Tag Archives: beneficiary

Have you made these 5 life insurance mistakes?

life insuranceWe came across an interesting article about life insurance on the Edward Jones web site.  It gives you some valuable information and some things to think about.  It’s reposted here in its entirety.

“If you already have life insurance, you’ve taken an important step to ensure your family is taken care of in case of an unexpected event. But just having it isn’t always enough. Do you have the right type or amount? Have you reviewed your policy lately?

These are the 5 most common life insurance mistakes people make.

1.  Having the wrong amount of coverage

Studies show that 1 in 4 people feel they need more life insurance protection.* So how do you decide how much is enough? Use our life insurance needs calculator, or “L-I-F-E,” to get a quick estimate. It will help you calculate your:

    • Liabilities (mortgage, car loans, student loans, other debt)
    • Income replacement – how much your family will need for ongoing living expenses and savings needs
    • Final expenses
    • Education expenses for your children or children

Once you have that number, compare it to your current policy amount and see how close you are.

2. Having the wrong type of policy (term vs. permanent)
Do you need insurance to cover you while you have a mortgage to pay or children at home? Or are you looking to build cash value in a policy that you can later pass on to your heirs? Each insurance type has its own advantages. Here are the basic differences:

Term insurance covers you for a specific time frame, typically less than 20 years. It’s the most basic, and affordable, type of insurance, which makes it a popular choice for young families who are balancing debt and saving for the future.

Permanent Insurance provides lifetime coverage and allows you to build cash value that you can later pass on to your beneficiaries. It’s more expensive than term insurance, but the premiums typically don’t increase with age.

Learn more about the differences between these two insurance types here.

3.  Relying solely on employer-provided insurance

Life insurance coverage provided by your employer might be okay if you’re single and without kids, but if you have dependents and large financial obligations, it may not be enough. Employer policies rarely cover more than 3 times an annual salary (the general recommendation is 10 times your annual salary) and sometimes only cover as little as 6 months’ salary. Plus, if you change jobs, you can’t take your policy with you.

4.  Neglecting to designate beneficiaries

Naming beneficiaries helps ensure that your insurance money goes directly to the people you intended, helping them avoid probate (the legal process of distributing your estate). This could save your family time and expense. If you have insurance from Edward Jones, your financial advisor can help you set up beneficiaries for your policy.

5.  Ignoring your policies

Life insurance is an important part of your overall financial plan and should be reviewed at the very least every 3-5 years. If you’ve recently gotten married, divorced or welcomed a new baby in the home, it’s time to review your policy to ensure your coverage amount and policy type still work for your situation.”

For information about financial and estate planning, check out our website www.diesmart.com.

Do I Really Need a Will?

last-willYes, you do.  A will is a legal document which ensures that your property is transferred according to your wishes after your death.

If you don’t have a will, here are five things that can happen.  We found this list at nerdwallet.com.

  • Spendthrift heirs – If you have heirs who aren’t equipped to handle a large sum of money, receiving it may cause damage.  Perhaps these heirs are bad at handling money or, maybe, they’re drug or alcohol addicts.
  • Unexpected or contested heirs –  There may be confusion about who the beneficiaries really are.  Sonny Bono, musician and politician, died without a will.  His ex-wife, Cher, and a man who said he was Bono’s son tried to claim part of his estate, which his wife, Mary, contested in court.  Prince’s estate is another classic example.  Many people came out of the woodwork claiming to be relatives, entitled to a piece of his assets.
  • Property (and probate) in multiple states – If you own property in more than one state, your estate will have to go thru the probate process more than one.  Probate is a costly and timely process, even if you just go through it once.  Image if you own property in four states and your heirs have to hire four attorneys and go through the whole process four times.
  • Fabricated wills – If you don’t have a real will in place, it’s possible for someone to create a fake one – especially if your estate is large.  A famous case involved the estate of tycoon Howard Hughes.  When he died, several supposed wills surfaced, and his estate spent millions of dollars defending against the false documents.
  • Beneficiaries don’t like the court appointed executor – If there’s no will, the probate court will appoint one.  It may likely be an experienced attorney but not necessarily one the family knows.  It may take a great deal of time for this person to take inventory, appraise assets and distribute the estate.  If you have a will and name a family member as executor, that person will usually do a much faster job, possibly because that person is also a beneficiary.

If you don’t have a will, you should prepare one now.  Otherwise, your assets may not be distributed the way you want them to and a lot of extra money will go to attorneys and the probate court and not to your heirs.

For more information about wills, trusts and other estate planning documents, go to www.diesmart.com.

Want to avoid probate?

estateplanningYou may think that if you have a will and in it you name the person who should inherit your home, that’s all you have to do.  Yes, it is if you’re willing to have the home go through a probate process.  That probate process will cost the beneficiary a lot of money as well as time and will be a public record.

However, there’s now a way that many can avoid the whole probate process and that’s thru the use of a transfer on death (beneficiary) deed.

There are several states that have a similar law and California just joined their ranks in January of this year.

If you live in one of these states, you now have the option to complete a Revocable Transfer On Death Beneficiary deed and name a beneficiary for your home.    After your death, the beneficiary can directly claim ownership rights to the property without involving the probate court and paying probate fees.

The deed can be completed and filed without hiring a lawyer or paying a third party to record the deed with the county recorder.

For some homeowners, a TOD Deed can be a cost effective way to avoid probate on the death of the last owner.   If you own a home and have it listed in your will, you might want to consider this new option.

For more information about probate and estate planning, go to www.diesmart.com.

Did he really just get the lorry?

junkyardAlthough this actually happened in the UK, it could just as easily have happened here.

Fred McGuinness owned a scrap yard.  When he died at age 64 in 1987, he left everything to his wife Edith.

He had four children: David, Freddie, Kevin and Denise.  David claimed that he and his brothers had been promised shares of the business to pay them back for all the years they spent working in the family business.

When Edith died at age 87 in 2013, David fully expected that their time had come to get their reward.  However, Edith left everything she had, including the yard, to Denise.  The only other bequest was a small one to charity.  In a letter Edith wrote to accompany her will, she said that she and Denise had been excluded from the business and “mistreated”.

Although Denise owned a quarter of the business, her bookkeeping role had been eliminated, she never got a bonus and her pension was a “pittance”.

Edith also wrote that “since Mr. McGuinness passed away, she had watched his once-thriving business ‘go to nothing from greed’.”

Edith’s estate was valued for probate at more than £3million after tax and the court heard that a £12million offer had been received for the yard.

Although David had “taken it for granted” that he would inherit part of the yard, the probate judge disagreed.  He said there was never “a cast iron promise” that the yard would be divided among all of the children.

The judge further ruled that the only thing David would inherit was a classic Morris lorry, valued at about £10,000.

You can’t assume that what’s been casually mentioned as what you’ll inherit will stand up in court.  If you feel that something should rightly be yours, be sure to discuss it with your parents while they are still alive and get their commitment put into a legal document.  Otherwise, you may find yourself – like David – without the inheritance you had been expecting…and experiencing friction with any other heirs.

Everyone should have a will that outlines what they wish to happen to their assets when they die and clearly spells out the terms.  If you have assets, don’t delay.  Get a will written today.  You can either find a “do it yourself” version on the web or, if your estate is larger or more complicated, find an estate attorney who will prepare one for you.

For more information about estate planning and will writing, go to our website, www.diesmart.com.

Are your beneficiary designations up to date?

k8758525Do you have a bank account?  What about a brokerage account or life insurance policy?  Have you set up an annuity  or a retirement plan?

You probably have a least one or two of these types of accounts.  When you set them up, you were asked to name a beneficiary for each.  At the time, the person you named was someone you wanted to receive these assets when you died.  It might have been a spouse or significant other.

It’s been several years since you named that person.  Have your circumstances changed?  Are you now divorced or no longer involved with him or her?  Have you remarried or had children you want to be sure are protected?

Most people name a beneficiary and then forget about it.  They never go back and update the information provided so it reflects their current wishes.   They figure it doesn’t matter because they have a current will that designates who should inherit what.  However, it does matter.  Whoever is named as a beneficiary receives that asset when you die, regardless of what it says in your will.   So your ex-husband or former girlfriend may receive a large sum of money that you didn’t want them to have.

Don’t let this happen.  Review your beneficiary designations whenever your circumstances change and be sure that your assets will go where you want them to when you die.

For more information about estate planning, go to our website www.diesmart.com.