Try to avoid this mistake lawyers witness repeated in many families: assuming the next generation actually wants and can use the assets being set aside for them—sometimes at great sacrifice.
Reality Check—and Conversation Too
Estate planning expert T. Eric Reich observes that it is heartbreaking to see older adults sacrifice to retain assets for younger relations without knowing whether or not they are really wanted, needed or helpful. Here’s an example he shared with Kiplinger:
A client really wanted a grandchild to have the beach house. Carrying the house was actually causing financial issues for her, but she didn’t want to give it up so she could pass it on. The heir lived out of state, but she really wanted them to have it. I asked if she ever discussed those wishes with her heir, and she had not, but then again, who doesn’t want a house at the shore?…Finally, I suggested we call the heir and have that conversation. The heir, as I suspected, loved the idea of a house at the Jersey Shore but didn’t really want it because they simply wouldn’t have time to ever visit it and the long-distance upkeep, maintenance, etc. would be added stress for them. With this new information, my client decided to let the house go, live a far more comfortable retirement and leave to her heir what they really wanted, cash.
Expert Help
When you work with an estate planning lawyer, you will create a will or trust—or even a combination, depending on your assets and circumstances. As you organize your affairs, be sure to have corresponding conversations with your loved ones and intended beneficiaries. Even when challenging, honest, realistic conversation turns out to be best for all. When you work with a lawyer you will also put financial and health powers of attorney in place, enabling others to make financial and health decisions for you, should you become unable to do so. You’ll need to appoint a a loved one, friend or professional to serve as your fiduciary. This person is generally referred to as an executor, trustee, or personal representative, depending on the circumstances and location. Your fiduciary will serve as the administrator of your affairs, in accordance with the intentions set forth in your estate planning documents—and the law
Keep in mind that estate bonds can play an important role in wealth transfer. Essentially, an estate bond protects the interests of the estate and its beneficiaries in accordance with state law. Sometimes these bonds are referred to as fiduciary, executor or trustee bonds. At Colonial, estate and other bonds are available directly and digitally. The steps to obtaining an estate bond are easy: get a quote online, fill out the information, and enter a payment method. Print or e-file the bond right from anywhere—even the law office.
Good To Consider
Estate lawyers say that the family home is often a source of stress and strife in families. Understandably, since it is can be the biggest asset in a family, the well-intended assumption is “the kids will share it.” As lawyers say this often turns out to be impractical:
The reality is that they likely can’t share it, and forcing them to do so will almost certainly lead to hard feelings. Somebody is going to get more use of it than the others, and that’s where the problems start. If one of them wants to buy out the others, that’s fine — but what are the terms in which they can buy it? Do they get a “discount” because they are family? Doesn’t that hurt the others’ value for the same reason?
To avoid messy sibling conflicts later, carefully consider options for the family home with an estate planning lawyer and take advantage of the gift of time to organize and communicate the plans. It’s estimated that two out of three Americans still don’t have a will. With more estate planning techniques and insights becoming more widely available, it’s more possible then ever to make a difference for the next generation by carefully passing assets—even modest ones—forward.
Adding Value?
Colonial’s direct, fully digital, user-friendly fiduciary bond portfolio reduces the time and expense typically associated with antiquated bonding processes. In addition to providing bonds directly to the general public, Colonial offers The Partnership Account® for Attorneys . This free business service provides user-friendly client management dashboards, enabling attorneys to easily coordinate, view, complete and e-file the court and fiduciary bonds clients need. See for yourself today: The Partnership Account® for Attorneys.
Founded in 1930, Colonial Surety Company is a direct writer of surety bonds and insurance products. Colonial is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed, and licensed for business everywhere in the USA.