How to Know If You Need an Estate Plan
Estate planning is an essential element of your financial strategy. Many put off planning their estate because the topics of death and family can be uncomfortable; however, creating a plan can save your loved ones emotional stress down the road, not to mention taxes and fees that may be associated with distributing your assets during the probate process. Your proactive plan will lessen the burden and ensure that your assets are taken care of exactly as you had hoped.
Though estate planning is incredibly helpful for families when their loved ones pass, is it for everyone? What makes estate planning different from simply having a will? Do you need a certain amount of assets to consider estate planning?
In this article, we will answer these questions and provide a few things to consider as you plan for the future.
Is estate planning for everyone?
If you’re questioning whether or not you need an estate plan, the answer is likely yes. The word “estate” can be intimidating to those who don’t consider themselves traditionally wealthy; however, estate planning exists for anyone who has assets that they would like to have more control over while they’re living and after they’re gone. Estate planning is a powerful tool for people of all levels of wealth.
What makes estate planning different from having a will?
Think of a will as one small part of an estate plan. As a whole, your plan would include a will and living will, power of attorney, medical power of attorney, and trust.
These elements achieve the following goals:
- A will: This document will communicate your final wishes as they relate to your assets, your children, and to designating the executor of your estate.
- A living will: This document will communicate your end-of-life wishes.
- A power of attorney: This document will designate a trusted power of attorney who can then make financial and legal decisions on your behalf if you are no longer able.
- A medical power of attorney: This document will designate a trusted power of attorney who can make medical decisions on your behalf if you are no longer able.
- A trust: This document communicates your assets’ proper distribution and can reduce the taxes tied to your estate.
These five pieces come together to protect your assets, determine how they are distributed, and communicate your final wishes. They also provide you with the peace of mind that someone you trust is in charge of making decisions on your behalf, if you are no longer able—medically, financially, and legally. Each piece is essential to ensure that your family has an in-depth understanding of, and a clear guide to, your wishes, helping to lessen potential family conflicts.
Do you need a certain amount of assets to consider estate planning?
No, you do not have to meet a certain threshold to consider estate planning. If you have assets that you would like to pass on, if you have children who will navigate your estate once you die, if you want to save stress for your loved ones down the road, estate planning is for you. For questions about when and how you should begin creating your estate plan or further clarification on how it will help you and your family, reach out to your financial advisor. Consider that the sooner you begin planning, the safer your assets will be. Like it’s never too early to plan for retirement, it’s also never too early to create an estate plan.
Ready to begin the estate planning process? Contact us today to schedule a consultation.
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