Wednesday, July 1, 2009

The King of Pop's Financial Lesson #1

You can't escape the blow-by-blow reports surrounding Michael Jackson's death. Probably the saddest portion of which is the custody battle for his children that is only beginning to heat up. Let's set aside opinions and look at what we can learn from all of this.

Okay, Michael Jackson is not known for his fiscal sensibility, but I can't help by wonder quite loudly, "where is the will?" Apparently there isn't one, or we wouldn't be hearing about court decisions regarding his children. Like most people who haven't reached an age where they are thinking about death Jackson probably never expected he would jeopardize his children's future. But here's the reality; if you have kids, you need a will.

Many people assume that upon their death guardianship automatically turns to grandparents or siblings. This isn’t necessarily true, and you shouldn’t leave these decisions up to the court. Instead, thoughtfully consider who would provide the best care and most loving home.

Your parents may have done a fine job raising you, but consider their health and energy level. Perhaps your siblings or even a close friend may be a better choice. If you have multiple children, decide if this is practical for one guardian to handle. Or, if your children are not close in age, could they be split between different guardians? Would the guardians work together to keep the children close?

Talk with prospective guardians before making a final decision. Be sure that they are willing to take on the responsibility of raising your children. As your children grow their needs may change. Review your guardianship choice every year to ensure that the plan is still acceptable.

Financial Provisions

Naming a guardian does not automatically give that person access to money to help meet your child's expenses. And, it’s not unusual for a person to be a loving and caring guardian, but not be so careful with money. Therefore people sometimes choose one person as guardian and another as conservator, to manage finances.

Don’t assume that any assets will automatically be passed to your children. Make plans for the distribution of your assets through either a will or trust. The basic difference between a trust and will is in the details. A will states how you would like your assets distributed and can also list who will serve as guardian for your children. A trust can ensure that distribution of assets and your wishes regarding your child’s upbringing such as education or religion are carried out.

Peace of Mind

Chances are good that you’ll be around to see your children grow into adults. But, a thorough estate plan ensures that no matter what happens, you’ve taken care of their needs.

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