Inheritances: Managing Life's Uncertainties

Not to be rude, but just imagine, only for the short time that it takes you to read this page, that it's many years from now and, after a long, full, fruitful life, and with your devoted family and friends gathered around, you pass away peacefully in your sleep. Now, from on high, just a few rungs below the right hand of God, you look down on loved ones left behind. You see your family gathered in an attorney's office. The attorney is going over the details of who will inherit the wealth that you labored so diligently to build. You wanted to pass this estate on to your most cherished heirs - perhaps your spouse, your children, your grandchildren, your favorite charities'so that they might have better opportunities in this increasingly competitive world and might themselves live long and comfortable lives or help others to do so.

Congratulations, or Remorse?
What do you see? Is everyone getting the inheritance you wanted? If so, congratulations! You diligently and recently prepared, with the help of your tax advisor, attorney, and financial advisor, for your estate to pass safely through the tangled tax and regulatory mazes that too often derail the best laid plans and intentions of the recently departed. Equally important, you may rest assured that those you love the most will continue on without you, but with every bit of financial help you could give them.

If you are not one of the well-prepared, then consider for a moment what could happen to your wealth. Have you recently updated the beneficiary designations on your 401(k)s, IRAs, and similar retirement plans? If not, then its possible that this part of your estate will not go to those you wish, and this may be true even if you have prepared a trust and a will. If you have updated the appropriate documents, beneficiaries may nevertheless unintentionally make mistakes after your passing that could result in the loss of most of the potential wealth these plans offer. For many people, their retirement plans are the largest part of their estate. It makes sense to get the details right.

Have you recently updated your will or trust, or considered whether you need a trust? Without these, you will likely not be the one deciding who inherits what. Instead, your state government will decide. You wanted your children from your first marriage to get a substantial portion of your estate? Sorry. Your last spouse gets it instead. When he dies, it might then go to his children, one of whom has repeatedly squandered his opportunities and proved incompetent in handling his financial affairs.

We're almost at the end of this page, and there is just one last thing. What if instead of dying peacefully in your sleep decades from now, you are unfortunately the victim of a terrible accident'tomorrow' Again, not to be rude, but from your perch on high, are you looking down on the distribution of your wealth as you intend?

It's a Pain
Getting these disparate inheritance problems taken care of is, to put it bluntly, a big pain in the butt. And what makes it harder, these preparations offer not one benefit to you. You'll be gone. It will be your heirs who benefit from your preparation or suffer from your lack of it.

Do your most cherished heirs a favor - do it now - and improve your changes that they remember you fondly. Make sure these final details are in order should you pass away tomorrow or in 30,000 tomorrows. As Lyle Lovett reminds us: "Life is so uncertain." One approach is to imagine that you are now dead, find out exactly what that means to your heirs, then make any changes desired.