MIDLIFE – TIME FOR AN ESTATE PLAN?

Do you have a will or living trust or some other way of passing along your assets to those you love in case you die suddenly?  In the past several years, I have watched two people that I went to high school with pass away quite suddenly.   I also watched the younger brother of one of my best friends pass away at the age of 38 … leaving behind a wife and three children.  Death does not often pre-announce itself … which means it is best to be prepared for something unexpected.  Otherwise the legacy you leave your family may be hardship and headache … and a pile of legal bills associated with probate.  You may even wind up leaving them nothing at all.

I’m forty-three years old.  Frankly I had never really thought about estate planning much prior to very recently. After all, I don’t have the kind of money that Ben Mallah does.  The first time it crossed my mind was at the funeral of my old high school friend, John – who died of a heart attack at age 38.  I had not hung around John too much since high school – but we still lived in the same city that we grew up in, and I occasionally bumped into him at a restaurant or bar.  The other guy I went to high school with who died was named Ruben.  From what I hear, Ruben was a party machine – and died of liver failure after drinking a very large amount of hard alcohol.  My friend’s 38-year old brother recently died of a heart attack … right in front of his family … while they were all watching TV together one weekday evening.  Phil was overweight – but not a heavy partier or anything, I don’t believe.  But it was his time to go apparently.

Life’s events mean different things to different people … and for me, the funerals of the three individuals I just described meant that I needed to get an estate plan together.  Now I’m not married – but I have lived with my girlfriend for the past four years … and I definitely want her to be taken care of.  I also have an elderly mother who I need to provide for.  I have some very good life-long friends and a few relatives that I want to leave money to.   And pretty much that’s it.  I have no children – but if I did, I would want them to be taken care of.  What I don’t want is a number of my distant blood relatives showing up and making claims … especially when I have not seen or talked to them in many years.   But that is exactly what COULD happen in the absence of a solid estate plan.

Now I am not an attorney, nor am I any kind of expert on estate planning.  My purpose in writing this article is not to lay out all of the various estate planning options available to people of all means – no.   Instead my purpose is to get you THINKING about what you need to do concerning an estate plan, and get you motivated to do it.  I am focusing on the Revocable Living Trust option because that is what I am most familiar with – as I’m just now in the process of completing one for myself.

The first thing you need to do is figure out your NET WORTH.  Your net worth is simply your assets minus your liabilities.  Start with making a list of each ASSET you own, numbered 1 through 10 or 20 or ???.  Next to each asset, right down its value.   If it is a hard asset like real estate or a vehicle or boat, then “value” means what it would sell for if you had to sell it today (not what you paid for it).  If it is a bank or brokerage account, then its “value” is whatever the current dollar amount is.   After you have a list of your assets, it is time to list your LIABILITIES.   Number your liabilities 1 through 5 or 10 or ???.  Your liabilities are your debts … what you owe.   A mortgage is an example of a liability … so is a car loan … so is a credit card balance, etc.   Once you have all of your assets listed, and your liabilities listed underneath – then subtract your total liabilities from your total assets – and you have your personal NET WORTH.   To go one step further, you also will want to determine your ESTATE NET WORTH by adding in the payout value of any life insurance policies that you have to your net worth.  [This is why people make statements like “I am worth more dead than alive” … because their spouse might get a $500,000 life insurance benefit when they die.]

Assuming that your NET WORTH is greater than zero, and less than $2 million – then you are an excellent candidate for what is known as a REVOCABLE LIVING TRUST.   At the very least, you would want to establish a WILL … but a revocable living trust has some key advantages over just a will, or over no estate plan whatsoever. Continued on next page >>>

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