complimentary report, focused on Estate Planning, is comprised of many of Mr. Miller’s articles from his long running column for the largest regional newspaper in San Diego County. This report will guide you through the questions surrounding getting your estate planning in order, and includes the following articles