June.8.16Family Finance
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Money Matters with Nimi
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The fear of death in many societies often prevents many of us from making plans for this most inevitable life event. Things may be going rather well, so why dwell on morbid thoughts such as your own death? Estate planning can be emotionally difficult to deal with, and many people actually feel that they face imminent death if they focus on this subject. On the contrary, by considering your own mortality and getting your affairs in order, you give yourself peace of mind and cushion the impact of your death on your loved ones, thereby helping to reduce the amount of stress during what can be a very painful time.

There are several estate planning tools and techniques; these include wills, trusts, gifts, retirement pension plans, and life insurance policies. Such tools should form a part of your financial plan and pass from the wealth accumulation stage through wealth preservation and finally through to the control of the disposition of your wealth.

Of the various strategies, a will is the most common and is one of the most important steps you can take to determine who inherits your property and personal assets. You have loved ones and people that you care deeply about such as your spouse, children, grandchildren, siblings, parents, a dear friend, or a trusted servant who may rely on you for financial support. What will happen to them if you were to die? It can be devastating for your loved ones if you haven’t left a will and die “intestate,” leaving intestacy laws to determine how your estate is handled, which may not be in accordance with your own wishes had you written a will.

Who gets what?

Take an inventory of your significant assets such as investments, retirement savings, insurance policies, real estate, business interests, and any other personal property such as vehicles, artwork, or jewelry. Assign a value to each asset. Once you have made the list of all your material possessions, make a short list of the people and institutions such as charities or your alma mater that you wish to leave your assets to in the event of your death. It is common in some countries for men to designate their brother as next of kin, but this can have serious implications for their widows and children. Ideally, a spouse and the children should take precedence over other beneficiaries.

In some communities, it is the birthright of the eldest son to automatically inherit all if a will has not been put in place. Whilst, historically, this was in place to protect the family assets and ensure that family members were supported, in reality the traditional heir may not be the ideal beneficiary to protect the family’s interests. Be cautious about leaving significant sums of money directly to very young people. Some children are ill equipped to handle sudden wealth and may squander it all in the twinkling of an eye.

Inheritance can be a complicated issue. The inconvenience and unpleasant situations that arise when heirs squabble over who gets what may certainly occur if there is no will. By planning ahead you also protect your estate from unintended recipients. Be absolutely clear about your intentions; this will help avert any potential conflicts after your demise.

Who will look after your children?

If you have minor children, spend some time deciding who will act as their guardian should they become orphaned. This should be clearly stipulated in your will and your chosen guardians should be informed of your wishes during your lifetime to determine whether he or she is suitable, willing or indeed able to take on such an important role and responsibility.

Update your will periodically

Your financial situation is fluid, and the value of your assets will change from time to time. An estate plan should be reviewed at least once every two or three years and certainly when there is any significant change in your personal or family situation such as a birth, marriage, divorce, or death.

Should your marital status change or should there be a new birth or an adoption in the family, revisit your will or life insurance policies to ensure that any new beneficiaries are taken care of. Wills can be amended via a codicil. However, where there is to be a significant change it makes sense to draw up a new will, using the original one as a reference point.

Keep your will in a safe, readily accessible place

As with all your other important documents, such as title deeds and insurance policies, wills can be lost, stolen, damaged, or destroyed. It can be very awkward when such documents and other necessary information cannot be found. Original documents can be kept with a lawyer or banker, and keep a copy for yourself for easy reference. Create a list of where the all-important information can be located, and give the list to someone you trust.

Funeral arrangements

If you have specific wishes concerning your funeral, discuss this informally with your family. Much that will happen is ritualistic or traditional and as such can be carefully planned in advance, from the funeral ceremony and service to the burial arrangements and any entertainment thereafter. This will give your family one less thing to think about at such a difficult time.

In some societies funerals can be such an elaborate long, drawn-out series of ceremonies that they force family members to dip into their savings or to go into huge debt, thus jeopardizing their own financial future for a life past. A new home may be hastily built for the lying-in-state ceremony just to show off to the community. Had half the money spent on the funeral been spent on caring for the deceased loved one during their Iifetime and providing appropriate medical care, they may well have lived a lot longer.

If you have lived like royalty and wish to be buried like royalty, do plan ahead and set aside funds specifically for such an event so that loved ones are not further burdened in an already stressful situation. For many of us, the term estate planning conjures up images of the elderly or the wealthy; estate planning is a must for anyone who has accumulated even a modest amount of wealth and wants a say in how it is distributed once they are no longer alive. Careful estate planning can reduce most of the feeding frenzy and the amount of stress and strain that often occurs after a person dies. No matter what your net worth is – whether you are married, single, a single parent, divorced, widowed, young, or old – it is important to have a basic estate plan in place. Be sure to put your affairs in order, now.

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