It’s incredibly difficult to consider our own mortality and the life that continues after we pass on, but when it comes to personal finance, estate planning is a necessary factor to consider.
Planning ahead lessens any burden on your loved ones when they’re already grieving, and it gives you peace of mind knowing your estate is in good hands.
If you’re ready to start thinking about estate financial planning, no matter your age, keep reading our essential guide to get you started.
Create a will
A will is a legal document that tells those who need to know how you want your things to be divided when you pass away. You can also choose someone called an executor, who will ensure the contents of your will are carried out correctly.
A well-drafted will should cover all significant assets, specify beneficiaries and address potential contingencies. Working with an experienced financial planner can help you identify relevant financial areas you need to address in your will to make sure you cover everything.
Consider establishing a trust
Trusts have more advantages than just a will. They can help you properly plan for what will happen with your estate. Trusts give you the freedom to control and divide your belongings, possibly lowering taxes on your estate and keeping your affairs private.
You can make changes to your trust once it’s set up, or you can choose to make it unchangeable.
You can also choose who you’d want to supervise and handle the trust, for the benefit of those who will inherit them – this is common if beneficiaries include younger children or teenagers.
Designate beneficiaries and powers of attorney
Choosing your beneficiaries and power of attorney can be tough, but it’s a good idea. It’s important to pick people who you trust, who can make decisions for you if you’re unable to. These people will have the power to handle important matters related to your health, finances, retirement plans and life insurance if you can’t.
And as your family circumstances change, it’s essential to review and update your plan with the help of a financial advisor. When changes happen, such as marriage, divorce, births, deaths and significant financial changes, you should make it a habit to review your estate plan.
Communicate your plan with loved ones
Perhaps most importantly, openly discuss your estate planning with your loved ones. You can explain your intentions, share an idea of what your wishes are and provide any necessary information to those who need it – such as where you keep your important documents and paperwork.
By communicating with those you love and making clear your choices and plans for your estate, you can help prevent potential conflicts and confusion during highly emotional times.
Get help from financial experts
Estate planning is an important part of personal finance. It helps you safeguard and divide your assets as you want, and protect what you work hard for through life.
Financial advisors like the team at Step Up Financial can help create an estate plan that fits your specific situation and what you want to achieve. Contact us today to start this important conversation.