THE FIVE FUNDAMENTALS OF ESTATE PLANNING
Estate planning is the act of ensuring your estate is secure after you die - essentially, it means organizing everything for your family and your financial goals. It also includes essential things like a living will, who gets power of attorney, and even the creation of a trust.
Here are five fundamentals of estate planning: all are necessary, important, and things a qualified money manager can help you with today.
1. Be open about the process - get over the awkwardness.
The very act of estate planning makes some people nervous - and that's natural. Deciding who to leave your property to is a strange process, one that forces you to acknowledge your own mortality more than any other 'routine' task might.
For some, the process is difficult enough that procrastination becomes second-nature. Don't let this happen! More than anything else, a few hours' work on your estate will save your family weeks, months, maybe years of painful interpretation and court-system headaches.
2. Make your will, and don't delay.
The most important part about planning your estate is unequivocal: you need a will. Without that, the rest is immaterial. The first step upon finding a qualified money manager to help with your estate planning should always be - with no exceptions - the creation of your will.
Consider your will the clearest, most fundamental part of your estate planning: the rest (trusts, gifts, asset distribution) all flows from this one, essential document. You need a lawyer to make a will, but a lawyer can't give you financial advice; before you sit down and draw up that crucial legal document, make sure you're doing it right by consulting with your financial advisor.
3. Make a living will, too.
By specifying your living will, you let your family know what kind of decisions you would like made on your behalf, should you be unable to express those yourself. A living will often names a health care proxy (someone you trust to make your health care-related decisions for you), and it's an important document to have on hand.
Deciding to sustain care for an extended period also means your finances will have to be dealt with, and you want a person who you trust making those decisions. Creating a living will is essential.
4. Consider a trust: it can save your family thousands.
While trusts aren't for everybody, they are also not only for the ultra-rich among us. There are certain conditions you might wish to lay out in regards to your estate - that your children receive money on a staggered basis, or after a certain age, or college graduation, for example - and these kind of conditions need to be worked out through a trust.
Fundamentally, a trust allows you to create conditions about how your money is used after you die: while many are happy simply declaring who will inherit what, others wish to extend their financial planning and control somewhat further, and a trust offers this opportunity.
5. Understand where you're vulnerable to heavy taxation.
This might be the most crucial part of all: by engaging in proper estate planning, your money manager can be a great information source your lawyer and you use to help sort out exactly where you're most vulnerable to heavy taxation after your death, and make appropriate arrangements. This depends on many factors: current estate tax laws, how much of your holdings are in specific sectors (real estate, savings, retirement funds), and how you choose to pass on your estate - they all have a bearing on how much tax you'll pay
The Sooner, the Better.
Estate planning is an essential practice: it's never too late to make a will, and the more well-drafted it is, the easier time your family will have after your death. This is one situation where you can't afford to put things off, as literally 30 minutes/week - for just a few weeks - with a qualified estate planner can make the difference between an easy inheritance and years of messy legal headaches. Start today!