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Sadly the world lost two well-loved celebrities this week: comic and actor Robin Williams and actress Lauren Bacall. I’ve already seen a few articles discussing Williams’ financial situation and praising him for trusts he had established for his three children.

In recent years the estate planning moves of actors Phillip Seymour Hoffman and James Gandolfini and others have also made the news for some of the things they did and didn’t do and in some cases the resulting extra costs incurred by their heirs. While some might say these types of articles are an invasion of their privacy, I disagree. Articles of this type bring estate planning to the forefront as something we all need to do. Moreover there are lessons to be learned from the things these celebrities did right and from what they could have done better. Even for the vast majority of us with much more modest estates, there a number of estate planning lessons we can derive.

Where do you want your money go when you die?

A key issue in estate planning is to determine who should get your money and other possessions of value when you die. In fact I always suggest that people discuss this very issue before heading off to an estate planning attorney to start having any documents created. Beneficiaries might include a spouse, children, other relatives, friends, or perhaps you have charitable intentions.

How would your assets be distributed if you died today?

This is essentially an estate planning fire drill. Different assets are passed on in different ways. For example life insurance policies, annuities, and retirement accounts such as a 401(k) or an IRA account are transferred via the beneficiary designation on the account. This supersedes anything that your will or any other document might say.

Non-financial assets such as art, collectibles and the like would generally pass to your heirs via a will or bequest. Other assets such as a bank or brokerage account could pass via joint ownership in some cases.

It is a good idea to sit down and go through all of your assets to determine how and to whom they would be distributed upon your death and to be sure this is consistent with your wishes.

Among the types of assets you might have are:

Stocks, bonds, mutual funds, ETFs, and similar investments

IRA accounts, 401(k) accounts, pensions, and other retirement accounts

Interest in a business

Stock options or restricted shares

Annuities

Life insurance

Art

Collectibles

Cars

Real Estate

Beneficial interest in a trust or an inheritance that could benefit your heirs

Again this list is not exhaustive and everyone’s situation is different. The important point is to sit down and go through everything you own so you and ideally your family and loved ones are aware.

Designate the correct beneficiaries

As mentioned above, certain assets are passed to the listed beneficiary(s) regardless of your will or any other intent. Nothing says I love you to a spouse quite like forgetting to change the beneficiary on your life insurance policy from your ex-spouse to your current spouse if you are divorced and remarried for example. If you die and this is the situation the ex-spouse gets the death benefit no matter what you had intended.

Protect your minor children

If you are the parents of minor children it is important that you have a will (or other acceptable document) designating who will care for them in the event that both parents die. There can also be a separate person to handle their inheritance if this desirable.

I can’t tell you how many times I’ve spoken with a young father with a non-working spouse and young children who is all amped up to invest and/or buy rental real estate who has no will or life insurance in place. This is pretty basic stuff and all young parents need to take care of this today.

One other thing, don’t assume that the person(s) who you’d like to be the guardians of your kids is willing to do this. Ask them upfront and again every few years. Just because they said yes and are listed in the will doesn’t mean they are legally obligated to act when the time comes. Moreover their circumstances may change over time as well.

Use appropriate estate planning techniques

Appropriate is the operative word. I receive any number of invitations to dinner seminars hosted by estate planning attorneys. Some might serve as good sources of information, but many others are run by folks who think that a Living Trust is the right answer for everyone. In addition they may be in cahoots with folks looking to sell you insurance and financial products that may or may not be appropriate for your situation.

Your situation is unique. The right estate planning strategies are the ones that help you accomplish your goals. These may be as simple as having your beneficiary designations in order or may entail more complex vehicles such as a trust among others. Be proactive, not the victim of some slick sales pitch.

The points listed above just scratch the surface and your situation may be wholly different. Certainly most of us don’t have either the amount of money or the complex situations that many celebrities have upon their deaths. Estate planning is important for all of us, however. Besides our natural curiosity about the rich and famous, articles about their estate planning, both good and bad, can serve as reminders to all of us that we need to take the necessary steps to ensure that our affairs in order.

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