Preparing Wills

Sorry folks! I've gone through one of my phases of "not having time to blog." In other words, I didn't make time to blog because I found myself "busy" organizing other important areas of my life. Most of the time, they aren't always so important as I just find things (other than blogging) to keep my mind spinning. But these important things should have been at the top of my list about 20.5 months ago (or prior).

First and foremost, I have been working on finalizing our wills. Yes, I know...shame, shame, shame on us! We should have signed our wills a long time before Annabelle was even conceived (and definitely while I was still pregnant), but it was one of those things that just got put on the back burner.

So, everything has officially been decided on, and hubby and I will go next week to the attorney's office to get them signed! Hallelujah! Let's just pray that nothing happens to either one of us between now and then (or after then for that matter). I would really prefer that hubby and I raise Annabelle!

For those of you out there without wills (and especially if you have children), you really should most definitely consult an attorney ASAP to get your will completed. If you live in Georgia, it is especially important because the law states that all assets (including savings and checking accounts) is to be divided equally among the surviving spouse and children if you do not have a will.

Do you know what that means? If you have $10,000 in savings and checking to pay your monthly ongoing bills, this $10,000 will be split 50/50 with the surviving spouse and child assuming you only have one child. And, it doesn't matter if your child is only 1 day old...the child would get $5,000 of the $10,000. Apparently, you have to go through a lot of paperwork and dealings with the court system to get that $5,000 back to the surviving spouse's name. Otherwise, it would go into a trust (for your child) managed by a trustee assigned by the state which means you could not touch it at all! And, the state is responsible for assigning that trustee. Scary!

Also, it is very important that everyone (including those that do not live in Georgia) have their beneficiary designations on their retirement plans set up properly as well. The average Joe would not know the tricks to save taxes on retirement funds at the death of the owner, so I'll share them with you.

In most cases, it is not wise to designate your child as the contingent beneficiary on your retirement plans. If you do (and if something were to happen to you), the money in your retirement plans would be required to be paid out over 5 years. The reason this is not good is because the money would then be taxable over 5 years. Depending on the amount you have (or hope to have one day) in your retirement accounts, this could amount to huge taxes paid out over 5 years whereas if you assigned the contingent beneficiary differently, then the payout would be over the beneficiary's life expectancies. This does not mean that you would not leave the money to your children...you can still leave the money to your children, but you would do so indirectly using different terminology.

It is all about the terminology! Isn't that great? That is our wonderful tax system at work! Complicated, complicated, complicated! And, typically, the average Joe's in the United States don't know these tricks (unless they have consulted with an estate attorney or CPA).

It is actually all very complicated, and even being in the accounting and tax profession, I didn't think about not assigning Annabelle as the contingent beneficiary until I spoke with my attorney. Once our wills are signed next week, my next goal is to change all of our contingent beneficiary designations.

You should also know that just because your will states that you want your assets to go to certain individuals, your will does not hold power over your retirement beneficiary designations. If your retirement beneficiaries are different from the beneficiaries assigned in your will, the retirement beneficiaries designated holds for those retirement assets. The will cannot direct these payouts in any way. So, it is very important that you review these designations annually.

And, the most important (and very obvious) reason for having a will is that you do NOT want the state to decide who is going to raise your children if you were to die before they reached adulthood.

Please note that I am NOT an attorney, and you should not rely on the information printed here. You should consult your own attorney for advice.

I just thought I would pass along the importance of preparing a will and designating beneficiaries for your retirement plans.

Don't follow in my footsteps...make this your priority today (if you haven't already done so)!

Best of luck!