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Willing Your Way in 2008 - by Jacqueline D. Byrd, a partner at BYRD & BYRD, LLC, author, columnist

At the end of each year, it’s important to check the status of your life planning. This is not really just estate planning, not really just long-term care or housing planning. It involves taking a look at the range of possible things that could happen over your lifetime and then devising a plan to handle such events in a rational, thoughtful way. In other words, not letting life’s changes and/or events catch you by surprise and unprepared.  Such planning should be considered for any loved ones for whom you care and also for yourself.

      Life planning can be simple or complex. It can be quick or developed over a period of years. It can be expensive or cheap. No two individuals or families have the same set of circumstances. When devising life plans, people should remember that old cliché about getting what you pay for. You need the help and advice of someone familiar with all the issues.

      Truly by far the most popular plan is No Plan: A common plan, but not recommended.  It is a mistake to say you don’t need a Will, for instance, because it is certain that the state in which you reside has a will already prepared for you through their intestacy laws.  That Will is in effect right this very minute, unless you make your own.  Additionally, if you get some life-limiting disease before your death, and you do not have appropriate powers of attorney in place, all your business matters are likely to be tied up in a huge knot, requiring court intervention through guardianship. 

      Perhaps the next most popular plan is Joint tenancy distribution: This common plan puts all property into joint tenancy and supposes that the survivor will inherit all the property. This may sometimes work well in small estates where husband and wife hold all their property in this manner. Remember, however, that having property in joint tenancy with friends or children can be a problem. Recent newspaper stories have pointed out how parents lost their life savings because of credit problems of their child, who was a joint owner of their bank account. Many people do use joint tenancy for their house, automobile and checking account. An advantage is that when one spouse dies, the survivor gets the property without delay. However, be careful of the pitfalls in this type of planning. 

      Sweetheart will: Many wills are written that distribute all assets to a surviving spouse. These are called sweetheart or I-love-you wills. This can be a good plan if the total value of the couple’s assets, including life insurance, is under the unified credit amount ($2 million in 2007) and no estate taxes would be due upon the death of the second spouse. This is probably the most popular will. Sometimes people may not realize that this type of will gives little protection to children. The surviving spouse could spend or lose all the property, or may perhaps remarry and lose control of the assets, leaving the children with nothing. Believe me, if there is a second marriage in your life, life planning is even more important.

      Complex will: This type of will entails a plan that directs property ultimately to the children but with life use (a life estate) to the spouse. This is sometimes used when combined estates are higher than the unified credit amount and the will maker desires to make definite provisions for the children. Willing a portion of the estate to the children protects them in case the spouse remarries or otherwise consumes the estate prior to death. This plan essentially puts a marital bypass trust into the will and protects the tax credit of the deceased spouse.

      Revocable living trust: A lot of people today use a revocable living trust as their primary estate or life plan. Assets in such a trust pass outside the probate process, which in some states can save thousands of dollars. Makers place all their assets into the trust and designate trustees, beneficiaries and all terms of operation and distribution for the trust. This type of trust is flexible and adjustable. It still requires a will, called a pour-over will, which places all assets not in the trust into it at death, thus managing the entire estate through the trust. This trust offers the advantage of privacy, as a will is a public document open to inspection by anyone at the office of the Register of Wills. Taxes for this type of trust are associated with the grantor’s Social Security number. Not everyone needs this trust, regardless of marketing claims. This decision should be made on a case by case basis for each family or individual.

      These are only some examples of life planning. For thorough life planning, an individual still needs powers of attorney documents, both medical and financial, and a living will. In 2008, get yourself in gear, and make sure your life planning gets done! 


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