Wills are not only for wealthy people.  Wills are the primary documents for transferring wealth upon death.  If you die without one, state law controls the disposition of your property.  In addition, without a will, settling your estates could be troublesome and costly for your beneficiaries.  Three major provisions that should be included in a will are:

• Guardian for your children. 
  A will should name a guardian for minor children in the event that both you and your spouse die. Make certain that the person you elect is willing to accept the responsibility.
• Creating Trusts. 
  All a will can do is direct the disposition of your estate. To accomplish longer term goals, such as funding a child’s education or providing for an elderly parent, you may need to include instructions for the creation of trusts at your death.
• Naming an Executor.
  Your executor is your personal representative after your death. He or she has several major responsibilities, including: administering the estate and distributing assets to beneficiaries; making certain tax decisions; paying debts/expenses of your estate; ensuring all life insurance and retirement plan benefits are received; and filing necessary tax returns and paying the appropriate federal and state taxes.

Assets owned jointly or that have beneficiary designations, such as life insurance, annuities, or retirement accounts, are not controlled by your will. However, their values are part of your taxable estate. 

While do-it-yourself and Internet wills are popular these days, you should keep in mind that estate, probate, and tax laws are complicated. A few misplaced or omitted words in your will can make a will null and void. You should consult with your attorney when designing your will.

Revising Your Will

Periodically reviewing your will is a good idea. It may need revising if :

• You move to a different state
• Your financial resources increase or decrease        
• You add another dependent        
• You change your life insurance        
• Your heirs change marital status, have children or die        
• Your guardianship plans change        
• You acquire property in another state        
• You inherit or purchase property        
• Your property increases substantially in value        
• There is a change in tax laws

To change your will you must execute a new one or amend an existing one. Don’t try to change your will by crossing out something. Changes made in this manner may be meaningless, and may even void the entire will. See your lawyer to make any changes.

Trusts

Trusts are legal arrangements in which you, the grantor, place assets in trust for the benefit of others, the beneficiaries.  Trusts are invaluable estate planning tools that can be either set up under the provisions of your will or established during your lifetime. Some of the most frequently used types of trusts are:

• Revocable Living Trusts        
• Unified Credit or Bypass Trust        
• Charitable Remainder Trust        
• Irrevocable Life Insurance Trust
   
   

It’s never too soon to think about saving for a college education.

If you’ve just become a parent or a grandparent, the child’s college days may seem a long way off. However, the earlier you start saving for education costs the better. Over the past few decades, tuition for both public and private education has increased more rapidly than the general cost of living, far exceeding the overall inflation rate.

There are a number of ways to save for a child’s education including:  Education IRAs, State Sponsored Education Programs, Custodial Accounts, Uniform Gifts to Minors (UGMA), Zero Coupon Bonds, EE Savings Bonds, stocks and mutual funds.

If something should happen to you or your spouse, would your child be protected financially? Life insurance helps to protect against the loss of income that would occur if you or your spouse were to die. There are a number of types of insurance that a family with a new child might want to consider:

Life Insurance in California

If you already have life insurance California, the birth or adoption of a child is a good time to review your coverage.  If you don’t have life insurance, it is time to learn more about how it can help protect your family in times of need. 

Your premature death could significantly affect your child’s future.  An addition to your family will generally increase your need for life insurance coverage because of the increased expenses and the potential changes in your financial goals and priorities.

Your life insurance needs depend on:

1. Your marital status
2. The number of children and their ages
3. Your income and debt level
4. The value of your assets
5. Your financial goals
6. Keep in mind that you must continually reevaluate your life insurance as your family grows. 

In two-parent households both partners are generally dependent on each other financially. Life insurance can provide income to the surviving spouse and allow your family to maintain its standard of living.

If your family has one wage-earner, that spouse’s death may certainly cause hardship for the surviving family members. Just as important, the death of the stay-at-home spouse could also result in financial hardship because of costly daycare and housekeeping expenses. Both spouses should have enough life insurance coverage to adequately cover all expenses that could potentially result from their death.

Disability insurance in California

You should consider the financial effects if you became ill or injured and were unable to work either for a prolonged period of time, or permanently.   Disability insurance is one way to protect your family from financial disaster should you become sick or injured and lose your income.  Most disability policies pay a benefit replacing generally 50 - 70% of your earned income while you are unable to work.

Universal and variable life insurance are types of permanent life insurance and both have the potential to accumulate cash value. How the cash value is invested by the insurance company is one of the key differences between the two.

1. 1A The actual cost of insurance increases with age and can become very expensive in later years. This is generally how term insurance works.
2. 1B Most permanent life insurance policies charge a level premium. This is accomplished by basically “overcharging” in the early years and “undercharging” in the later years. Part of your premium is invested by the insurance company and accumulates as cash value in the policy. Some investment earnings are used to help offset the higher cost of insurance in later years.
3. 1C For universal life insurance policies, cash value is supported by the insurance company’s general account.For variable life insurance policies, cash value is supported by the insurance company’s separate account, and your return will be based on the investment options you select. One way to describe how both policies work is to think of them as a bucket, called the contract fund, into which net premiums are paid and from which most charges and fees are taken.
4. 1D1 When premiums are paid, deductions are taken for such things as charges for premium taxes and, in some cases, sales fees. The balance of the premium, or net premium, is allocated to either the insurance company’s general account (universal) or separate account (variable) and accumulates in the policy’s contract fund.
5. 1E Each month deductions are made from the contract fund to pay the cost of insurance, which increases over time, and other charges for administration and any additional benefits.
6. 1F There is a contingent surrender charge usually during the first 10-20 years. This would generally apply if the policy is surrendered, lapsed, or if the face amount is reduced.Continued timely premium payments, favorable investment results for variable life and current crediting rates for universal life, and time can potentially result in the cash value of the policy growing after a number of years.
7. 1G For variable life policies, cash value is not guaranteed and will vary with the performance of the chosen investment options. With universal life policies, a minimum interest rate is guaranteed.
8. 1H Cash value may grow sufficiently so that it may exceed the monthly cost of insurance charges and other fees. You may also be able to pay less out-of-pocket premiums. If cash value is insufficient, you may need to make additional payments, which could be higher than the original premium.
9. 1I1 If cash value is more than sufficient, you may be able to access it through loans and withdrawals. For non-modified endowment contracts, loans and withdrawals*  are generally not taxable when they are taken. Policy loans and withdrawals will reduce the cash value and the death benefit payable to your beneficiaries and may have tax consequences.*

Both universal life and variable life insurance policies can offer you:

• Flexibility in the amount and timing of premium payments. 
• Death benefit guarantees and options, depending on the type of policy. 
• Potential for income tax-deferred cash accumulation.

In addition, universal life offers you the security of a minimum guaranteed crediting rate, and variable life offers you a choice of investment options.