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Let Heirs Know Your Legacy Plans

Estate planning can be one of the most emotionally difficult aspects of financial planning. One often-overlooked aspect of estate planning is talking with your heirs about your legacy plans. While most of us probably accept in theory that these conversations are important, actually carrying them out can be terribly difficult.

Here are a few suggestions that may help.

1. Communicate your values about money in a larger context with both words and behavior.

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Rick Cited in Wall Street Journal on Best Assets to Leave to Heirs

When you plan the best strategies for withdrawing money to fund your retirement, one factor to consider is which types of accounts are best to leave to heirs. An article by financial writer Andrea Coombes in The Wall Street Journal (June 2 online and June 3 in the print edition) has some excellent information about this issue. The piece explains some of the tax consequences for heirs and why it’s generally better to inherit Roth IRAs than traditional tax-deferred IRAs.

Rick is one of the advisors quoted in the article, “The Most Valuable Assets to Leave for Your Heirs.”

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More on Money and Marriage

To marry or not to marry? This isn’t a decision to make on financial grounds, but the choice certainly has financial consequences.

My column a few weeks ago about laws that provide financial incentives not to marry drew a great many comments. The points several commenters made are included in this follow-up.

The example I cited from the federal tax code was for a high-earning couple. Yet tax laws for married couples don’t just affect the wealthy. Those with lower incomes can pay a tax penalty for marriage, as well.

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Estate Planning for Adult Children With Special Needs

The heart of estate planning, for many of us, comes down to one issue: taking care of family. We do our best to make decisions that we hope will be right for surviving spouses and children.

Such decisions are especially challenging for parents of children with special needs. The question of “Who will take care of this child after we’re gone?” can be heart-wrenching.

There are financial planners who specialize in this area, and the best option for many families might be to ask a generalist planner like me for a referral to one of them. The following suggestions, then, are intended as starting points or a very general framework on which to build.

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Equal Inheritances Not Always Fair

In estate planning, “equal” isn’t necessarily the same as “fair”. I rarely see an estate plan that does not treat children equally. When I do see inequality, it’s usually because a parent is estranged from one child and leaves him or her nothing.

Dividing an estate into equal shares for each child might seem to be the obvious way to treat children fairly. However, that usually only works if you’ve treated them equally during your lifetime. If you have given more to one child during life, it’s usually smart to level the playing field at death.

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