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Estate Planning  
Where there's a Will, There's a Way.


FinancialIt's a subject most of us try to avoid talking about—let alone actually addressing. For many people, dealing with your own mortality is a matter that gets pushed to the back burner, making time to deal with more current and pressing situations. The process of deciding what will become of your material possessions after you are gone is seldom a high point on any "to do" list. In fact, the Federal Citizen Information Center (FCIC) states that about half of all Americans will die without having a will. The truth of the matter is, making others aware of your desires in the event of your passing is a vital part of caring for your family's interests and future well-being. Taking the time out of your schedule to meet with a professional and talk about estate planning is one way to make certain that things proceed according to your wishes and that each member of your family is guaranteed legal rights to their inheritance. The process of estate planning can often be complex but having some background on the process and key points to address will hopefully make you more comfortable with this important undertaking.

Estate planning is not just for the rich. Over the years, we all accumulate items of value—either monetary or sentimental. Whether you have real estate holdings, stocks, bonds, and collectible automobiles or a few heirloom items passed down from ancestors who preceded you, effective estate planning is the only way to make certain your assets are transferred to your beneficiaries quickly, efficiently, and in keeping with your wishes for their distribution. The FCIC states that estate planning is seldom a "do it yourself" job. Although there are computer software packages that enable you to create a will, such documents are not recognized in most states. When it comes to a document as important as a will or estate plan, the FCIC suggests consulting with an attorney, tax advisor, and/or certified public accountant. These individuals are well-versed in the laws and regulations that impact inheritance. They also have the scope of experience to look at your entire family situation and make certain all needs are addressed in your particular family circumstances.

Before meeting with a professional, the FCIC notes that a good place to start is establishing a complete inventory of everything you own (your assets), and assigning a value to each item. The FCIC suggests using the following list as a guideline to which you may add or delete categories:

  • Your residence
  • Additional real estate holdings
  • Monetary savings (CDs, money market accounts, savings, etc.)
  • Any investments (bonds, mutual funds, stocks)
  • Pensions and retirement accounts—401(k) and Individual Retirement accounts (IRAs)
  • Life insurance policies and annuities
  • Any ownership interest in a business
  • Motor vehicles (boats, cars, planes)
  • Jewelry
  • Collectibles (antiques, art, coin collections, etc.)
  • Other personal property

When it comes to establishing a value for some of the more complicated items such as a collection or business, you may need to obtain the services of a professional such as an appraiser or real estate agent to determine accurate and realistic values. When you have your list of assets accumulated and valued, you are ready to begin your estate planning.

FinancialThe main document involved in estate planning is a will. The FCIC defines a will as "a legal document designating the transfer of your property and assets after you die." Without a will, the court steps in and takes responsibility for distributing your possessions according to the laws of your state. Those decisions may or may not be in keeping with your ultimate wishes. If you have no heirs, and do not leave a will, it is even possible that the state will claim your estate. Careful estate planning with a proper will can also streamline the "probate" process where the court determines if your signed will is an accurate and true statement of how you wish your assets to be distributed. Careful estate planning can help avoid lengthy delays in the probate process and help make the process much easier for your beneficiaries.

For a will to be valid it must comply with the laws of the state in which you live. Additional reasons for using a professional for estate planning include:

  • To limit the amount of estate taxes for which your beneficiaries will be responsible.
  • To foresee and address any possible disagreements between beneficiaries and heirs.
  • To address issues involving children from more than one family or your "blended" family.
  • To establish a trust.
  • To handle property owned in another state.

For those with young children, a will is an especially important document that gives you the opportunity to express your choice of a guardian for your child or children in the event of your passing. In the absence of a will, the court will appoint a guardian for any children, which, once again, may or may not be in line with your wishes.

The basic elements of a will are straight forward and the FCIC notes that they include:

  • Your name and place of residence.
  • A brief description of your assets.
  • The names of your spouse, children, and any other beneficiaries (including charities and friends).
  • Names of alternate beneficiaries in the event a beneficiary dies before you.
  • Specific gifts such as family heirlooms, homes, and automobiles.
  • Establishment of trusts, if so desired.
  • Cancellation of debts owed to you, if you so desire.
  • The name of an executor who will manage the estate.
  • The name of a guardian for any minor children.
  • The name of an alternative guardian in the event your first choice is unwilling or unable to assume the responsibility.
  • Your signature.
  • Signature of witnesses.

As with any legal document, the FCIC recommends being as specific with your wishes as possible especially when making specific "bequests" where you name a specific beneficiary to receive a specific item, property, or sum of money. The FCIC adds that beneficiaries should be named as specifically as possible by stating the person's full name as well as the person's relationship to you so the executor of your will (the person you designate to be responsible for fulfilling the terms of the will) will know your exact intentions. By being perfectly clear in your wishes, you will greatly reduce the chances of any challenges to your will.

One last item noted by the FCIC, a residuary clause, is a catchall to cover any assets you may have missed assigning to a specific beneficiary. The residuary clause generally states, "I give the remainder of my estate to..." Without the clause, any items not specifically mentioned will be distributed according to state law.

Life changes on a daily basis and there are a number of life events that indicate it is time for a review of your estate plan. The FCIC recommends revisiting your estate plan and will if any of the following occur:

  • You marry, remarry, or divorce.
  • You have a new child, grandchild, or great-grandchild.
  • You move to a different state.
  • The value of your assets significantly changes.
  • The executor of your will or the administrator of your trust dies, becomes incapacitated, or your relationship with that person significantly changes.
  • One of your heirs or beneficiaries dies or has a permanent change in the status of his or her health.
  • Your children reach the age of 18.
  • The laws affecting your estate change.

Establishing a will and an estate plan is a vital project every parent should undertake to protect the well-being and financial security of his or her family. If you have not already done so, make an appointment today and start the process of putting your wishes down on paper. In return, you'll have more peace of mind that you have done what you can to ease matters for your family should you ever leave them unexpectedly.

As with any matters involving your family's financial matters, consult with your lawyer, accountant, tax advisor, or financial planner for solutions specific to your family's needs.

Federal Citizen Information Center—

Articles are provided for the general interest of our readers. Gerber Life Insurance is not responsible for any content and recommends that you consult the appropriate professional with any questions or concerns you may have concerning any financial or health related issues.

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