The Three Secrets to an Effective Estate Plan

There are many elements that can make up your estate plan. However, there are really only three secrets to know to make your estate plan effective. Here I discuss those three secrets and how you can use them to make your estate planning better, more current and effective to protect yourself, your family and your property.

Secret No. 1: Think Family First.

Thinking family first is the first and most important of the three secrets. Sometimes we lose sight of the forest for the trees in all endeavors, sometimes especially in estate planning. You want to take planning out of the ivory tower and bring it home to make sure it applies to your family and situation. Here's what I mean.

The reason to do an estate plan always starts with family. That is the reason we plan, to protect our families and ourselves. Does anyone really think that the reason to plan your estate is to pay MORE money to your attorney or accountant? Of course not!

By planning your estate effectively, you are seeking to create for your family the following benefits:

1. Certainty. We want to make certain that our families and ourselves know what will happen if something happens to us. What will be the living arrangements? What are the education and care arrangements? How will it be paid for? There are hundreds of similiar questions that apply to families.

2. Replacing resources and income. An element of your estate plan should be financial. How can your resources be protected? How can future resources and income be provided to the family if something happens to you? What will the family's financial needs be going forward and how can you make sure those needs will be met?

3. Making future dreams happen. We have goals and dreams for the future. So do our families. By working on your estate plan, you can do much to make sure that these future goals and plans have the best chance of coming true. I have written before that estate planning allows us to create a bridge between the known present and the unknown and uncertain future. Make sure you have built your bridge to the future with your own estate plan.

This is how we make sure that the tax tail never wags the family dog! While taxes can be an important element to be considered in every estate plan, they never predominate over our wishes and concern for family. By putting family first, you will have discovered the first secret to an effective estate plan.

Secret No. 2: Work with qualified estate planning counsel.

There are lots of attorneys out there doing lots of different kinds of law. I recommend that you view attorneys the same way you view doctors. For example, if you have a problem with your tooth, you don't go a foot doctor. This same principal works for dealing with lawyers. When it comes to estate planning, work only with a qualified estate planning attorney.

How do you know if you have one? Well, here are some minimum standards you should insist upon.

1. Make sure the attorney has at least seven years of full time estate planning practice as experience. Estate planning is something you don't want to leave to rookies.

2. Make sure that the attorney has an AV rating from Martindale-Hubble. This is a peer ratings achievement and a measure of what other attorneys think about the particular attorney you are considering.

3. Make sure the attorney is a member of their local estate planning council and a member of the Trust & Estates Section of the state bar association.

By insisting on at least these three minimum qualifications, you can go far to make sure you are represented by qualified estate planning counsel.

Secret 3: Keep your estate plan current.

Nothing messes up an estate planning faster than being out of date. Here are just two important examples:

1. John and Sue had named guardians for their kids in their estate plan. However, the initial guardians were no longer friends of the family. John and Sue didn't update their plan and were very upset when they finally read their plan after a serious illness.

2. Mary had an older Power of Attorney that did not contain HIPAA provisions. When she experienced a disability, her agent was not named as Mary's HIPAA Personal Representative for obtaining medical information. This made her agent's job difficult during Mary's diability and was completely avoidable had Mary only updated her estate plan.

How can you make sure your estate plan stays current? Follow these simple suggestions:

1. Review your estate plan with your estate planning attorney at least every two years.

2. Review your estate plan with your estate planning attorney if any significant events happen in your family. These would be things like any deaths or disabilities of your future and successor decision makers; issues with your spouse or kids effecting long-term health and viability; changes in your goals and objectives; and any questions that come to mind when you take your documents out periodically and read them over.

By following this review schedule you will make sure you are always current with your estate plan.

So, here are three secrets to having an effective estate plan. Have you followed each of the three?

Why meet your Insurance Agent for Annual Reviews?

The article below is reprinted here with the generous permission of its author, J.P. Gudka.

Why meet your Insurance Agent for Annual Reviews?
By J.P. GUDKA, Colorado Allstate Agent

You put a lot of time making your house a home filled with memories. Naturally, you want to protect your home. Whether you’re moving into a new house or protecting the one you have, Allstate homeowners insurance can help you keep your home safe.

Many people come to me with insurance already in place. Often they ask me to simply quote them the exact same coverage as they currently have so that they can make a price comparison. Although I understand why they want that, I usually never do and prefer instead to start a quote from scratch. The reason I do this is because I would never take for granted that the coverage someone already has is adequate for their needs!

As you know, life marches on. There are many things in one’s personal circumstances that can change. Needs change, insurable interests change. People buy things, they have children, they do additions, they inherit money, they get raises, they travel, they start new businesses, they get new jobs, they get laid off, their kids start driving etc. Hey, life happens and sometimes the furthest thing from their mind is to call their insurance agent and tell them about the changes!

The other side of that equation is that your insurance company’s programs change too! For example, Allstate rolled out a new product in the last 14 months that allows a homeowner to make claims and not get penalized for it, and for every year you do not make a claim, get some of your premium back. We do the same with the auto insurance. Allstate has a product that allows for accident forgiveness, cash back each year, and a gradually declining deductible for collision coverage.

I have found in many cases that our underwriting models have become more forgiving under certain circumstances and in some cases, not only can we give someone better coverage but do so at a much reduced rate!

I recently did an annual review for a client of mine. As it turns out, they had finished their basement and never told us about it. If the home was involved in a catastrophic loss, it is possible that there might not be enough coverage there to rebuild the home to its former condition. Also, due the rising costs and scarcity of certain natural resources, the cost to rebuild a home may be higher than it was when the policy was written.

Another family I met with was completely unaware that if their roof was damaged in a hail storm, their deductible would have been 2% of the building coverage. In their case, the home was insured for around $200,000. That meant that they would have had to pay $4,000 deductible for hail damage to repair their roof. In other words, with a cost to replace the roof at only $3500, there would have never been a need to make a claim for their roof. They might as well have been self insured….

People tell me that they are very concerned about the cost of their insurance with the economy being the way it is right now. Everyone needs to cut expenses and save money where they can. Your auto insurance may be one place you can save quite a bit.

Do you know that in Colorado, every time you get behind the wheel of your car, you are taking your entire financial future and putting it at risk? The real reason to have auto insurance isn’t because you love your car and want to make sure it gets repaired or replaced in an accident. Let’s face it, a car is metal, plastic and glass. Unless its an antique or collector’s item, all it’s parts can be found or replaced.

No, the real reason you want auto insurance is for the Liability coverage. You see, Colorado is a tort state. That means that it is lawyer vs. lawyer. If you are in an accident and are found to be at fault, it is within the right of the injured party to collect damages. That means that they can take you to court to collect their losses. These losses are not just limited to buying them a new car. They can include medical costs, lost wages, and pain and suffering. The great thing about auto insurance liability coverage is that your insurance company will represent you in court and will do so up to the limits of your policy.

Please do yourself a favor and make sure you are properly protecting your family from catastrophic losses. Going with a higher deductible for the auto protection can often more than compensate for the extra cost of giving yourself better protection for your 401K, IRA’s, equity in your home, college savings plans, and perhaps even your business if you are self employed.

Here are some good questions to ask your current carrier:

How do I determine how much coverage I need?

Start with the basics. The standard Allstate Homeowner policy covers them. But maybe you have some special insurance needs – your wedding ring or a couple of mountain bikes. Your policy covers these items too, but you may need more than basic coverage for them.

What is “optional coverage”?
You can buy extra coverage to help protect your jewelry, tools, sports equipment, rental income and more.

Do I get a homeowners discount if I have auto coverage from the same carrier?
Most of our homeowner rate plans offer a multi-policy discount.

I know with auto insurance, good driver discounts are available. Are there similar rewards for homeowner policies?
Customers should contact their agencies to determine if they qualify for any discounts or can increase their deductibles.

Will raising my deductible lower my rate?
Typically, raising the deductible on your policy will lower your rate. It’s important to keep in mind that you should carefully evaluate any changes to your deductible since it can affect loss settlement and you as the customer will have to absorb more of the loss.

For more information, please contact Allstate Agent J.P. “Good Hands” Gudka at 303-752-2999.

Estate Planning for Network Marketing Pros

Are you involved in network marketing? Did you know that your network business is a business that should be planned for if you became disabled or died? Do you know the steps to protect your business interests and downlines?

Well the answer to these questions for you should be yes! If you are involved at all in network marketing, it is essential to learn how to protect your business interests. Here are some simple steps to follow to make sure you and your family are protected.

1. Read your business documents and materials. There may be provisions that specify what happens by default to your business if you are disabled or die. Make sure you know how these contract provisions work and how they affect your planning for your family.

2. Make sure you have current durable financial and health care Powers of Attorney in place. Make sure that these documents have the very important HIPAA provisions. And make sure that your designated agent(s) can deal with your network business if you are incapacitated.

3. Make sure you have an up to date Will or Trust that has provisions for your network business and that these provisions will be respected by your uplines and business promoter. Nothing will cause your family more dismay then if you valuable business disappears because you didn't follow the requirements in the network contracts.

4. If you already have these arrangements in place, then review them with your estate planning attorney if you haven't done so within the last six months or longer. Periodic reviews are crucial to ensure synchronization between your business and your estate planning.

These simple steps will go far in protecting your business and making you feel more comfortable that all your hard work will benefit your loved ones.