Even though most people understand its importance, estate planning is one of those things that tends to get put off. If you’re nowhere near retirement age, you may not be considering what will happen when you die. Even though this is understandable, the reality is that it is wisest to be equipped with a plan—even for unlikely scenarios. Having the important conversations about your will today will ensure that your loved ones are cared for in the event of an accident, illness, or passing.
When should you begin estate planning? If you’re in a long-term relationship or considering starting a family, the time to begin estate planning is now. Planning for the future means protecting your assets and caring for your family. If something happens to you, you want to make sure there is no legal question about your wishes for the allocation of your property or assets in case of death. Without a will and proper planning, you could leave your family in a legal and financial mess if something tragic were to happen to you.
Now Is the Time to Plan Ahead
Estate planning ensures that your final wishes regarding property and healthcare are honored. If you take the time to develop a comprehensive estate plan today, there won’t be any questions about your finances or property.
The estate itself consists of all the property you own at the time of your death, including real estate, bank accounts, investments, jewelry, cars, and other personal property. As part of your will, you can allocate who should receive which assets. You also need to consider issues such as paying the taxes on transfer of property and how to allocate funds for funeral expenses and outstanding bills.
Beyond allocating property, estate planning also involves ensuring that your family members will be properly supported. You may need to appoint a guardian for your children, or you may want to establish a trust to pay for their education. You also can designate what happens to payouts from life insurance policies. If you own a business, your estate plan can include succession planning or a plan to liquidate the business and sell company assets.
One of the primary reasons to create an estate plan in advance is to avoid probate. Probate is the legal process of allocating your property. In Missouri, if you die intestate, the court decides what happens to your property. This can be a lengthy and expensive process because the court will collect a percentage of the estate for fees. This process will also create additional hardship on your family. The clearer your estate plan, the easier it will be for your loved ones to handle your legal and financial matters.
How to Approach Estate Planning
Think of estate planning as part of long-term financial planning. Just as you are planning to accumulate wealth and assets to prepare for retirement, you also should be planning for how you want your estate to be handled. Estate planning gives you peace of mind because you know that everything will be managed properly and won’t create a burden for your loved ones.
- Start by creating an inventory of your assets. Compile a thorough list of everything you own, including your home, bank accounts, IRAs and retirement funds, vehicles, any property of value, and anything that holds special meaning that you want to leave to a specific person or group (e.g., a family heirloom).
- Next, inventory all the bills and costs that your family will face in the event of your death. In addition to taxes, there may be other expenses that your family will have to deal with. For example, if you were a cosigner on any loans or credit cards, those debts now become the responsibility of the consigned.
- Will you need to arrange care for children under the age of 18? You will want to name a guardian to care for them, but you may also consider appointing a trustee. If you want to leave money to your underage children, it is usually held in trust until they are legally adults, and the trustee manages the estate.
- You may also want to consider life insurance. The right kind of insurance can ensure that your family will receive a sum of money in the event of your death.
- As part of your estate plan, be sure to include any directives, such as whether you prefer burial or cremation. In the event that you become too ill to manage your own care, advance directives can simplify healthcare decision-making. Missouri has a healthcare directives registry so that any instructions or directives are stored for direct access by authorized healthcare providers.
- Preparing a will also helps avoid intestacy laws. For example, if you die intestate in Missouri, only your immediate family can inherit, and property is allocated based on their relation to you (e.g., your spouse first, then children, then parents, then grandparents, and so on). If you don’t have immediate family and die intestate, your estate could go to the government.
Help with Estate Planning
Laws vary from state to state, so it’s important to find a professional who is well versed in your state’s laws to help you with estate planning. In addition to an attorney, you may want to consult your insurance agent or financial advisor.
Estate planning isn’t something you can do once and then forget about. Revisit your estate plan regularly, especially as your life changes. You will need to update your will if you buy or sell a home, decide to change the beneficiaries, add new accounts to retirement planning, or achieve other milestones that affect your estate. You may not think you need estate planning, but you never know what may happen. It’s always best to be prepared.
Need guidance with your estate planning? Get in touch with a financial advisor on our team who can help you through the process.
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