What should you do?
Most of us don’t plan as well as we should. That is to be expected. We are human; therefore we err. This article and the next focus on what not to do — and what we should do.
Who’s your beneficiary? The new widow expected to benefit from her husband’s life insurance, which she knew was substantial. The procrastinating husband of 20 years hadn’t changed the policy’s beneficiary from his ex-wife (who was grateful). You should make sure that all insurance policies and retirement accounts and your will are up-to-date.
I am an unmarried co-homeowner. Young (or not-so-young) lovers buy a house together before marriage (if that may occur). They title the property in one person’s name, or in both names. So what can happen? Love can move out. What becomes of the house? If both own the property, then the issue may be what percentage each owns. There is no divorce court to divide the property, but another court may determine ownership by each’s contribution to the house payments. If the title is in one person’s name, what are the other’s ownership rights? You should enter into to a written agreement specifying each individual’s contribution and ownership share and keep a record of each person’s contribution to the down payment and monthly payments.
To prenup or not to prenup? A marriage may last until death, but the statistics indicate otherwise for many. The second marriage usually follows divorce. So what do you do differently? Well, you can consult Dr. Phil for counseling, but not for legal advice. Property splits, retirement plans divided and support paid occur upon a second trip to divorce court. You should consider executing a prenuptial agreement, so you both can determine an equitable division and not leave that to the divorce court. By the way, the second marriage could come after the first spouse’s death, and you may want to preserve each spouse’s family inheritance by the prenuptial agreement.
Grandma rules! A single parent of young children may pass away suddenly or another tragedy may render the parent incompetent. Sadly, too few have designated anyone to rear the children. You should execute a will which specifies the guardian for the children. Grandparents may be a viable choice, or siblings or friends. Whomever you choose should understand how you believe the children should be raised. If the grandparents are not chosen, make it clear how you want them involved in the children’s lives.
If it’s too good to be true, then beware. The current financial crisis has hit us hard. Most of us have been satisfied with a reasonable return on our investments, but losing money wasn’t part of our plan. We are tempted to seek higher returns to catch up. Promises aren’t cheap if they are not kept.
Investments promising significantly higher returns than the average always will entice us. You should consult a reputable investment adviser and understand that risks are always there, but some are more risky, or just scams.
Steve Maple is the author of The Complete Idiot’s Guide to Wills and Estates (3d ed.). Maple is an attorney and holds the Fitzwater Chair of Business at the University of Indianapolis.
