August 23, 2013

Brian and Bo take a detailed look at estate planning that will be helpful no matter what stage you are in financially. This topic affects everyone differently and the guys are here to give you some insight. From the basics to complex strategies, the Money-Guy covers the realm of estate planning in this show!

Essentially, estate planning is to ensure that your wishes are met and that your loved ones will be cared for if something were to happen. If you have children the one thing that we always harp on is to make sure you have wills and keep them up to date. So many assets are often overlooked and not covered in a will, which makes planning even more important. When drafting your wills it is important to know which assets need to be included and how others can be titled in order to speed up the transition process.


  • Items that should be included in your will:
    • Primary Residence
    • Unique Collections (example: stamp or coin collections)
    • Personal Property
  • Items that do not need to be included in your will:
    • Joint Checking Accounts: do not need to be included in your will, but if you do not want your share to pass to the joint holder, consider setting up Tenants in Common.
    • IRAs, 401(k)’s, and Life Insurance: Do not need to be included in a will, as long as, you have named beneficiaries.
  • When wills are drafted you typically set up Health Care Directives/ Living Wills. These documents designate someone to make decisions about your medical treatment in situations in which you are not able.
  • A majority of wills can be legal jargon, the 4 main things that you need to address in a will are:
      1. Name guardianship for your children.
      2. Name an executor and have backups- make sure that you trust them and they will act in your best interest and execute your wishes.
      3. Name how big items will transfer (cars, boats, furniture)
      4. List how small items will be handled, it will make life for your friends and loved ones much easier. From antique toasters to sentimental jewelry and family heirlooms. (Listing individual items in the will may not be necessary, rather make a list that your family will honor.)

Retirement Accounts

  • Have primary and contingent beneficiaries listed. The primary is just that, they act as the first layer recipient to your assets. The contingent beneficiary names who will receives your assets if the primary beneficiary were to predecease you.
  • Per Stirpes is a great tool to use especially if your named beneficiaries have small children. Per Stirpes is a term used in estate planning that designates how assets will be distributed if a beneficiary predeceases the account holder. The Per Stirpes designation stipulates that the deceased beneficiary‘s portion would be distributed in equal amounts to that beneficiary’s heirs. Per Capita is the default designation if Per Stirpes is not explicitly stated. The following chart graphically illustrates the difference in the Per Stirpes and Per Capita designations:


Other Estate Planning Thoughts:

  • Don’t let life sneak up on you! Make sure that when you have major life changes you re-visit your estate planning documents and beneficiary listings.
  • Prepare an annual net worth statement, so that you have a nice inventory of your personal assets.
  • If you keep estate documents in safety deposit boxes make sure someone has duplicates or access to the box.
  • Please understand the benefits of stepped up basis. If you give away appreciated stock while you are alive, your heir’s inherit your basis. If the stock is passed after death, the heir receives the stock at a stepped up basis to the current value. This strategy saves the heir from recognizing your entire gain on the position.
  • Annual gifts: Cash is King! The annual gifting limit is $14,000 (we may or may not have said $13,000 in the podcast, we’re not admitting to either) for 2013. Beware of the value of property you gift. You may not have to incur any taxes, but you could eat up some of your lifetime gifting limit.
  • Keep it simple! Be sure to use an attorney to draft your documents so that there is a level of accountability. Online sites make it super easy and affordable to create your documents, but it may be difficult to find someone to fall back on if the will is challenged.

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