Have you prepared your loved ones for the inevitable? Planning for babies, college, a vacation, or buying a home is always at the top of the list, but end-of-life planning often falls by the wayside. "I remember having knots in my stomach,†says Montrie Adams. "When you're thinking about life insurance, you're really thinking about death.†Although it wasn't easy, Montrie and her husband, Todd, didn't want to follow the example of relatives who had died without having in place executors, beneficiaries, or money to cover burial expenses. Life insurance payouts can be used to pay off debts and loans, making it possible for homeowners to keep their property; finance a child's college education; maintain a family business; and provide a steady stream of income for surviving family members. According to a September 2011 survey from LIMRA, an association that provides consulting, research, and other services to insurance and financial services companies worldwide, the proportion of U.S. adults with life insurance protection has declined to an all-time low. Only 41% of adults in the U.S. own life insurance policies. Yet, poor planning can leave a hefty burden on your loved ones. According to the National Funeral Directors Association, the average cost of a funeral is about $7,000. Leaving money to pay for burial costs as well as to heirs is just part of the estate planning process. For families like the Adamses, it's critical to add another layer of protection. The couple crafted an estate plan that also provides a guardian and a financial trustee for their children, Tadj, 10, and Najah, 8. (Continued on next page) "We wanted to make sure that if we died, our children wouldn't become wards of the state,†says Montrie, 50. The Adamses live in Ohio. Children who become wards of the state have their assets administered by a court-appointed guardian. Although the assets are still distributed to the children, they may not be disbursed as the children's parents would have wished. Since their children's legal guardian would have control of money and property, the Adamses set out to find one who had values like theirs. "We had a discussion with our family,†says Todd, 47. Montrie adds, "We thought of individuals with the same educational values and moral standing, the same thought processes we have in terms of life goals and religion.†After discussing their needs, they chose one of Todd's sisters, Angela. Legal matters, such as planning for the future and protecting your assets, can be complex. To help the Adamses understand their rights and options, they first found an attorney who specialized in estate planning. An estate plan essentially transfers a person's assets and properties to his or her beneficiaries. It can include a will or trust and may also provide for charitable giving. "The way our will is written, if one of us dies then the surviving spouse is automatically in control of all the remaining assets,†says Todd. "If both of us die, then the estate's executor would manage the assets as well as make decisions about our children.†The couple then determined how much life insurance they would need. "We used some basic formulas and considered projected income loss, projected expenses, and other family needs,†says Todd. Currently, they each have a 20-year term policy with a face value of $1 million. They pay a monthly premium of $194–$96 for Montrie and $98 for Todd. The policy was renewed in 2003 when their daughter was born, so it will be in effect until she and her brother graduate from college. This year the Adamses will be reviewing their policies because they've left their full-time jobs to work for their 10-year-old communications and public relations firm, Visibility Marketing Inc., which has projected 2012 revenues of $420,000. (Continued on next page) The Adamses realize that they may have to add new provisions including key man insurance, which provides business owners with funds to hire a replacement, pay off debt, or buy time until the business assets can be liquidated and the business closed should one of the owners die. The Adamses are also exploring long-term care options and disability insurance. "Our business has grown, our entire financial plan has changed,†says Todd, "so we are looking to meet with our financial planner to reassess our insurance needs. HOW THEY DID IT - Get professional advice. "Find an attorney that specializes in estate planning,†says Todd. Working with a professional will not only help you get started, it will also ensure that your plan is valid under current state law. After asking family and friends for recommendations, the Adamses spoke with several attorneys and developed a short list. - Select guardianship with care. "Sometimes you look at people and think they may be the perfect person to raise your children,†says Montrie, "but they may already have enough children or other obligations. Who you think might be best is not always best.†Although it is for the Adamses, the person you select as guardian does not have to be trustee and executor. You can select one person to care for your child, someone else to manage the checkbook, and another person to carry out your will. - Get organized. Make sure to designate beneficiaries on your savings accounts and other assets not outlined in your will. Organize your personal and financial records and prepare a written summary. Keep the information in a safe place and be sure the right people know where it is. The Adamses store their documents in a bank safe-deposit box, which contains their homeownership documents and bank, securities, and retirement account statements. They have reviewed the documents with Todd's sister. - Pay attention to your state's tax structure. Estate tax is imposed on the transfer of property at your death. Currently only estates and lifetime gifts that exceed $1 million are taxed. For more information, visit www.irs.gov.Â