What will you leave your family when you’re gone? Estate planning is a crucial part of securing your family’s financial stability.
Many people don’t create a plan for distributing their assets – personal property, investments, life insurance benefits, etc. – through estate planning, leaving their loves ones without peace of mind.
When it comes to estate planning, there is no “magic age” to determine when you should begin. Most people wait until later in their lives to financially plan for their family’s future and the future of their estate. The earlier estate planning begins, the better, as your family is left with an organized plan after you pass away.
If you don’t create a plan for what happens to your estate, the state steps in to make those decisions in court. This may include deciding who inherits your assets, who has the responsibility to act for you financially and who has the authority to care for your children.
For many people, estate planning is triggered by major life events, ranging from marriage to the birth of a child to a recently diagnosed illness. It may even be the result of seeing parents age or experiencing a loss in their family. However, to avoid leaving your family unprepared and your assets unorganized, it’s best to take a proactive approach to estate planning.
Another common estate planning mistake is failing to regularly update your plans. View estate planning as a fluid activity, as your plan is likely to change. With every new life event, review your estate plan. If you learn about a change in estate laws, review your estate plan. Regardless of life changes, it’s good to review and update your plan every five years, at a minimum.
Estate Planning: The First Steps
If you’re ready to start financially planning for your estate, start today with these steps:
-
Choose Guardians: First, prepare for the wellbeing of your children, in the event you’re unable to do so. Name a guardian or conservator to be responsible for their care.
-
Outline Your Assets: Catalog your entire estate – your assets, income and liabilities – so it’s easier for your loved ones to manage.
-
Assess Your Finances: Determine if you have enough assets to replace your income and to provide for your family if you’re unable to work. If you lack adequate funds, consider acquiring disability insurance or life insurance.
-
Name Your Beneficiaries: Who do you want to receive your assets? Name your beneficiaries, such as your spouse, children, friends or charitable associations. Also, create a contingency plan if you outlive one of your beneficiaries.
-
Select Your Estate Administrator: In the event that you are incapacitated, choose a responsible, trustworthy individual to administer your assets and carry out your estate plans as you wish. (This could be an agent under power of attorney, a personal representative, an executor or a trustee.)
-
Create A Living Will: Name the party that you would like to make health care decisions for you if you’re unable to do so yourself.
With estate planning, the ultimate goal is to ensure your assets are managed sensibly and distributed to your loved ones in accordance with your wishes. It’s your responsibility to financially plan for your future and provide your family the support and guidance they will need when you’re gone.
Are you seeking more guidance on estate planning? Do you have specific questions or challenges with your estate? Schedule a free consultation with a Richard Brothers financial professional to talk about your financial future.
