Investing

This Is How The Wealthy Plan For Death, But Anyone Can Do It

Austin Smith

Published: November 18, 2024 9:01 am

Key Points:

• Rich people are not the only ones with will and trusts. Anyone with assets should visit a lawyer to ensure a tax-efficient transfer of their assets and avoid probate.
• Having five to ten death certificates ready is wise as numerous legal and financial activities follow a death call for them.
• Pay ahead for your funeral or cremation to save your family having to make difficult and costly decisions at a challenging moment.
• Also: Are you ahead, or behind for retirement? Click here now to check. (sponsor)

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Transcript:

[00:00:00] Doug: So what should you do because you know you’re going to die and you’re going to be leaving something to people? Okay. So the first thing is, is that people think that a trust and a will is for rich people. It’s not. If you’ve got any amount of money and you want to avoid the chance that You know, your assets end up in court for some period of time and probate in some states that can take months.

[00:00:26] Doug: The first thing to do is to go to a lawyer who understands state law and sit down with them and look at two things. How do you avoid probate? Number one, and number two, what is the most tax efficient way To transfer assets right to self, to other people in your family. So I would say that’s number one.

[00:00:50] Doug: Don’t assume a will or a trust is for rich people. Okay?

[00:00:53] Lee: Oh, not at all. Not at all. I mean, and there’s lots of lawyers that’s specialize in, not cheap, that’s not the word, but reasonable plans for a lot of it’s boilerplate, but, but then they can add in the things that you want, put in names, places, organizations you’d like to leave money to, things of that nature.

[00:01:13] Doug: The next thing is make sure that there are a lot of death certificates, uh, and in most cases, people,

[00:01:20] Lee: Sadly that’s true. Yeah.

[00:01:22] Doug: In most cases, people need to prepare to have between five and ten death certificates made available. Yep There are a lot of transactions after you die where you have to be able to prove that the person died to, you know, collect benefits, real estate transactions.

[00:01:41] Doug: I understand it’s odd, but once somebody’s dead, you’ve got to be able to prove that they’re dead.

[00:01:47] Lee: Yeah. And it’s, it was interesting. I remember when my stepfather passed away and I had to take care of his, everything was pretty well set up. He and my mom had done a great job at this. And, uh, but he was, he had got, he had been in the coast guard.

[00:02:01] Lee: He had been in actives for six years and he was in reserves. He, in fact, he was the head of the, of the, of the Coast Guard station in Detroit, uh, when we were growing up, Doug, and I used to kid him about guarding us from invasion from Canada, but he got a very, very nice Coast Guard pension. And the Coast Guard got, you know, I, I informed that he was deceased and which was good for them because then they could stop sending money.

[00:02:27] Lee: They said, stop sending money until you send us the death certificate. And I’m like, all right, I’ll go get one, another one.

[00:02:35] Doug: Right. The next thing is to plan your own funeral. And I don’t mean, you know, who’s going to sing or what church is going to be in, but, you know, people will often overspend on funerals.

[00:02:47] Doug: I’ll give you an example of something that you see a lot of people doing right now. And that is, they decide that they’re not going to have a cough and they’re not going to be not going to go through all that. They, in essence, arranged beforehand to have an organization come get their body. and have it cremated, given to the family.

[00:03:07] Doug: But it’s prearranged and it’s prepaid. So your family doesn’t have to worry about it. They, this isn’t morbid at all. You’ve got a contract to be cremated. When you die, the body is picked up by that organization. There’s cremated and the family gets the ashes. So the next part about preparing for what happens after you die is Prepare for what’s going to happen to you afterwards.

[00:03:34] Doug: So your family sitting there trying to figure out whether they ought to get a coffin, like the one that the Pharaohs are buried in, or whether they can have a simple wooden box or whatever. So save, save people the trouble of trying to go through that. Another one, which we don’t hear much about this anymore.

[00:03:53] Doug: Again, this is, this is income and asset base, but if you have a lot of assets, buy insurance, the insurance going to the people who are the beneficiaries. Insurance is not taxable, life insurance. So if you think that part of your estate is going to be taxed, leave money to pay for that tax by having life insurance with the policy beneficiaries being, let’s see, it’s your children.

[00:04:18] Doug: But what it means is the tax is being paid by an insurance, um, product. Usually if you’re going to do this by a one that’s called last to die, if you’re married last to die is much, much less expensive because the actuaries are gambling on, you know, the death of the second person.

[00:04:38] Lee: Yeah, exactly.

[00:04:39] Doug:  So at that point, the price of last to die is much, much lower than it is for individuals.

[00:04:45] Doug: So look into last to die, uh, insurance if it’s set up.

[00:04:50] Lee: Yeah, that’s really good advice. And again, one thing everybody has to remember is especially any of you that have have lost a parent or a close loved one. The grief factor is Is is tough and, you know, having to make a ton of decisions if you haven’t made them, they’re even made harder when you’re grief stricken.

[00:05:11] Lee: And like you said, insurance. Like, like for instance, for my, my mother-in-law, she, she didn’t have that much money, but, um, and, and she, she’s, she wanted a coffin to be buried with, uh. her husband and, and, and her family, but she had gotten a small insurance policy and it covered the lion’s share of those costs.

[00:05:32] Lee: And that was important because especially for lower to middle income people, it’s really smart to, to even if the policy is only 10, 000, 15, 000, it’ll help.

[00:05:42] Doug: Another thing worth looking at is Making sure that people have an IRA so that if you have IRAs when you die, the money can passed from one IRA to the other.

[00:05:54] Lee: You can roll ’em in. Yeah,

[00:05:56] Doug: right. There’s, there is a definitely a tax issue there and so people ought to make sure that if whoever’s the money is going to from your IRA, so that it is set up so there’s, it is tax advantage.