It is a subject no one is comfortable talking about and one that many people avoid: individual mortality. Despite the negative connotations, estate planning is a necessary financial consideration that anyone with loved ones should address, regardless of age. It is misnomer that estate planning is just for older, very wealthy people. In fact, I recommend estate planning as part of your overall financial planning, which can start as early as possible.
Why estate planning? Because estate planning can offer peace of mind to you and your loved ones. Knowing that surviving family members and friends will not have to sort out details on their own may seem trivial, however having to unwind a loved one’s estate and decipher their wishes only magnifies the stress during an already difficult time.
Preparing for end-of-life is full of decisions that are hard to think about. This process is further complicated by the inertia of tax codes, regulations, and legal concerns that apply only to estate planning and can be a source of uncertainty, anxiety, and worry over every decision and detail. Relying on the competent and compassionate advice of an estate professional can alleviate worry and anxieties and ensure that your final wishes are executed without difficulties.
Here are four things everyone needs to know about estate planning.
You Better Name Your Beneficiaries
There is a difference between named beneficiaries and an estate. In terms of estate planning, the three key areas to pay attention to include:
· Knowing who your beneficiaries are
· How assets are titled
· Whether assets can transfer without a will
While these issues may seem simple, they are often the most overlooked estate planning considerations among people with bank accounts, money markets, real estate, life insurance, and other valuable investments and assets which all can have listed beneficiaries.
Additionally, most retirement accounts can transfer without (or outside of) a will. Taking the time to review documents, update beneficiary names and contact information, and assign assets to the correct transfer proceeding ensures that they pass correctly and expeditiously.
It’s also critical to know that a will designation does not override beneficiary designations. For example if you IRA had your spouse listed as a beneficiary, but your will had your children, the assets would move to your spouse despite what was written in the will.
An Estate Includes ALL Assets
Another misconception of estate planning is that you need to be rich or own a large amount of property to have an estate plan. Every personal and financial asset is an integral piece in legacy planning.
As modern financial markets change, even online assets like your social media accounts should be considered as part of effective estate planning. Digital assets, such as online savings accounts, may be well-hidden and difficult to access through varied layers of complex security if no one else has your login information. Providing loves ones with specific rights and access to online accounts is a serious and necessary consideration for estate planning in the digital era.
A Will Isn’t Enough and May Not Be Your Best Option
Estate planning begins with a will or living trust, but having one doesn’t complete your estate plan. A will itself will provide your instructions, but it won’t avoid probate. Jointly-owned property and assets that let you name beneficiaries can often allow your loved ones to avoid probate, which is why it is so important to name beneficiaries on your assets.
An irrevocable living trust is usually a good option for many families, because it helps your family avoid probate and brings all your assets (even the ones with designated beneficiaries) together in one plan. Another huge benefit of the irrevocable living trust is that it is valid in every state and is easy for you to update. You can designate a trustee to manage your estate until beneficiaries reach the age you determined they would inherit your assets.
Estate Planning is Relevant While You’re Still Alive
Estate planning isn’t just for divvying up assets after you’re gone. Estate planning also includes your healthcare directives in the event you are unable to express your wishes for your medical care. If you are unconscious or incapacitated, having your healthcare directives established in your estate plan will not only ensure your wishes are honored, but it takes the burden off your loved ones to make these impossible decisions in the moment.
Designating a Power of Attorney (POA) will enable the person of your choosing to access your bank accounts, pay your bills, and manage your affairs if you are unable to perform these duties on your own. Without a POA, important financial matters may be abandoned until you recover and that could have long-term consequences for your finances and anyone who relies on them.
Estate planning is as much for you as it is for the people you love the most. From protecting financial assets from being tied up in probate court to eliminating conjecture over what measures you would want doctors to take to preserve your life, proper estate planning will communicate your wishes.
If you don’t have an estate plan, don’t delay any longer.
Want to learn more how Lake Road Advisors can help you?
- Nov 5, 2018 Have You Taken Steps to Protect Your Credit? Nov 5, 2018
- Oct 31, 2018 Lake Road Advisors Announces New Partnership with Vestwell Oct 31, 2018
- Oct 22, 2018 6 Biases That Can Impact Your Financial Behavior Oct 22, 2018
- Oct 8, 2018 Open Enrollment is Coming: Are You Adequately Covered? Oct 8, 2018
- Sep 24, 2018 What Today’s Economy Means For Investors Sep 24, 2018
- Sep 10, 2018 Recent Grad That Can’t Find a Job? Here’s What to Do Sep 10, 2018
- Aug 20, 2018 How Your Financial Planner’s Network Can Help Aug 20, 2018
- Aug 6, 2018 These 2 Accounts Offer the Best Tax Advantage and Here’s Why Aug 6, 2018
- Jul 23, 2018 The Big Difference Between a Fee-Only & Fee-Based Financial Advisor Jul 23, 2018
- Jul 9, 2018 Why Titles Mean Little and Designations Mean Everything Jul 9, 2018
- June 2018
- May 21, 2018 The 5 Most Common Estate Planning Mistakes Parents Make May 21, 2018
- May 7, 2018 Here’s Why You Need to Think About the ROI of Education May 7, 2018
- April 2018
- Mar 26, 2018 Get Beyond The Price Mar 26, 2018
- Mar 12, 2018 Index Funds and Passive Fund Management: Understanding the Opportunity Mar 12, 2018
- February 2018
- January 2018
- Dec 11, 2017 The Psychology of Saving Money: Why some do it successfully and others struggle Dec 11, 2017
- Nov 27, 2017 Why Your Child's 529 Plan Should Be Direct Nov 27, 2017
- Nov 13, 2017 Get on the Road to Financial Success with These 4 Behaviors Nov 13, 2017
- Oct 30, 2017 Know the Lingo - the daily market recap and how it affects you Oct 30, 2017
- Oct 16, 2017 The 3 Unbreakable Rules for Financial Success Oct 16, 2017
- Oct 2, 2017 Follow These Steps When Selecting a Financial Advisor Oct 2, 2017
- Sep 18, 2017 Why You Should Choose a Fiduciary as a Financial Advisor Sep 18, 2017
- August 2017
- Jul 24, 2017 How Am I Doing? Jul 24, 2017
- Jul 10, 2017 Do I Pay Off (Student Loan) Debt or Do I Invest Instead? Jul 10, 2017
- June 2017
- May 29, 2017 Diversification: The Right Way to Manage Risk May 29, 2017
- May 15, 2017 Having A Tough Conversation & Helping Your Aging Parents May 15, 2017
- May 1, 2017 What Everyone Should Be Doing Post-Tax Season May 1, 2017
- Apr 17, 2017 Want to Raise Financially Savvy Kids? Try These 5 Steps Apr 17, 2017
- Apr 3, 2017 Inflation: What Every Investor Needs to Know in 2017 Apr 3, 2017
- March 2017
- February 2017
- January 2017
- Dec 26, 2016 5 Steps to Get Your Finances Ready for 2017 Dec 26, 2016
- Dec 12, 2016 How Much Should I Invest In My Company Retirement Plan? Dec 12, 2016
- Nov 28, 2016 How About What Not To Do With 401(K) Contributions Nov 28, 2016
- Nov 14, 2016 Keeping it All Together: How to Balance Personal Financial Goals with Running Your Business Nov 14, 2016
- Nov 1, 2016 Nervous About The Election And Your Investments? Nov 1, 2016
- Oct 16, 2016 30-Somethings: Why are You Wasting Time Following the Stock Market? Oct 16, 2016
- Oct 3, 2016 Will 30 Year Old's Ever Get To "Retire"? Oct 3, 2016
- September 2016
- Aug 8, 2016 Why Budgeting Doesn't Need to Be a Dirty Word Aug 8, 2016
- Jul 18, 2016 What Does a Financial Planner Do? Jul 18, 2016
- June 2016
- May 16, 2016 It's Urgent, But Is It Really Important? May 16, 2016
- April 2016
- March 2016
- February 2016
- January 2016