Make Estate Planning A Priority

Thinking about who will take care of your children or how your assets will be distributed if you die is never pleasant. However, it is important to have a will to provide financial security for your loved ones. If you do not have a will, make it a priority to draw up a will this year. For basic estates, you can use an online website to create a will. However, you should visit an estate planning attorney for more complicated situations. (For more information, see Everything You Need To Know About Wills and Estate Planning.)

If you already have a will, set some time aside to review the will with your spouse to make sure it reflects your current wishes. Evaluate if the people named as guardians of your children are still the best choice. Verify that all beneficiaries of your estate are still the desired recipients and that all are currently living.

Give a copy of your new or updated will to several family members for safekeeping and also keep a copy at your home. Additionally, create a list of all bank accounts, monthly bills, retirement accounts and insurance policies to help your family continue paying your bills and distribute your assets quickly in the event of your death. Keep a copy of the list at your home so you can easily update it. Make sure to tell a family member where it is located.

http://www.candofinance.com/debt-management/resolutions-to-improve-your-fiscal-health/

Give a gift of financial knowledge to a child or grandchild.

Strategy: Give a gift of financial knowledge.

Best for: Gift-givers at all income levels.

Overview: 

Even if you're not in a position to make a financial gift to a child or grandchild, you can still take time to impart financial wisdom.

Even for very young children, it's not too early to start discussing big-picture concepts such as the benefits of delaying gratification today for a greater payoff down the line. 

And if a child is slightly older, you can share some specifics of your own approach to investing; it's amazing how many great investors say they got their starts by reading the stock tables with their grandparents. 

You might also share a good basic book about investing: The Wall Street Journal Guide to Starting Your Financial Life is a fine entry-level book for new investors; The Bogleheads' Guide to Investing is another great basic tome for entry-level investors.

http://news.morningstar.com/articlenet/article.aspx?id=449121

Write your will – before it's too late

No one wants to think about what might happen to their dependants after they die, which is why so many of us put off making a will.

By Rosie Murray-West
Published: 9:39AM BST 26 Oct 2010

Comment

A badly worded will could lead to relatives being saddled with massive legal fees

It is National Write a Will week this week, and 30 million people in Britain don't have a will – about 70 per cent of the population – according to unbiased.co.uk, the financial advisers' website.

Even if your affairs are simple, you do need to spell out what you want to happen to your assets. "If you die without, you leave your dependants at the mercy of the intestacy rules," warns William Marriott, of solicitor Meadows Fraser. "The rules don't always work the way you would expect them to."

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As well as making life easier for your dependants, making a will can help reduce the tax payable.

So what should you put in a will and what will happen if you don't have one?

IF I DIE INTESTATE, WHAT WILL HAPPEN TO WHAT I OWN?

If you die intestate, which means without making a will, your assets will be distributed according to the law, and not according to your wishes. Jill Dando and Stieg Larsson, the author of The Girl with the Dragon Tattoo, are among those who have died without leaving a will and whose estates were inherited by their fathers, not their partners.

In England and Wales, if you are married with children, you might assume that all of your assets would go to your spouse. However, if your estate is worth more than £250,000, your partner will only get the first £250,000. They will get a life interest in half of the remaining estate, which means they can't get rid of it or spend it, but they are entitled to the interest.

The remainder will go to the children. If your assets are worth less than £250,000, your children will get nothing.

If you are not married or in a civil partnership, your partner won't inherit under the intestacy rules. Similarly, if you have separated but not divorced, your ex-partner will inherit the first £250,000 of your estate.

If you are childless and single, various family members could take varying shares of your estate. If no one claims it, the Government will take the lot.

THAT'S NOT GREAT. HOW DO I GO ABOUT GETTING A WILL?

You can make your own will, as long as you get it witnessed and have all of the formal requirements within it. If your circumstances are fairly simple, you could consider using a will-writing kit, which is available from stationers. However, a will that is badly worded could lead to relatives being saddled with massive legal fees.

It is possible to use online services where your will would be checked by a professional. For a full will, which will help your family to avoid tax and trauma after you die, it's best to talk to a solicitor. Using a firm regulated by the Law Society (www.lawsociety.org.uk) will mean that you deal with a qualified person, and also that you have some consumer protection.

Will-writers, on the other hand, are cheaper, but not regulated.

WHAT ISSUES SHOULD I CONSIDER WHEN I MAKE A WILL?

Do everything you can to make sure that your wishes are not contested. Make sure you do not ask any of the beneficiaries of your will to help draft it. Older people may ask grown-up children to help them write a will, but this means the will could be challenged by other potential beneficiaries. Make sure your will is properly signed and witnessed by two people who are not beneficiaries.

You will need to decide who your executors are. These are the people who will administer your will. You can pay for a bank or solicitor to do this, or a friend can offer to do it for free. If you have young children, you will need to appoint guardians to look after them if you were to die.

WHAT ABOUT TAX PLANNING?

Inheritance tax is 40 per cent, but it is known as the "voluntary tax" because it is relatively easy to get out of paying it with proper planning. Anyone who dies with total assets of more than £325,000 could leave their family with a tax liability. But if you leave your assets to your spouse or civil partner, no tax is payable. If you want to avoid tax and leave money to your children, seek legal advice about setting up a discretionary trust.

HOW MUCH SHOULD IT COST?

To save money, check if your employer, union or home insurer offers a free or discounted solicitor will-writing service. More Than insurance's £20 legal "add-on" to its home insurance policy offers a service where they will check a will for you. If you are on a low income, aged over 70, disabled, or you have a disabled child, www.communitylegaladvice.org.uk may be able to help you.

November is Will Aid month, when more than 1,000 solicitors will draft wills in exchange for a charitable donation. Expect to pay a voluntary £75 per single person and £110 per couple. Visit www.willaid.org.uk.

WHERE DO I KEEP MY WILL?

If a solicitor has made the will, they will usually store it, or you can pay an annual charge to have it stored at a bank. You can keep it yourself, but this is not the safest option.

HOW OFTEN SHOULD I REVIEW IT?

If you get married, divorced or have a child, make sure your will reflects this. Ensure that it is properly changed – either with an official change called a codicil if the change is minor, or by making a new will. Either way, make sure the changes are witnessed.

http://www.telegraph.co.uk/finance/personalfinance/consumertips/8087048/Write-your-will-before-its-too-late.html

Parents won't have wealth to pass on, report

Future generations should not expect to inherit wealth from their parents following the ravages of the worst financial crisis since the 1930s, a new report has warned.

 

By Angela Monaghan
Published: 10:00PM BST 18 Sep 2010
126 Comments

The report says few Europeans are likely to have made adequate provision for their retirement, let alone passing on wealth to the next generation. Photo: Alamy

 

Of 6,010 Europeans questioned, just 10pc said they were actively intending to pass on "significant wealth" to their children, according to a survey of consumer finances by Janus Capital Group.

A further 42pc said they had no intention of doing so, while the remaining 48pc said they were unsure.

 

The survey claimed the financial crisis has produced a generation of under-saving, risk-averse Europeans, which will challenge the future of "inter-generational wealth transfer".

The responses of adults from the UK, France, Germany, Holland, Spain and Italy, showed the financial crisis has "fundamentally challenged the norms of financial wellbeing", according to Ric Van Weelden, head of Janus Capital's European business.

"Specifically, the report highlights how few Europeans are likely to have made adequate provision for their retirement, let alone passing on wealth to the next generation. The financial services industry will have a very different landscape to serve going forward," he said.

Many who were relying upon returns from their long-term investments for later life and to pass down as inheritance have seen values wiped out, and extended life expectancy is placing additional pressure on finances.

Of the six nations that took part in the survey, French respondents were most likely to pass on wealth, while their Spanish and German counterparts were the least likely.

In the UK, 16pc said they intended to pass on significant wealth to their children, 44pc said they had no intention and the remainder said they were unsure.

David Bowers, of Absolute Strategy Research, which carried out the survey for Janus Capital, said: "Inter-generational wealth transfer is something we have taken for granted.

"This is one generation when it may not happen as smoothly."

The report said that at present in the UK, the average estate is worth £90,000 and divided five ways, but Janus Capital said that is likely to change, with those aged 45 to 54 unable or unwilling to save sufficiently.
"The financial crisis has exacerbated a tendency to under-save and to be risk averse.

"Europe's working population has yet to wake up to the fact that it will not be able to retire as early as it would like, and indeed may have to work a lot longer," Mr Bowers said.

http://www.telegraph.co.uk/finance/personalfinance/8010896/Parents-wont-have-wealth-to-pass-on-report.html

Will writers taking thousands from customers, Panorama claims

Will writers taking thousands from customers, Panorama claims
Popular will-writing services are unfairly taking thousands of pounds from customers and their loved ones, a BBC investigation has claimed.

By Martin Beckford
Published: 6:00AM BST 10 Aug 2010

The firms claim they are cheaper and more straightforward than solicitors at creating a last will and testament, and are said to account for 10 per cent of the market.

But a Panorama documentary says in some cases their fees quickly escalate from hundreds to thousands of pounds in hidden fees and charges, while the supposed beneficiaries of wills can be left with nothing.

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The problem is made worse by the fact that will-writers are not regulated as strictly as traditional law firms or financial services companies, which used to help people write wills.

Fergus Ewing, a Member of the Scottish Parliament who is bringing in protection north of the border, told the programme: “The public have a right to be protected, in Scotland they will be.

“Anyone who is charging a fee for writing a will must be regulated. They must have appropriate qualifications, they must have proper indemnity in place. At present none of this protection exists.

"I hope that justice will be done for people – throughout Britain, ideally – in protection against crooks, cowboys and con men."

The programme, broadcast on Monday night on BBC One, interviewed one woman who was left a large sum by a friend but who never received a penny because of fraud by the will-writing firm involved.

Mary Neenan, a single mother from Birmingham, said: "To have something like that £35,000-£40,000 would have been a life-changing amount of money for the three of us."

She went to police and last month David Nash and Nicholas Butcher, two men behind the firm, Lincoln-based Willmakers of Distinction, were each jailed for three-and-a-half years for stealing more than £400,000 from estates they were administering.

Neil Hollingsworth, of the Economic Crimes Unit of Lincolnshire Police, said: “A lot of the times, probably 90 per cent of those cases, the beneficiaries didn't know they were beneficiaries and so they weren't asking questions. I guess they probably thought they'd got the perfect crime."

However financial experts also warn that some banks are wrongly claiming that they must be added as joint or sole executors when writing customers’ wills, which can reduce the value of their legacies substantially.

James Daley, of Which? Money, told BBC Radio 4’s Today programme: “What that means is when you die they’re then able to take as much as 4 per cent of your estate in fees, which ends up adding up to tens of thousands of pounds.

“It’s quite a complex area. It’s the kind of thing most people have to do once in their lives. You’re really in the hands of the advisers, it’s really important that they give you the right advice.

“If somebody tells you that you need to have that firm written in to your will you take their word for it and you might not realise you’re then going to pay for that. This is a widespread issue, it’s a real problem out there.”

Pauline Platt, a Probate Lawyer at SAS Daniels LLP, said: "I've seen an increase in the companies who offer will writing 'services' and the shocking financial pitfalls that have faced some unwary consumers. It can be immensely costly to undo, and can leave a family in disarray after the loved one has died – which is usually only when issues come to light.

“If clients use a solicitor in the first instance, not only can they offer the correct legal advice taking into account the client's domestic and financial situation, but they can also advise on other services such as the creation of trusts, transfer of assets and powers of attorney.”

http://www.telegraph.co.uk/finance/personalfinance/7934820/Will-writers-taking-thousands-from-customers-Panorama-claims.html

What is the first thing you think of when considering how to pass on your wealth?

Inheritance When a young successful professional from telecom background lost his life in an accident leaving behind his wife (home-maker ) and three children between four and 10 years of age, apart from the severe emotional shock, the family went through immense trauma since the deceased had not put in place any succession plan. While, the man had left behind substantial wealth, enough to secure their financial future, the family still needed to grapple with multiple challenges—how to consolidate scattered assets? Who will manage the assets for the children until they reach the age of majority? How to ensure that inheritance is not squandered away but is protected for the family’s long-term benefit? So, what is the first thing you think of when considering how to pass on your wealth? For most Indians, it’s probably a Will. Of course, that is the most traditional method but is it the right choice for you? What are the alternatives? And what are the advantages and disadvantages? Let’s consider the various options. The succession planning tools most often favoured in India are the Will, Personal Holding Company (PHC) and Trust. Apart from these, options such as life insurance and setting up a foundation are also used internationally. Will and Probate Where does a Will rank among all these choices? You should look at it as being the minimum measure you need to take. A Will is a legal document that describes how your assets should be distributed in the event of your death.  However, the actual distribution is controlled by a lengthy legal process called Probate. Derived from the Latin meaning to “prove the Will,” Probate can be cumbersome, time-consuming , in certain cases expensive and emotionally traumatic during a family’s time of grief and vulnerability. A further drawback is that your assets not only have to be made available for public inspection but they are also frozen and cannot be utilised, pending Probate. Revocable Living Trust Given the disadvantages of a Will and considering how important a well thought-out succession plan is, you should also evaluate other options. For instance, an increasingly popular alternative among those with substantial wealth is a “Living Trust” . Living Trust is often called a Revocable Living Trust.  As the name suggests, it can be revoked or amended by the person creating it (settlor) at any time while the settlor is still alive and remains competent. Importantly, when you set up a Living Trust, it manages and administers your wealth both during your lifetime as well as beyond. In other words, there’s no need whatsoever for Probate from the courts since your assets continue to be held within the Trust. Eliminating the Probate formality implies that your family privacy is maintained and administration procedures are minimised so no extensive time lag and no additional costs. Going back to the above case, had the gentleman formed a Trust, his family would have at least been absolved of the nightmare of collating the scattered assets and the accompanying administration. While there are many benefits to be derived from a Living Trust, there are also a few drawbacks. Though most of these are minor and should not discourage you, it helps to be completely informed of the disadvantages so that you can structure it appropriately.

Living Trust

Since a Living Trust does not come under direct court supervision, a trustee who fails to act in the best interests of your beneficiaries may, in some cases, be able to take personal advantage. In addition, the cost of preparing a Living Trust could, in some cases, be higher than the cost of preparing a Will.

However, this depends on the particular estate plan and the difference in cost may not be significant if the estate plan is complex. Refinancing, especially of property held in a Living Trust, can be slightly difficult, though it is not impossible and is more of a minor complication that can slow things down.

Perhaps the most important decision for you to consider in a Living Trust is your choice of trustee to act in your place. The trustee may be your spouse, adult child, other relatives, family friends, business associates or a professional fiduciary, such as a bank or trust company. Whoever you decide, it should be someone who will follow through on your wishes in an impartial manner and without compromise so that your wealth legacy endures for generations to come.

http://economictimes.indiatimes.com/quickiearticleshow/5681798.cms

Parents Can Help Ease the Burden

By Mara Lee
Special to The Washington Post
Saturday, July 19, 2008; Page F02

There are things parents can do to make it easier for their children to handle their affairs after they die or if they should become unable to manage them.

Most important:

Tell them where everything is.

• Where's your will?
• Where do you have bank accounts, stock holdings or safety deposit boxes?
• Where are those statements?
• Where are your tax records?
• Your utility bills?

Elinor Ginzler, a co-author of "Caring for Your Parents: The Complete Family Guide," said children should bring these things up, as uncomfortable as it is.

"Don't wait until bitter crisis," she said. She recommends that children broach the subject by saying, "I want you always to be in control."

It's not comfortable to talk about funerals and burials, she acknowledged, but if parents tell their children how they want them to handle things, they can be assured that they'll do what they want.

Ginzler said parents should give a child power of attorney in case they have medical problems that prevent them from making their own decisions.


Carylin Waterval, whose mother died rather suddenly in September, established power of attorney while her mother was in the hospital. It was helpful, she said.

Ginzler said that if a parent has become incapacitated before getting this set up, it's arduous to get it done. "Just being her daughter doesn't give you that authority," she said.

Mary Ann Brewer is co-owner of Busy Buddies, a company in Northern Virginia that helps elderly people with downsizing moves, as well as helping people whose parent has died.

She said parents want to treat all their children equally and so sometimes they'll make them all executors of their will.

"At some point in time, all those children may not be getting along," Brewer said. "Pick one executor."

Cyndy Esty, one of six children, traveled from her home in Chevy Chase to Boston to take care of her father's estate after he died of cancer nine years ago at age 79. She and one sister were co-executors. "It's amazing how much bickering can come up over the littlest thing," she remembered, even a candy jar.

After 14 years in the business, Brewer and her partner, Nancy Loyd, have seen a lot of parents seek to minimize conflict over their things, either for a downsizing or planning for after they die.

Some are simple, such as putting the name of the intended recipient on the back of a piece of furniture or the bottom of an heirloom. Or letting the children draw straws about asking for certain pieces.

Others are more involved. In one case, parents gave each child a chance to pick something they wanted, starting from youngest to oldest, then changing the order in each successive round.

Another couple gave each child $500 in play money and set starting bids for belongings. The children had to outbid each other if more than one wanted the same thing.

http://www.washingtonpost.com/wp-dyn/content/article/2008/07/18/AR2008071801433.html

The dangers of failing to write your will

The dangers of failing to write your will

Not writing a will, or not updating it, can be disastrous for those left behind.

By Emma Wall
Last Updated: 10:13AM BST 05 May 2009

Actress Natascha McElhone with her late husband Martin Kelly Photo: GETTY

The actress Natascha McElhone feared she might lose her home after her husband died without leaving a will, she has revealed.

Although in the end McElhone managed to keep her property with the help of a lawyer, her fears illustrate the dangers to a family's finances if one of its members dies intestate.

A survey by Standard Life, the insurer, revealed that only a third of people aged 35 to 44 had a will and, perhaps more surprisingly, one in five people aged 65 or more did not. But only with a valid will can you be certain that your estate will go to the right people.

If you do not draw up a proper will, you risk depriving your spouse or partner of their home, increasing the inheritance tax (IHT) burden and leaving parts of your estate in the wrong hands.

On a brighter note for people who fail to make a will, the rules governing an intestate death have been changed to their benefit. People who die without making a will shall now have more of their estate given to their spouse or civil partner.

Previously, if you did not have children, £200,000 of your estate was awarded to your spouse should you die without a will. This figure has now been increased to £450,000. The remainder of an estate is then halved between your parents and your spouse.

Should the parents be dead, it is divided between siblings and the spouse. If you do have children, £250,000 (previously £125,000) of your estate will be awarded to your spouse, before being divided between your children.

The changes mean that inheritance tax liabilities are reduced because the spouse (who is tax exempt) will inherit more, and so the amount going to non-exempt beneficiaries is reduced.

Experts worry, however, that these changes will create a false sense of security and people will feel they do not need to make a will. People may consider their estate to be covered under the law change, when it is still just as important to draw up a will. Failure to do so can cause acrimony and complications.

Look no further than famous stars such as Barry White, Bob Marley and Jimi Hendrix whose families squabbled for years because they all died intestate.

Paul Bricknell, private client associate for Mace & Jones, warned that the increased limits did not mean that a will was now unnecessary. "There are so many reasons to try and avoid the intestacy rules. Failing to make provision for a partner will almost certainly lead to unnecessary legal costs in trying to rearrange an estate after death," he said.

There are many eventualities that are not covered under intestate law. For example, if you die without making a will the rules of intestacy award none of the estate to stepchildren and live-in partners, regardless of the longevity of the relationship.

Unless you have a joint mortgage, the house that you share with your live-in partner, even if they have lived there for 20 years or more, could potentially be passed onto your children, parents, siblings or the state, leaving your partner homeless.

Leaving no will can also mean extensive legal costs for your beneficiaries; failing to provide for a partner or dependent will mean they will have to hire legal help to contest the state's decisions, with no guaranteed result. Complex cases can require the hire of a genealogy expert, at great cost, to clarify relatives' rights to your estate.

Julie Hutchison of Standard Life said making a will and keeping it up to date could save family and friends a great deal of distress and, potentially, money, so it should be regarded as a priority.

Aside from the legal implications, there may be personal wishes that cannot be fulfilled without a will. You may not want your children to inherit at 18 – the set inheritance age in intestate law – considering it too young, or you may not want parents or siblings to benefit at the detriment to your spouse.

If you draw up a will, you can specify how long funds must be held in trust for children, to any age you deem appropriate. You may also exclude family members who you don't want to benefit from your estate in a will.

Stepchildren or live-in partners can only inherit part of the deceased's estate if specified in a will, as is the case for friends or charities. You may also want to outline personal wishes, such as funeral arrangements or who should inherit particular property or items of worth.

Drawing up a will also prevents assets being claimed by the state at the cost of loved ones. Ms Hutchison urged people to make sure they had an up to date will. "A will should be part of bread-and-butter financial housekeeping," she said.

"Once you've bought your first property you should draw one up, regardless of your age."

Even if you have made a will, you need to ensure it is updated. Family make-up can change after the birth of a child or the breakdown of a marriage, but if a will is not updated to include or remove beneficiaries, they will have little or no claim to the estate should you die. The late Heath Ledger's daughter Matilda was left out of a will completed before her birth.

Neither, in the event that both you and your spouse dies, will you have any say in who becomes your children's guardian. If your child or children are under the age of 18 it is essential you have a will for this reason. This also applies to a family member or dependant with special needs.

Nearly half of all marriages end in divorce, meaning that not updating your will can have devastating effects for your spouse and any new children or stepchildren. It is also vitally important that family members know where your will is kept and that a duplicate is stored with a solicitor or financial adviser.

Mr Bricknell cautioned: "Many people's estates are administered as if they are intestate, even if they have a will, simply because no one knows where the will is kept."

http://www.telegraph.co.uk/finance/personalfinance/consumertips/5277201/The-dangers-of-failing-to-write-your-will.html

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