When Congress passed the recent $1.5 trillion tax bill (The Tax Cuts and Jobs Act or TCJA), it triggered the first comprehensive revamp of the U.S. tax code in more than three decades. As we prepare to file our 2018 tax returns, Americans will feel the effects of this legislation for the first time. For most, the effects will be positive. In fact, 80% of Americans will see their taxes drop. However, not all the news is good. There will be inevitable surprises as 2018 taxes are filed with one particularly nasty “gotcha” that will likely catch many taxpayers off guard.
Atlanta Financial Blog
Writing a will or trust is strictly for legal tasks, such as naming your executor/trustee, beneficiaries of your property, and guardian for your children. As you think about your estate plan, you may find that you also want to:
- Explain why you are giving property to certain beneficiaries and not others
- Explain disparities between bequests or gifts
- Express positive sentiments about a beneficiary or negative sentiments about a disinherited heir
- Leave instructions for your digital legacy
- Leave statement about your personal experiences, value, or beliefs
Using an Explanatory Letter
Although these sentiments are encouraged, they should not be included within the text of your will or trust, because adding general information, personal statements, or reasons for making or not making a bequest risks the possibility of producing a document with conflicting, confusing, or potentially even illegal provisions.
If it is important that you have a final say about personal matters without seriously risking your will’s integrity, we suggest that you write a letter to accompany your will expressing your thoughts to those who survived you. Because what you say in the letter will not have legal effect as part of your will, there is little danger that your expressions will tread upon the legal language of the will or cause other problems in the future. In fact, if your will is ambiguous, a judge make look to your letter to shed light on your intentions and to help clarify the will.
However, it is extremely important that the statements in your letter do not contradict the provisions in your will. Any contradictions could create interpretations problems after your death, which may lead to lawsuits and family turmoil.
Keeping these precautions in mind, writing a letter to your friends and family, explaining why you wrote your will as you did – and knowing they will read your reasoning at your death – may give you a great deal of peace of mind during your life. It may also assisting in explaining potential slights and hurt feelings of surviving friends and family members.
What to Include in Your Letter
What to include in your letter is completely up to you. It can be long or short, funny or intense, verbose or succinct. Below are some ideas of you might want to include:
- An explanation as to why certain gifts were made to particular beneficiaries. You may also want to explain why a particular piece of personal property was gifted to that particular beneficiary.
- Positive or negative sentiments. This is your time to “have the last word.”
- An explanation about disparities in gifts, including why you left more to one person and less to another.
- A statement in support or in opposition of a controversial issue.
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I was recently asked by a cousin during a New Year’s Day lunch conversation, “If you had to name the one key to starting a good financial plan at my age, what would it be?” My reply came without hesitation – “Margin.”
To provide context as to how the question arose, he and his wife are in their late 20’s. They married fairly young, have already survived some incredibly difficult life events together, purchased their first home, adopted two dogs, and are now expecting their first child. He understands the value of a dollar, the meaning of hard work, and is, quite frankly, one of the most principled men I know. So, what he was really asking was simply this: If we are looking to REALLY start getting our act together financially, and begin to put ourselves on a path to build wealth, where should we start? By the look on his face, my cousin was expecting something quite different in response, but quickly caught on to what I meant as we continued to chat.
As your parents age, they will probably need more help from you. But it may be difficult to provide the help they need, especially if they’re experiencing financial trouble.
Money can be a sensitive subject to discuss, but you’ll need to talk to your parents about it in order to get to the root of their problems and come up with a solution. Before you start the conversation, consider the following four scenarios as signs that your parents might be experiencing financial challenges, and how you can make things easier for them.
When planning for retirement, it’s important to consider a wide variety of factors. One of the most important is health and its associated costs. Thinking about your future health and the rising cost of health care can help you better plan for retirement in terms of both your finances and overall well-being. This quiz can help you assess your current knowledge of health and health-care costs in retirement.