Estate Planning in Five Easy Steps: Financial Advisor Bradley Bofford Explains Why Even Average Folks Need to Plan Now
It's been estimated that seven of 10 Americans have no estate plan. Recent stories reported by the media have shed light on the tragedies that can befall a person who dies without an estate plan. While most people's estate value falls considerably short of Anna Nicole Smith's mind-boggling $500 million, it's a mistake to assume that estate planning is not warranted based on the value of your assets alone. According to Fairfield-based Chartered Financial Consultant Bradley Bofford, even people of modest means should develop an estate plan - and they should do it as soon as possible. "Time waits for no one," Bofford says.
Fairfield, NJ (PRWEB) June 6, 2007 -
It's been estimated that seven of 10 Americans have no estate plan. Recent stories reported by the media have shed light on the tragedies that can befall a person who dies without an estate plan. While most people's estate value falls considerably short of Anna Nicole Smith's mind-boggling $500 million, it's a mistake to assume that estate planning is not warranted based on the value of your assets alone. According to Fairfield-based Chartered Financial Consultant Bradley Bofford, even people of modest means should develop an estate plan - and they should do it as soon as possible. "Time waits for no one," Bofford says.
"It's easy to feel that because you have a modest amount of assets that there is no need to develop an estate plan," said Bofford. "But you couldn't be more wrong. If you own anything with value, from money, stocks and property to jewelry and collectibles, you have an estate that needs to be properly planned. The problem is, too many people put off doing even basic estate planning work. That's a recipe for disaster."
According to Bofford, there are five easy steps involved in creating an estate plan.
Step 1: Where There's A Will, There's A Way
"A will is the cornerstone of any estate plan," says Bofford. "If you have a will, you have done a large part of what needs to be done to properly plan for your heirs." Among other things, having a legally prepared will ensures that your wishes regarding property are honored as well as the ability to specify how estate taxes and other expenses will be paid.
Step 2: Law and Order
While a will is a very important part of an estate plan, there are other documents that help to ensure your wishes are carried out. A Durable Power of Attorney is a document that designates a person to act on your behalf during times of incapacitation. "A Durable Power of Attorney is important for everyone, but especially for unmarried couples and singles," says Bofford. "Without it, all powers will secede to your next of kin, no matter how close or distant the relationship. Additionally, a Health Care Proxy and a Living Will or Heath Care Directive are important documents. It wasn't long ago that we witnessed the very public battle between Terry Schiavo's husband and family over when to remove life support. Had these documents been in place, it would have been very clear who had the right to make heath care decisions for her and who was able to make the decision to remove life support."
Step 3: Make Your Wishes Known
Creating the necessary documents for an estate plan is half the battle. "Once you've developed and signed your estate planning documents, make sure that the people who need to have them, receive them," advises Bofford. "Your doctor, hospital and the person who has been given power over making health care decisions should have the appropriate documents granting that power. Additionally, your executor should have a copy of your will as well as the knowledge of where you keep other important information that will be needed upon your death."
Step 4: Side-Step Unnecessary Taxes and Delays
Many people are surprised by high taxes and needless delays when a loved one dies. "This is not the time to add any additional stress," Bofford says. "There are a variety of strategies - ranging from making sure one has the right beneficiary designations on IRA accounts and 401(k) plans to creating a "stretch IRA" to gifting directly from an IRA to a charity to buying enough life insurance to cover any inevitable taxes and lifestyle needs - that can be beneficial if put into place before death occurs. Without proper planning and fore-thought, a family could lose a good portion of the intended inheritance. IRD (income with respect to a decedent) and estate taxes can eat up a big portion of the estate; the government could end up confiscating 35-60% of the wealth they hoped to pass on to their heirs."
Step 5: Review It
Once an estate plan is developed, it should not be a static document. "Like you, your estate plan is a living, breathing document that needs to be reviewed and changed as your life changes," advises Bofford. "When there is a change in family situation, insurance coverage, or the death of a trustee, executor or guardian, you need to ensure that your estate plan reflects those changes." There is no hard and fast rule that determines how often the plan should be reviewed, but based on the value of your estate, a professional financial planner, such as a CFP, ChFC, or Registered Investment Advisor, can help to determine appropriate intervals for review. "While attorneys are the professionals who draw up the estate planning documents, it is the primary financial advisor who's most likely to see when plan documents and the overall strategy should be updated," Bofford says.
About Financial Principles, LLC
Financial Principles understands the importance of planning - whether it's for retirement, saving for college or even charitable giving. As representatives of Securities America, Inc. they are able to provide comprehensive services and advice in all areas of personal finance, such as estate planning, retirement planning and tax reduction strategies. Two senior partners, Brad Bofford, CLU, ChFC, and Mike Flower, bring a combined 30+ years of financial services experience to their clientele. Both are recognized as qualifying life members of the prestigious Million Dollar Round Table, a premier association for successful financial professionals.
Bofford and Flower believe that a well-informed client is essential for success. They love taking clients from fear to confidence regarding finances, by placing a strong emphasis on educating people about how to prepare for and enjoy a comfortable retirement.
Visit www. financialprinciples. com to learn more about the advisors at Financial Principles.
Note:
When you need a knowledgeable professional to speak on complicated financial topics in an easy-to-understand and comprehensive manner, please call the advisors at Financial Principles.
Securities offered through Securities America, Inc. Member NASD/SIPC. Bradley H. Bofford, CLU, ChFC and Michael A. Flower are Registered Representatives. Advisory services offered through Securities America Advisors, Inc. Bradley H. Bofford and Michael A. Flower are Investment Advisor Representatives. Financial Principles, LLC and Securities America, Inc are not affiliated.
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