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Financial Literacy - Planning for your heirs
See a pro for estate planning
Estate plans need professional evaluation, says this estate planning professor.
Planning for your heirs

Spotlight: Ted Kurlowicz

Estate planning might seem appropriate only for wealthy families, but most people need to engage in this process.

At a glance

Anybody with minor children should have a will and name a guardian, says Ted Kurlowicz, a professor of estate planning at The American College in Bryn Mawr, Pa. Parents should also consider setting up a trust so that their children can inherit assets at a more mature age than 18 or 21, he says.

Estate planning also involves decisions that make a difference to people while they are still alive. For example, advanced medical directives, living wills and health care powers of attorney ensure that certain instructions be carried out in the event of incapacitation.

To do estate planning right, people must first learn about the topic and then see a professional for an evaluation, Kurlowicz says.

What kind of person wouldn't need any estate planning?

It's impossible for a lay person to determine if they do or do not need estate planning in advance. A common theme among middle-class people who see me for estate planning is, "Well, I don't really have anything. I guess I should have a will, but I don't really have anything." Then, three minutes into the interview they find out they actually do have something and the truth is, anybody who owns real estate in areas of the country where real estate is thriving -- even to some degree -- has a significant asset. Real estate is something that, if two people are married, has to be considered should both spouses die.

The big smoke screen, and the most publicized thing about estate planning, is probate and probate avoidance. I really think that's a critical issue to some people in some circumstances, but it's a much smaller issue to me than getting the plan evaluated and coordinated to determine what steps need to take place.

I've referred to estate planning in my books as answering three questions: who, how and when. Most people won't have thought it through beyond "who" -- "how" and "when" are left out.

People don't get educated as to what their risk exposures are and the options that they have, which are answering the "how" and "when" questions. Sometimes people become educated though speaking with an attorney or a financial adviser.

The problem with estate planning under current law is that there is a whole lot of estate planning that goes on de facto, without any planning or coordination.

-- Posted: Nov. 19, 2007
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