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March 4, 2009

Protecting Estate, Assets and Loved Ones:


by Denise Appleby CISP, CRC, CRPS, CRSP, APA

Planning for what happens with assets after death is not on most individuals’ list of favorite things to do. However, it is a necessity; especially if one wants to make sure that the assets left behind are allocated in accordance with one’s wishes. Proper estate planning can also help to reduce taxes that beneficiaries may owe on assets they inherit, and can help to ensure that loved ones who are not self-sufficient are taken care of from a financial perspective. However, these plans will work only if they are put in place before the owner’s death.

The following are some of the key steps that individuals can take to preserve wealth, and control their assets even when they have passed on.

Prepare A Will

It is a known fact that doctors should not give every patient the same prescription, as each patient visit the doctor for different reasons and would be given different diagnoses. The same thought process must be applied to an individual’s estate, by preparing a Will that details how the individual’s assets should be allocated among heirs. If there is no Will, the State intestacy laws will generally determine how the assets are distributed, and will likely use a standard process that could conflict with owner’s wishes.

Fill-in-the-blank Wills can be purchased at many bookstores and pharmacies. However, individuals may want to work with an attorney who has estate-planning experience, as he/she will likely be able to provide helpful information beyond what is included in a pre-formatted document.

Determine Whether Life Insurance is Needed

It is common for individuals who will leave large estates for heirs to think that they do not need life insurance. However, life insurance does not only serve as replacement income, but can be used to pay taxes due on inheritance, such as tax-deferred retirement assets. This will help to negate the need to tap into taxable inherited assets, such as IRAs and 401(k) plans.

Consider Whether Long-Term Care Insurance Is Needed

An individual’s medical history and that of his family is a good place to start to determine the likelihood of the individual living a long life, and whether the individual will maintain good health. However, unless the individual is eligible to receive free healthcare- which is unlikely unless the individual has little or no assets- long term care (LTC) insurance may be a necessity. LTC can be used to protect an individual’s savings, by covering expenses attributed to home

health care, adult care and nursing home expenses, by eliminating the need to use retirement savings to cover those expenses.

Establish Trusts for Minors and Special Needs Beneficiaries

If amounts need to be earmarked for the care of a beneficiary who is disabled or have special needs, it may be necessary to establish a special-needs trust, also known as a discretionary trust, to keep assets for that beneficiary. A properly designed special-needs trust would not affect the beneficiary’s eligibility for receiving public assistance. 

A minor’s trust can also be established for beneficiaries who are under the age of majority as defined by the State of residence. This would allow the grantor to determine the age at which the child would gain control over the assets.

Complete Beneficiary Designation Form for Retirement Accounts

Unlike most other assets, retirement assets are not governed by an individual’s Will. As such, a beneficiary designation form must be completed so as to ensure the right individuals receive the retirement account balance after the owner’s death. Failure to complete a beneficiary designation form will result in the beneficiary being determined in accordance with the default provisions of the plan document that governs the retirement account. For qualified plans, and ERISA 403(b) arrangements, the default beneficiary is typically the surviving spouse of the decedent. For IRAs and Non-ERISA 403(b) arrangements, the default beneficiary is usually the spouse or the estate of the decedent.


Regardless of the value of one’s assets, steps much be taken to ensure that they go to the right individuals after the owner’s death. Failure to take the right preparation could cause frustration for beneficiaries as they try to determine who should share in the estate and how it could be allocated. In some cases, beneficiaries may need to employ the services of lawyers and get the courts involved, resulting in costs and frustration that could have been avoided.



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