Five Financial Problems You Might Not Know Your Family Had.
Even if you think you have all your money issues taken care of, here are five common problems that are often overlooked.
Guardianship – If you have children under the age of 18 or if you are the caregiver for a special needs child or adult, you need to make provisions for those loved ones if something happens to you.
Simultaneous death – In the TV series, Designated Survivor, Kiefer Sutherland’s character becomes President of the United States when almost everyone is killed during a State of the Union Address. He was the designated survivor. If you are married, you need to have the same concern for your children. What happens if both of you die?
Dividing the residuary estate – It is interesting to read an old will on Ancestory.com. Many people took painstaking care in recording who got what property. That level of care is rare nowadays. You may decide who gets your significant property, however, make provisions for what is left over, that is called the residuary estate.
Making provision to pay taxes and debts – From time to time, I encounter someone who says, “my family can fight over my estate when I’m gone, I going to be dead.” That statement probably doesn’t describe you since you are reading this article. For those who are concerned about the debts that they may leave to their family, burial expenses are not all that needs to be planned. Taxes and debts are commonly overlooked. If you think you do not have enough money to worry about estate taxes, you may be right. However, when you die, your heirs still need to complete your income tax return. Plus, they will need to take care of any property taxes that may be owed. Here is the real shocker for many people. If you die with a credit card balance, your spouse must pay that off. It does not die with you. The same applies to a mortgage in your name. I have encountered instances where a spouse died, and the surviving spouse had no idea that the deceased spouse had credit card debt.
Contingent beneficiaries – Sometimes a will may be okay for years and years. What happens if the primary beneficiary dies? You can name someone to be in line after that person. Another significant reason to have contingent beneficiaries is if the primary beneficiary does not want an inheritance. Here is an example. If you have a child that enters a bad business deal, have bad debts or is going through a divorce, they may not want to inherit property from your estate. If that child is the primary beneficiary, they can refuse the inheritance. At that point, the property would pass to the contingent beneficiaries.
Estate planning for most people is not complicated to understand. Estate planning takes effort and is usually best done with the guidance of someone familiar with the most common issues that most people face.