DIY Estate Planning: Select Your Beneficiary

DIY Estate Planning: Name Your Beneficiaries

This is the latest in a series of blog posts about doing your own estate plan.  

Before we get into the specific details, please note the following:

  • This blog post is for general informational purposes, and NowInsured is an insurance provider, not a law firm.  If you have specific legal questions, please approach an attorney.   
  • NowInsured has no stance for or against your particular approach on estate planning, whether you choose to hire an attorney or go with a do-it-yourself plan.  
  • NowInsured is not affiliated with any of the organizations identified in this blog post.  We will link to them as sources of information, but none of those links should be considered endorsements of any kind, and we are receiving no compensation in exchange for our links.  

Issues Around Naming Beneficiaries

As mentioned in our prior blog post, there are pros and cons with doing a will yourself.  In the same way, you can name your beneficiaries on your own, but you need to realize that there are potential problems with this.  

First, to reiterate from our last post: there are certain types of property that can’t be passed on in a will.  Here are a few examples from Consumer Reports:

  • If you own a house with your spouse, and your spouse has what is known as the right of survivorship in the house deed, he or she will get your share of the home when you pass away.  
  • If you have a savings or brokerage account that is payable on death, the bank gave you forms to fill out.  In those forms, you identified a beneficiary that would receive the money in those accounts once you die.  Those forms may override any beneficiary named in your will.  
  • Do you have a retirement account or life insurance policy?  They work the same way: they’ll pass on to whichever individual(s) you identify on their forms, not necessarily the people you name in your will.  

Forbes identified several other potential issues with naming beneficiaries.  Here are just a few:

  • Are you leaving cash gifts to particular people or organizations?  If so, you need to make sure that enough money will be available for the executor of your estate to pay those gifts.  
  • Be careful when naming a spouse as your beneficiary, particularly if you have a trust set up.  This can create problems if you have children from a previous marriage, or you don’t want your spouse to have full control over your assets after you pass away.  

Like we stated at the beginning of this blog post: we’re not taking a position for or against naming your beneficiaries on your own.  These are just some of the potential problems that can occur.  If you think you need guidance, talk to an attorney.

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DIY Estate Planning and Will Creation

Do-it-Yourself Estate Planning: Wills

This is the first in a series of blog posts we’ll be doing on DIY estate planning.  The thing to realize about an estate plan is that it isn’t a single document or contract.  It’s a series of legal documents that establish what you want done with your property and belongings – including your house, vehicles, money and valuables – after you die.

Before getting into the details, we need to present some very clear conditions right up front.  

  1. NowInsured is not a law firm.  This blog post is for general informational purposes only, and you shouldn’t treat this as legal advice.  If you think you need specialized legal counsel, you should find an attorney.  
  2. NowInsured doesn’t have a dog in this fight.  It goes without saying that we’re biased in favor of final expense insurance, but when it comes to your general estate planning, we’re impartial as to whether you decide to find an attorney or try a do-it-yourself approach.  
  3. NowInsured is not affiliated with any of the organizations named in this blog post.  We will refer to them as providers of services or sources of information, but none of those references should be considered endorsements of any kind, and we are receiving no commissions or kickbacks of any kind for mentioning them in this post. 

DIY Wills: Pros and Cons

Getting a will is probably the first thing people think about when it comes to estate planning.  A will establishes which individuals or organizations will receive assets that you leave behind.  

As pointed out here, hiring an attorney to create a last will and testament can cost as much as $1,200.  Of course, the internet has responded; you’ve probably heard about services like LegalZoom and Quicken that allow you to create a will inexpensively.  Visit that link for an expanded list of online will makers.  These services are all fairly similar: they ask you a series of questions, and their systems adjust the language of the will based on your responses.  

Overall, this seems like a sort of cookie-cutter that probably works well for a lot of people.  However, several sites reported a real risk in using these services.  Nerdwallet shared the story of a man who thought his will was simple enough to set up through an online service.  He made a lot of mistakes in the process, which has created a lot of conflict among his heirs and generated a lot of lawyer fees, which will be paid out of the inheritance.  

One reason that DIY wills can create problems is that your life situation may change after you signed your will.  As SmartAsset points out, “If you have kids, get married or divorced, or come into a large sum of money or valuable asset, you’ll need to adjust your will to account for the change.”  Obviously if you are at a stage in life where you don’t expect massive changes like these, then an online service might make sense for you.  But people don’t usually expect big life changes.  

Some online will makers have adjusted their services to address these problems.  LegalZoom gives its users the option to consult with an attorney for an extra fee.  And Rocket Lawyer’s subscription model has an option for access to an attorney.  

Here are a few other things to take into consideration when doing your own will.  

  • Make sure that the will is properly signed, with the correct number of witnesses.  You’ll have to get it notarized, and you’ll need witnesses on hand when it’s signed. According to the American Bar Association, most states require at least two witnesses, and some require three.
  • Be aware that certain assets can’t be passed on in a will.  As explained by Consumer Reports, “For instance, if you own a house jointly and your spouse has the right of survivorship (a type of ownership that is spelled out in your house deed), he or she will get your share of the home when you die. If you open a payable-on-death savings or brokerage account, the cash and securities in those accounts will go directly to the beneficiary that you name on the bank or brokerage house’s forms. Moreover, your 401(k), individual retirement accounts, and life-insurance policies will pass to beneficiaries you designate in those documents.”  
  • Make sure that your will is someplace easily found after you pass away.  We’ve all seen movies that involve some sort of high-stakes drama when somebody dies and nobody knows where the will was kept.  

We’ll cover other issues around estate planning in upcoming blog posts.

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Factors Driving the Cost of Funerals

Burial Insurance: Issues Impacting the Cost of Funerals

One common issue that a lot of people run into when trying to determine how much burial insurance they need is projecting the cost.  It seems like the price tag for a funeral can vary by tens of thousands of dollars.  

There are a range of issues that can impact the cost of a funeral.  Here are just a few of them:

  • Cremation versus burial. If a body is cremated, embalming and a casket aren’t required, and the body usually isn’t dressed.  As a result, cremation is generally cheaper than a traditional funeral.  (It’s worth pointing out, however, that the amount of savings of a cremation over a burial can vary substantially depending on other factors.)
  • Cemetery plots.  Folks looking to plan a funeral learn quickly that buying a cemetery plot truly is a real estate transaction.  You really are buying a plot of land – it’s just large enough for a casket.  As a result, the cost of a cemetery plot is on some level connected to local real estate values, so a plot will probably be more expensive in Manhattan than Kansas.  Even in an area with relatively low real estate prices, the location you choose within a cemetery will directly impact the cost.  
  • Additional features during a funeral service can also add to the final bill: 
    • Decorations.  You may want to include pictures, mementos and flowers to remember the deceased loved one.  This can drive up the cost, depending on how elaborate you get.  
    • Music.  Many people want a special musical number performed by an individual musician or a group.  
    • Reception accommodations.  If you plan to have a post-service reception for funeral attendees, you’ll probably end up having to get a caterer to prepare food.  It may also mean renting a separate space for the event.  

These are just a few of the factors that can impact the amount you pay for a funeral.  But with the right level of final expense insurance coverage, your next of kin can have enough money on hand to lay you to rest without worrying about how to afford it.  

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Funeral Insurance vs Final Expense

Final Expense Insurance vs. Funeral Insurance vs. Burial Insurance: What’s the Difference?

Some folks looking for funeral insurance (sometimes referred to as burial insurance) discover final expense insurance, and want to know what the difference is between all these terms. Here’s a quick explanation.

Because people were looking for an inexpensive way to pay for their own funerals, the insurance business responded with final expense insurance. It’s a small, inexpensive life insurance policy with a low monthly premium. When you pass away, we’ll provide a cash payout to your next of kin that can be used for your funeral or anything else your loved ones want to spend it on.

In other words, all the labels in the title – “burial insurance,” “funeral insurance” and “final expense insurance” – are fundamentally identical. Final expense insurance is an industry term, but it’s insurance to be used for your funeral or burial in the event of your passing.

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