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Valuable Documents and Estate Planning

Death and taxes are both inevitable. Well, that is unless you live in a state where there are no state income taxes. Death, on the other hand, is an unfortunate side effect of life, so we had better deal with it.

And while mortality may be far off for those of us still in our prime, it’s something we need to confront for our parents. Getting their financial affairs in order can make the experience far less difficult.

The sad truth is that not enough of us take the time to consider what will happen when we’re gone. In fact, 55% of Americans pass away without a will or an estate plan. One could suppose from this statistic that over half of us either die unexpectedly or didn’t face up to the fact that we need to have certain documents in place while we’re still living. Here are some of the affairs that should be kept in order before we are referred to as the dearly departed.

Your will is the foundation of your estate plan. The main purpose of a will is to set out with some specificity who you would like to receive your property once you’re gone. If you don't leave a will behind, disbursements will be made according to state law, which may not be what you wanted. Good portions of families find themselves at odds when it comes to inheritance, and there was recently a 36 percent surge in family disputes as a result. 

Another essential document that will be useful is a Letter of Instruction (a non-legal document that typically accompanies your will and is used to express your personal thoughts and directions concerning items in the will).

Durable Power of Attorney may help protect your property in case you become physically incapable or mentally incompetent to handle financial matters.

Advanced Medical Directives lets others know what medical treatment you might want or enables someone else to make medical decisions for you, in case you can’t express them yourself.

Something else to consider is life insurance. The truth is that unless scientists discover a way to cheat the aging process, all of us will pass away. This means that every single one of us will at one time or another need a life insurance policy.

Since there are different kinds of policies available and every individual’s and family’s insurance situation is unique, you should consult with an insurance professional for guidance on the best type of life insurance for you and your family.

The average life expectancy for women is 81 years, compared to 73 years for men. The statistics indicate that married couples are usually where the older of the two is the man. This makes it highly likely that the woman could be left having to deal with her late husband’s financial obligations — a far higher likelihood than the reverse.

Either way, dealing with debt is something that can be planned for while you’re still around. It may involve a somewhat uncomfortable conversation with your spouse or your parents, but a very important one nonetheless. Life insurance can help pay for debt after someone dies, but another effective tactic is to eliminate as much debt as possible while you still can. Reducing monthly expenses and using the extra money to pay down credit cards is just one way to approach the issue.

The bottom line is that while it is unavoidable that we will be gone someday, it is also true that the sun will rise again, and we can alleviate the loss for those left behind by planning ahead.



Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC.

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