When it comes to household finances, many couples assign one spouse to take care of the money. That person balances the checkbook, makes sure the bills are paid, and sets the budget. It is part of the divide and conquer paradigm that makes households, and businesses for that matter, work efficiently. In any couple, though, the paradigm leads to strife because, no matter how large your estate is, you can never afford every single thing everyone in the family wants. So how do you decide how to spend your money? Estate planning may require employing the same methods to determine the best outcome for everyone. However, the inability to come to a resolution on your own should not be a reason to avoid making a comprehensive estate plan. Speaking with your estate planning attorney may help resolve these issues.
One common issue in estate planning hinges on the children. Although you love all your children equally, you may not wish to treat them equally in your plan. If your children vary greatly in their professional success levels, you may wish to give a leg up to the children who are having a more difficult time by leaving the family home to that child or otherwise leaving that child extra assets. Alternatively, you may wish to reward your other children for their good decisions. If all of your children are successful, you may instead choose to set aside a separate educational trust for the benefit of your grandchildren. In such cases, it is important to fully consider your plan with thoughtful counsel, not only to consider how the disfavored children might interpret your distribution, but also the types of incentives it creates.
Another issue that often arises for married couples is whether to purchase life insurance, how much, what type, and on whose life. The decision involves balancing the purposes for the insurance against the premiums. Realistically assessing your financial situation and income in the case of either of your deaths is essential to making a good decision. Many couples simply decide to purchase life insurance for the husband under the, sometimes false, assumption that he will die first. Instead, it is likely that if both spouses are working, both incomes are necessary to the household. Similarly, although survivor’s benefits for social security, pensions, and other programs exist, they may not remain at the same level. It is helpful to determine what financial obligations will continue to exist even after either spouse’s death.
In any case, your estate and financial planning may be tailored to your specific wishes. If disagreements arise over how to create your plan, it is important to remember that, ultimately, it is only dollars at issue and compromises may be made by splitting the difference or balancing the various interests at play. Working through your financial decisions is not a new feat to overcome; estate planning simply places the issue in a different situation. If you are normally wearing the metaphorical financial pants, now is the time to make sure you sit down to complete your plan!
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