Free Money Finance

Planning for a Funeral

Here's a piece on planning for a funeral courtesy of Marotta Asset Management:

Funeral expenses are often a family's fourth largest expense after paying for a house, college expenses, and a car. The average funeral costs between $5,000 and $7,000, but it's not uncommon for funeral expenses to top $10,000. Planning a funeral may be an uncomfortable task, but, planning early will save you or your family members from having to make difficult decisions during a time of bereavement. Last-minute planning often leaves family members feeling pressured to spend more than they should in order to demonstrate their love for the departed.

When my mom was dying I went with my father to help make arrangements. Having me along helped him through the painful process of planning for an event we all wanted to deny would actually happen. Having two of us made it easier to see that a $12,000 casket wasn't really the best decision.

Bringing a friend can help you go through the process of selecting funeral products and services. And, if a friend of yours is faced with planning a family member's funeral, you can provide great support by going with them and helping them stay within whatever budget they have set.

It is always good to get the list of prices for at least three different services. The Federal Trade Commission requires all funeral homes and cemeteries to provide you with a free itemized price list of their services during your visit. My father and I visited a few different funeral homes in order to find one that fit with our family's purpose in holding a memorial service.

Having your own values in mind during the process can help avoid unnecessary expenses. My own philosophy is that a funeral is all about gathering friends and family to remember the loved one's life. The products and services of a funeral home should be relatively plain so as not to distract from that focus.

We do not recommend that our clients purchase prepaid funeral services. Pre-paid arrangements are expensive and impossible to get your money back out of, if you change your mind or move. Setting aside a certain amount of funds for funeral expenses is the best option. Money properly invested will appreciate faster than inflation and provide better financing for funeral services. Alternately, you can purchase a small life insurance policy to cover funeral expenses. Only if you are purposefully trying to spend down an estate for some reason should you prepay for funeral expenses.

Similarly, family burial plots rarely work as planned. Parents often want to be buried near their children while children often want to be buried near their own children.

Where you are buried can be especially tense if you have been remarried. Children often want to reunite mom and dad in death while your current spouse may have other wishes. Communicating your love for everyone as well as the reasons for your decision can help avoid those tensions being combined with the powerful mixture or grief and anger.

If you want to make planning your funeral easier for your surviving family, draft one page that gives your wishes. Oral or written instructions about burial aren't legally binding. They are only intended to make things easier for your family, not harder. Be sure to include instructions regarding the following important decisions:

• Preparation and care of the body. Do you want your body to be buried immediately after death, embalmed and buried, cremated, or donated to science?

• Place of burial. Do you have a cemetery or burial plot? Where would you like a service? Who would you like to perform or speak at the memorial service? Do you have favorite music or flowers that you would like included in the service?

• Communication with friends and family. Who should be contacted regarding your death? What would you want included in your obituary and headstone? Is there a charity where contributions should be made in your name?

• Important documents. Where is your will? What is the contact information of your executor, lawyer, CPA, financial planner? Do you have an inventory of your assets that is kept up to date annually? Where is your safe deposit box and key? Where are all the important documents such as birth certificate, marriage, divorce, prenuptial, deed, business, insurance, financial, social security, pension, and benefit records?

Keep these instructions handy, not just sealed away with your will or in your safe deposit box. They should be reviewed annually with family members along with your estate plans. More information can be found online at www.aarp.org or www.fpanet.org/public/tools/lifeevents/.

You Need a Will

Here's my semi-annual reminder that you need a will:

Many people think wills are just for people who are rich, old, own property, are married or have children. But even if none of those applies to you -- in fact, even if you're flat broke -- you still need a plan.

Drawing up a simple plan can be one of the best gifts you can give to your family and friends. Without it, your spouse, parents, partner or other loved ones could spend countless hours and dollars battling courts and each other to carry out what they think you would have wanted in the event of your death or a medical situation.

There are two main areas of estate planning with which you need to concern yourself. The first is a standard will that gives instructions for how your assets are to be handled and distributed after your death. The second is a plan that details your wishes in the event you are alive but unable to make financial or medical decisions for yourself.

Do yourself, your family, and your friends a favor and get a will today. If you already have one but it needs to be updated (like mine), please do that as well. It's relatively simple and not that expensive (can be only $100 or so for a simple will), yet provides a whole host of benefits to those you leave behind.

For my past thoughts on wills, see these links:

• Do Yourself (and Your Family) a Favor: Read This, then Do Something About It

• Benefits of a Will

• How to Choose a Guardian for Your Children

• How to Write a Good Will

Roth IRAs Make Great Estate Planning Tools

Here's a piece courtesy of Marotta Asset Management on how Roth IRAs make great estate planning tools:

If the tax-free growth of a Roth IRA wasn’t enough to wet your appetite, the estate planning benefits it offers should seal the deal. Bequeathing a Roth is much the same as setting up a life-time tax-free stream of income for your heirs. Because Uncle Sam has already taken his cut of the principal when you put the money in, withdrawals from a Roth can be made tax-free, either by you or by your beneficiaries. All this happens simply by naming the appropriate beneficiaries for your Roth.

A Roth will protect your investments from its worst enemies: taxes and required distributions. Unlike their traditional counterparts, Roth’s don’t require you to begin withdrawals from the account once you reach the magic age of 70½. With time on your side and your investments sheltered from taxes, your Roth will begin to experience what Einstein called the "greatest discovery of all time" - compounding interest.

The traditional IRA is an unwieldy estate planning tool in more ways than one. Account owners must begin distributions from their account at age 70½, whether they need the cash or not. What’s more, investments in a traditional IRA grow tax-deferred, not tax-free. Uncle Sam won’t let you defer those taxes indefinitely.

By taking the required minimum distributions out of your traditional IRA each year, you put the brakes on the snowball effect of compounding interest. Plus, your required withdrawals deplete the account, making it difficult to control what you actually leave to your beneficiaries.

However, it won’t make much difference whether you leave your heirs a traditional or a Roth if they plan on draining the funds right up front. A Roth can offer a goldmine, but only if the owner keeps the funds in their tax-free environment over the long haul.

A Roth can help you keep more of your money by sheltering your investments from capital gains and from minimum distribution requirements — at least for a while. Spouses who inherit a Roth can also forgo taking distributions, preserving the account’s ability to grow unchecked year after year.

All of that changes once the Roth is passed on to the next generation. All other beneficiaries of a Roth must begin taking distributions after inheriting the funds. It is best to drawn down an inherited Roth as slowly as possible over the beneficiary’s expected lifetime. The required distribution amounts are based on the beneficiary’s age: the younger the heir, the smaller the required distribution. Taking the smallest distribution each year will ensure the beneficiary achieves the maximum tax-free growth of tax-free income.

Let’s look at an example. Dad opens a Roth at age 60. He takes no withdrawals in his lifetime, and the funds grow tax-free. His wife inherits the Roth after her husband’s death at age 75. She wisely passes up on the opportunity to take withdrawals from the account. Ten years later she passes away and the Roth is inherited by her son, Dwayne. Thus far, the Roth has enjoyed 25 years of growth, without being depleted by withdrawals or taxes. Dwayne, age 55, must begin minimum distributions and does so for 30 years. Thirty years later, the funds are fully depleted; however, over its lifetime the Roth has provided 55 years of tax-free earnings and withdrawals. The benefits are even greater if the account is left to grandchildren!

No traditional IRA can offer that kind of benefit to your heirs. If they were to inherit a traditional IRA of equal value to a Roth, the IRA of the traditional variety would run dry long before the Roth. Because taxes are due on withdrawals from a traditional IRA, larger amounts must be taken out to match the tax-free sums taken from the Roth. Those hefty withdrawals from the traditional IRA eventually drive it to zero. Meanwhile the Roth account would still be growing and withdrawals could still be made.

So, what can you do if your funds are sitting in a traditional IRA? If you already own a regular IRA, you may have the option to convert it to a Roth. With a Roth conversion, you pay taxes now so that your beneficiaries won’t pay later. Even if you inherited a traditional IRA from your spouse, it is still not too late to convert to a Roth.

Converting to a Roth and paying Uncle Sam now may be a good thing, especially if you plan on leaving more than $2 million to your heirs. Paying taxes for the conversion will mean you reduce the size of your estate, and therefore your estate’s tax liability. Your heirs will pay less estate tax, and they will inherit a tax-free income stream.

Currently, the option to convert to a Roth is only open to those with a modified AGI less than $100,000. But not to worry if your AGI exceeds that number. Thanks to the recent changes in our tax code, Roth conversions will be open to all Americans beginning in 2010.

Even if you are currently taking distributions from a traditional IRA, you can still do a conversion. However, the amount you withdraw for the conversion, also known as your conversion contribution, won’t count toward this year’s required minimum distribution from your IRA. The rules and options are complex, so seeking professional tax advice before doing a Roth conversion is important.

A Roth IRA can provide your heirs with a life-time stream of tax-free income. But, a Roth in itself cannot provide a complete answer to your estate planning needs. Please seek the advice of a financial planning professional who can provide you with a comprehensive financial plan.

Five Money Mistakes to Avoid

Here are five money mistakes we should all avoid according to personal finance author Suze Orman. She claims that these are moves that men are more inclined to make than women, so pay attention, guys (and don't turn away, ladies). Here goes:

1. Funding early retirement with a home equity line of credit.

2. Not paying off the mortgage early.

3. Neglecting to make a will.

4. Refusing to take the investing long view.

5. Assuming the role of the family's sole money manager.

Ha! Boy, has she got us pegged! ;-)

Here are my thoughts on each of these:

1. Does anyone really do this? What a crazy idea! How about the strange concept of funding early retirement with something like, say, savings? What a novel concept, huh?

2. Oh, yeah, she's talking my language now! If you buy the right house, you should be able to pay your mortgage off in 10 years at the most. So what's the issue?

3. Yep. No one wants to make a will (including me). But we have to. Just read Do Yourself (and Your Family) a Favor: Read This, then Do Something About It and see if you don't agree.

4. Many people want to get rich quick with a "hot" stock tip. Me? I'd rather get rich slowly -- investing in index funds and letting the power of time and the power of compounding work for me.

5. I do most of the money management in our family, though my wife and I have regular money meetings to make sure we're on the same financial page.

Do Yourself (and Your Family) a Favor: Read This, then Do Something About It

I've covered the reasons you need a will in prior posts, but it's a topic we all need to re-visit every now and then. A will is a vital part of any financial plan, but this piece from USA Today says that many people are woefully unprepared in this area:

Nearly 60% of Americans lack even a simple will, according to a 2004 survey by Lawyers.com.

The piece goes on to detail instances when it's especially important to have a will. Their list:

• You have minor children.
• You're part of a non-traditional couple.
• You have children from a previous marriage.

Finally, they list some ways to get a will done if you don't have one:

If you don't already have a family attorney, finding someone to prepare a will can be intimidating. Belcher suggests seeking referrals from relatives, friends or professionals, such as your accountant or financial planner. Costs vary depending on the complexity of your estate, but a straightforward will typically costs $500 to $1,000, Belcher says.

Another option is a do-it-yourself will. With most of these programs, you can prepare a basic will for less than $100. Quicken WillMaker Plus, a software program from Nolo Press, includes a long list of documents, from a basic will to a living trust. LegalZoom.com allows you to prepare a will online and will check your work for spelling, grammatical errors and consistency. But LegalZoom's review won't correct substantive legal errors, Liu says. The company doesn't give legal advice.

We currently have a will, but it needs to be updated. Hence, updating our will is one of my New Year's resolutions for 2006. I'm planning on using a lawyer (I have a couple referrals from friends) as I don't want to take any chances on a do-it-yourself mess up. A will is that important -- it's the security of our children -- so it's certainly worth the extra cost in my mind.

For those of you reading this who don't have a will, please, please, please get one. Even a simple do-it-yourself will is much better than none at all. Especially if you have kids, it's vitally important for you to get one. Don't put it off.

If one reason you're "waiting" to complete your will is that you don't know who to name as guardian of your kids, see my post titled How to Choose a Guardian for Your Children. It will help you select a guardian and keep your kids protected from a very bad situation caused by not having a will.

Eight Secrets of Financial Happiness

Here is a simply great article from Market Watch that lists the eight secrets of financial happiness. It starts by describing the relationship between money and happiness:

The psychology of money, now known as behavioral finance, has a positive side. It turns out you can use psychology to increase your financial happiness by reducing your money stress.

Fortunately, this psychological formula is simple: Stress down equals happiness up. So how do you cut the stress? Try a new mindset: Stop blaming "them," take responsibility and then take positive actions. What's happening "out there" is no excuse for whining. You can't change them, but you can control you.

The piece then lists their eight secrets of financial happiness:

1. Learn to want less.
2. Get organized.
3. Set goals.
4. Plan your spending.
5. Invest sensibly.
6. Protect what's yours.
7. Start talking about money.
8. Find work that fits.

Here are my thoughts on each of these:

1. Learning to want less is the first step in spending less than you earn, which is the first step in becoming a millionaire.

2. I use Excel to budget, Quicken to track, and have files for all my paperwork. Being organized makes managing your finances easier, more effective, and less time-consuming.

3. We set annual goals as part of our budgeting process.

4. Yes, we plan our spending -- it's called a budget. Here are some good budget-related posts to review:

• Why We Hate Budgeting - But Shouldn't


• A Great Alternative to Quicken and Microsoft Money, Part 2


• Five Keys to Developing a Successful Budget

5. Three keys to investing for me: 1. Invest regularly. 2. Time/the power of compounding. 3. Index funds.

6. Yes, you need to protect what's yours by making sure you have a will and have all your insurance needs covered.

7. Communication is key in a family, and this includes talking about money. If nothing else, planning/having a budget will force you to do this (which is a good thing).

8. Your career is your most valuable asset and by managing it correctly you can add millions to your earning potential. But you also need to enjoy what you're doing. If you don't, maybe a career change is called for.

The Richest Man in Babylon: Seven Cures for a Lean Purse Part 6, Insure a Future Income

In the third chapter of The Richest Man in Babylon the book lists and details "seven cures for a lean purse." Today, we'll cover cure #6 which is:

Insure a future income.

Here's what the book has to say about saving for retirement:

Therefore do I say that it behooves a man to make preparation for a suitable income in the days to come, when he is no longer young, and to make preparations for his family should he be no longer with them to comfort and support them.

Later it gives this similar advice:

The man who, because of his understanding of the laws of wealth, acquireth a growing surplus, should give thought to those future days. He should plan certain investments or provisions that may endure safely for many years, yet will be available when the time arrives which he has so wisely anticipated.

And finally, it recognizes that everyone needs to plan for retirement:

No man can afford not to insure a treasure for his old age and the protection of his family, no matter how prosperous his business and investments may be.

So what are the practical applications today of what this cure is saying? I'd list the following:

1. Plan for retirement by setting your retirement number. Retirement is more expensive than most of us think it is, so take the time to figure out what you need to save for retirement. This will help you avoid major retirement mistakes and make sure your retirement savings outlasts you. A key part of this, of course, is figuring out your 401k -- deciding how much goes in your 401k and, at a minimum, contributing enough to at least get the full employer match. If that doesn't work, consider tricking yourself into saving. Doing this, you may even be able to retire early.

2. Don't forget about updating/writing your will. There are many benefits of having a will (including naming a guardian for your kids) and a simple, effective will is rather easy to draw up.

Click here to read cure #7.

One Year Ago: Invest in Appreciating Assets, The Value of Insurance and Estate Planning, and Free Money Finance Principles Summarized

One year ago this past week I finished my posts on "The Five Principles" I believe will help you grow your net worth (based on the fact that they've helped me). Here are the posts and a brief summary:

• Principle 4: Invest in Appreciating Assets - This includes things like a house, a small business, or rental property.  On the flip side, this principle also advises us to avoid those assets that decline quickly in value – like new cars.  As we explore this principle, we’ll discuss these issues and how to address them. 


• Principle 5: The Value of Insurance and Estate Planning - In order to be financially solid, you must protect your largest assets – your home (house insurance), your car (auto insurance), and your income (disability, medical, and life insurance).  In addition, you must protect them even beyond your life -- that's why we'll discuss wills in this section.


• Free Money Finance Principles Summarized - A quick review of all the Free Money Finance five principles.

Stop by these posts and see what Free Money Finance was like in the "early days."

Pre-Paid Funerals – Worth the Price?

Let's cut to the chase on this one:

• Question: Pre-paid funerals – worth the price?
• Answer: Not in most cases.

But this piece from Money does give some advice on times when a pre-paid funeral MAY be a good deal:

Despite the drawbacks, there some instances in which paying up front is a smart move.

If a person will require long-term medical care, but his assets are just above the Medicaid cutoff point, prepaying for a funeral could help him meet that requirement, according to the National Funeral Directors Association.

A more important step in estate planning is making sure you have a good will.

Comments: How to Choose a Guardian for Your Children

I've been writing a lot about wills lately because we're in the process of updating our will. My posts on the subject include these:

• How to Write a Good Will
• Protect Your Most Precious Assets
• Proof that You Need a Will (And What to Do About It)
• Wills that Work
• Benefits of a Will

Another one of my motivations for writing on this topic is to encourage you to get a will so that your children will be taken care of should anything happen to you. The importance of this was driven home to me once again by a comment I received on my post titled How to Choose a Guardian for Your Children. Here it is:

We had a family situation a few years ago where a guardian was NOT named for a seven-year-old child. His mother died and his father (M's uncle) became too ill to care for him. BAD BAD SITUATION. He bounced around for several months and then finally landed with some family thousands of miles away from his school and his friends.

This is so, so sad to me. Please, take the time to complete at least a simple will so the same fate doesn't happen to your children.

How to Write a Good Will

If it seems like I've been writing a lot about wills lately, it's because I have. The subject's on my mind because it's something we're working on right now -- updating our will. And it's something that a lot more people need to work on as it's estimated that 70% of all adults don't have a will. That's a sad state of things -- especially since without one, the state will decide where your kids and money go. And based on what I've seen, states aren't that great at making these sorts of decisions!!!!

This article from MSNBC tells us how to write a good will. Since I've already covered this subject, I thought I'd just highlight a few of their comments that seemed especially good. This first one seems to cover an often overlooked point of dying without a will:

[Without a will] blended families can face an assortment of unintended consequences, with some or all assets passing to first-marriage children and bypassing second spouses and stepchildren altogether. In some cases, family heirlooms may be put up for sale with family members having to buy them back from the state.

The piece is sure to tell us how easy it is to complete a will -- it's really pretty simple. Their summary:

Drafting a will does not have to be a big production. Basic, legally enforceable wills may be written rather quickly and economically using online software programs. They can later be fine-tuned, expanded or amended as personal situations and assets change. Web sites like Nolo.com, and LegalZoom.com are among those that can help get the deed done. With LegalZoom in particular, legal experts will actually review all documents before allowing them to be endorsed into legally binding existence.

The piece continues with this interesting finding:

“They say that siblings are five times more likely to fight about family items than about money,” says Arnold.  Such fights often lead to wounds and resentments that never heal.

Thankfully, there's a simple solution to this problem:

This is why Arnold advocates writing a "good" will. It addresses such "why’s" either through letters of explanation included within the will or through discussions with those named in the will ahead of time. It can head off potential feuds, ill feelings regarding misunderstood intentions and lead to the healing of old rivalries once and for all.

'Nuff said on this topic. At least for a day or two. ;-)

For more information on wills and estate planning, see these links:

• Proof that You Need a Will (And What to Do About It)
• Wills that Work
• Benefits of a Will

How to Choose a Guardian for Your Children

Previously I've covered a Money magazine piece on how to protect your family with a will and today I'd like to refer back to that article again. Except this time, I want to focus on what is probably the most important (and most difficult) part of drafting a will -- picking a guardian for your kids/deciding who will care for your children in case of your death. Here's what Money advises:

• Make a list. Jot down possible guardians and have your spouse do the same. Anyone you both name makes the short list.
• Score the candidates. Ask yourselves: Is this person healthy? Is the family okay financially? Do they share your values? Get along with your kids? Are they willing?
• Split roles. Still not sure? Consider appointing one person as the financial guardian to manage the kids' money and another as the personal guardian to care for them on a day-to-day basis.

I think this is a GREAT list of suggestions and one we will certainly use as we update our wills.

Protect Your Most Precious Assets

Since I'm in the process of updating my will, I guess articles about wills are really catching my attention. This one is from Kiplinger's starts off with the best reason to complete a will -- to protect your kids:

Many parents put off writing a will because they see it as a downer -- a way to dispose of your assets after death. Think of it instead as a way to protect your most precious assets -- your children -- if something should happen to you and your spouse while the kids are minors.

The article then gives some tips on how to select a guardian for your kids -- probably the hardest decision you'll make regarding your will. Their thoughts:

• Look to your generation. Many older people lack the stamina or the desire to start child-rearing all over again.
• Name one guardian, not two. Choosing a couple might seem natural, but things could get complicated if the couple splits up.
• Consult the prospective guardian. Don't assume the person you have in mind is prepared to accept the job. If your children are old enough to understand, tell them your plans.
• And don't be shy about leaving a letter or recording in which you give detailed instructions about how you want your children to be brought up.
• You may even want to name two separate guardians: a guardian of the person to take care of your child, and a guardian of the property to manage your child's finances.

This is good advice -- and we'll consider it as we have our will updated. Currently, we have named a couple in our generation and have talked to them about the issue (of course). We've also separated the guardians from the inheritance dollars by naming a trustee who will make sure the kids are well-provided for (and reasonably provided for).

For other posts on this issue, see these links:

• Proof that You Need a Will (And What to Do About It)
• Wills that Work
• Benefits of a Will

Proof that You Need a Will (And What to Do About It)

When I heard of the death of Dana Reeve (wife of Christopher Reeve -- who played Superman in the movies) recently, I was heartbroken most of all for her 13-year-old son. His dad had died just 17 months earlier and now his mom -- and he was all alone in the world. How can someone not be moved by that situation?

I thought about what plans were (or weren't) made for this young man's care and I hoped he would be ok. Then I thought about my own kids and what would happen to them if my wife and I were to die. It made me even more resolved to update my will asap.

And that's why I wanted to share this article with you. It's from Kiplinger's and highlights five issues to consider when deciding how to protect your family after you are gone. It first starts with a warning:

Don't be fooled into thinking you are too young to worry about estate planning or that you don't have enough assets to warrant legal advice, warns Tracy Craig, an estate planning attorney from Worchester, Mass., whose practice includes many families with young children. She highlights the importance of planning for the unthinkable.

Without your instructions, a court will make crucial decisions about who will care for your children and what will happen to your assets, including turning everything over to your kids when they turn 18, regardless of whether they are capable of handling major financial decisions.

This is probably the main reason I want to update our will -- to determine what will happen to our kids. If it was just money, we probably wouldn't need an update, but I want to make 100% sure our kids are taken care of the way we want them to be.

The piece then offers the issues to consider including:

• Setting up a trust
• Naming a guardian
• Think about checks and balances
• Be proactive
• Don't forget safekeeping

I suggest you click through and read the piece. In addition, here are a couple posts from me that might help as well:

• Wills that Work
• Benefits of a Will

I pray that no one reading this will ever be in a situation similar to the one noted above, yet I strongly encourage all of you to get your will drawn up/updated just in case.

Wills that Work

I've posted before that there are several benefits of having a will. And those of you folloing my New Year's resolutions, you know that one of my goals this year is to update our wills. Having an up-to-date will that clearly describes your wishes in the event of your death is one of the most important parts of any financial plan.

This article from Market Watch gives several tips on making a will that works for you. Here are their suggestions:

• Do hire a lawyer to draft your will -- and your spouse's.
• Do get witnesses.
• Don't put your will in a safe-deposit box.
• Do use percentages rather than dollar amounts when making bequests.
• Do review your will once every three years -- and more often if there is major new tax legislation or a significant change in your family status.
• Do revise your will if you move, particularly from a common-law state to a community-property state, or vice-versa.

These seem like good tips to me and they reinforce our need for a new will. We haven't updated ours for seven years and our last on was in another state. It's time for an update.

Why Treasures in Safe Deposit Boxes Get 'Lost'

Here's a piece from Money Central that talks about how thousands of safe deposit boxes are declared 'abandoned' every year, how their contents are turned over to the state, and how you can keep it from happening to you.  Here's the situation:

Every year, untold numbers of safe deposit boxes are declared "abandoned," drilled open and their contents turned over to state unclaimed-property offices. Whatever's inside that can be auctioned -- jewelry, stamp collections, coins, watches -- eventually is sold to the highest bidder.

The proceeds from these sales join the estimated $23 billion sitting in states' escheat coffers, waiting for the rightful owners to appear. But the stuff that's sold, much of it irreplaceable memorabilia and heirlooms, can never be retrieved.

Here's their advice for making sure this doesn't happen to you:

• Call your bank.
• Visit your box. (at least once a year).
• Tell your heirs.

Of the three tips, the last is probably the most important. I would suggest that as you put together your will you include written instructions on how your heirs should get into your safe deposit box and how the contents are to be divided.

I don't have a safe deposit box (I use a fire retardant safe at home), but I am planning on mentioning my safe in the update I'm doing to my will this year.

10 New Years Money Resolutions, Part 6

Here's part 6 of a series from Money magazine that lists their 10 New Years Money Resolutions:

Resolution 6: Protect your family

There's a simple reason that 55% of Americans don't have a will: "It's difficult to talk about death and money," says Colleen Barney, author of Best Intentions: Ensuring That Your Estate Plan Delivers Both Wealth and Wisdom. And it's even harder to make emotional choices about, say, who will raise your kids. But ignoring the topic could one day leave those tough decisions in the hands of a probate court judge. Try reducing the tension in the situation with a highly pragmatic approach.

1. Start the conversation.

2. Choose a guardian.

3. Make it public.

4. Write the will.

My thoughts:

1. As I've posted previously, updating my will is one of my resolutions for 2006.

2. Also see Benefits of a Will from Free Money Finance.

Click here to read part 7 of this series.

Back-Stabbing from the Grave

Here's an interesting article from Money Magazine. Not only was the question a surprise to me, but the answer was as well. Here's the question:

When my mother, an elderly widow, died recently, she left nothing to my sister Susan. Instead, shocking us all, Mom divided her estate evenly between my brother and me. I'm sure she had her reasons for excluding Sue, with whom she had often locked horns.

But I also feel Mom exploited my sister, relying on Sue -- not my brother or me -- for considerable care, while never revealing she'd left Sue out of her will. I want to respect my mother's wishes, and I'd prefer to keep my entire inheritance. But doesn't my sister deserve something?

I expected an answer like "Your mother wanted the inheritance to go to you. You should respect her wishes and leave it at that." Instead, Money heads in a different direction:

Your mother's final wishes have been respected: Her estate went to you and your brother. Now it's up to you to remedy the injustice created as a result.

Your letter implies that you and your brother left the responsibility of caring for your mother to your sister, assuming, as Sue did, that she was included in the will. If you and he now fail to share your inheritance with your sister, you'll be stiffing her, just as your mother did.

This is not to say that every child is automatically entitled to an equal portion of a parent's estate. Far from it. But equality is not the issue here; fairness is.

While it no doubt was love, not money, that prompted Susan to care for your mom, surely more of the heavy lifting would have fallen to you and your brother had Susan understood that your mother planned to return her devotion with a stab in the back from the grave.

I think the reader was writing in hoping to have justification for keeping all the inheritance, but it backfired on her. Still, I'm not sure Money's answer is right.

Plus, it's vague: "But equality is not the issue here; fairness is." What does that mean? The inheritance shouldn't be split equally but fairly? What's the difference? What do the exact amounts (percentages)look like in a "fair" division?

What do you think about this?

Benefits of a Will

Here's a post on probably the most unpopular issue in money management (other than budgeting and maybe insurance), but it's an issue you must take very seriously.

Much of our lives are spent working to provide for ourselves and our family. But what about after we’re gone? If you don’t have a will, others will decide how your estate is divided when you die.  Follow these three simple steps to make a will that expresses your provision for your loved ones:

Step 1 – Find a good lawyer to do your will. Hand-written or fill-in-the-blank kits are often out-of-date and may not conform to state laws. Though a professionally prepared will may cost a few hundred dollars, it could save thousands of dollars for your estate. Ask friends and relatives for references as a starting place.

Step 2 – Complete the will. Be sure it includes the following:

• Who inherits your property. Make a list of all your assets and their approximate value. Then decide who gets your property, when they get it, and in what form. If you die without a will, the state decides what happens to your assets.
• Who will care for your minor children. Name a guardian (caretaker) for your children and a trustee (who distributes assets for children until they are mature and capable of making their own financial choices). Without your written instructions, the court will select a guardian who may not be the best choice.
• What happens if you’re incapacitated. A power of attorney gives someone legal authority to make health care and financial decisions for you if you cannot make these decisions yourself. A living will gives your doctor your desires regarding life sustaining procedures, artificial nourishment and organ donation. You’ll need both.
• How you minimize estate taxes. Many people have estates much larger than they realize when life insurance, retirement benefits, home, farm or other real estate, savings and securities are taken into account. Structure your will to avoid the unusually high estate taxes.
• Who administers your will. Choose an executor or a trustee. This person carries out the terms of your will.
• What gets donated to charity. Federal and state tax laws allow your estate to receive a charitable deduction for the full fair market value of a gift. Your will can remember the work of your favorite charity by donating a specific dollar amount or a percentage of your estate.

Step 3 – Update your will as needed. Review your will every three years to be sure it fits your present situation and conforms to current state laws.

Make it a priority to have your will drafted soon. It will not only allow you to express your desires regarding your health and resources, but will also give the maximum provision to those you love and wish to benefit.