Estate planning is a critical part of any financial strategy, but unfortunately it’s something that many people skip. An estate plan helps you distribute your assets to loved ones after you pass away. It also helps you protect your family and leave a legacy.
Contrary to popular believe, an estate plan isn’t just for people who have accumulated vast wealth. Even those with a modest estate should think about what will happen with their assets after their death. Before you develop your plan, though, you should think about what kind of goals you want to accomplish. Below are a few objectives you may want to incorporate into your legacy plan:
Providing protection for your loved ones.
Perhaps the most important objective any person can have with estate planning is providing support and protection for loved ones. That’s especially true if your spouse and children rely on you for financial support.
You’ll likely want to start by deciding who should receive assets. If you have a spouse, you may want to leave the bulk of your estate to him or her. You also may want to leave assets for children, grandchildren, extended family or even a favorite charity.
After you decide who gets what, you’ll then want to consider how best to distribute the funds. For example, you may want to use a trust so you can minimize the impact of probate and exercise more control over the distribution of your assets. You might also consider increasing your life insurance coverage to maximize how much you can leave behind.
One of the best ways to figure out what to leave to whom, and how to leave it to them, is to create a vision. Write down what you would like to see happen with your assets after you pass away, and then create a plan to make sure your vision becomes a reality.
Managing estate costs and risks.
If you’re not careful in your planning, you might jeopardize your estate. Even if you’re not wealthy enough to face estate taxes, there are still threats that could drain your assets. One of those is probate. This process can tie up asset distribution. On top of that, it can also come with large administrative and legal fees.
Another potential risk to your legacy is medical debt. End-of-life medical treatment and long-term care can be expensive. And if you haven’t prepared for these costs, then your family may be forced to pay for them from your estate. Supplemental insurance can cover the costs not paid by Medicare, and long-term care insurance can also be a valuable tool to protect against this risk.
Planning for incapacitation.
While it’s not pleasant to think about, there is a chance you’ll become incapacitated before you die. Usually a result of conditions like strokes or diseases such as Parkinson’s or Alzheimer’s, becoming incapacitated means that in the final days, weeks or even months before your death, you’ll be unable to communicate your medical and financial wishes to your family.
If you haven’t planned for this, your family may make decisions for you that you wouldn’t have otherwise made. But with tools such as a living trust, a power of attorney or a living will, you can minimize the financial impact of incapacitation. These are all fairly straightforward documents, and a financial professional can help you decide which ones are best for you.
Ready to develop your legacy plan? Let’s talk about it. Contact us at Senior Care Alliance for more information. We welcome the chance to help you analyze any remaining questions and develop a strategy. Let’s start the conversation today.
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