Last month, I wrote about how my husband and I are starting the process of estate planning. There were some great comments on that post – thanks for all your thoughts! Although I must say, I was surprised at how unanimous the opinions were in terms of hiring a lawyer instead of using software to do it ourselves – usually my readers tend to be pretty split on issues like this.
We haven’t decided what we will ultimately do, but for now, we’re working through the process ourselves. Just as with our taxes, we want to really understand the whole plan, rather than just hand it over to a lawyer. The first step we took was to pay $14 for the Suze Orman protection package, which is teaching us a lot. We’ve already used it to do my healthcare power of attorney and advance directive (still need to get it witnessed and notarized), and will do my husband’s this weekend. That alone is worth more than the $14 we paid for the program. We’ll go through the whole program, paying attention to the details and figuring out what questions we need to ask ourselves, and what the answers will be. We may end up using a lawyer for the will and/or trust paperwork, but I want to understand all of the details before we show up in the law office – if we do at all.
One of the issues to which we hadn’t ever given much thought was inheritance in general. I guess we had both just assumed we’d leave our estate to our son, but we hadn’t thought about it beyond that. Once we started to consider it, we decided that we don’t like that idea at all. In general, we’re both relatively opposed to the idea of people inheriting large sums of money. Right now, our net worth isn’t much. But it’s growing at a fairly good pace, and ten or fifteen years from now (to say nothing of fifty), it could be a considerable sum. We have known several people who are aware that they stand to inherit large estates, and to be perfectly honest, we feel that the knowledge of the future inheritance has had a negative impact on those people. Some even get irritated when their parents spend money, as they feel entitled to the money (?!?!) Some don’t put much effort into saving or planning for the future, as they are simply counting on the inheritance to fund their retirements. To each their own, but our opinion is that large inheritances are often more of a curse than a blessing.
We want to give our son the tools he’ll need to be successful in life. We’re saving to help pay for his college education, but only $100/month, and we have no plans to fully fund his education – we want him to take an active part in that process too. In general, we want to give our son the things that money can’t buy. We want to teach him the value of money, and how to manage it responsibly, but we want him to earn his own money and make his own way in the world. As soon as we had a conversation about this, it was an a-ha moment for both of us. We didn’t want a will or trust that simply left everything to our son.
For now, our son is not even two yet. If we both die, he’ll need a guardian, and he’s also the contingent beneficiary on our life insurance policies. The guardian we’ve picked is just as frugal as we are, and the life insurance money would be more than enough to raise our son to adulthood and pay for college. But what about the rest of our estate? These are the questions we’re looking at now, and there are no easy answers.
We did take a first step earlier this week when we opened our SEP IRA accounts. We each listed each other an our primary beneficiaries, but rather than listing our son as the secondary beneficiary, we each picked a favorite charity. The nice thing about retirement accounts is that beneficiary designations make it very simple to transfer assets without a will. The Vanguard forms we filled out just required us to check a box and list the charity of our choice – couldn’t have been easier.
Hopefully we’ll both live to be 110 and spend our last dime the day before we die. But just in case, we’re working our way through this process. I gotta say, I’ll be glad when we’re no longer pondering our mortality!
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