Not sure your “estate” is big enough for estate planning? You might be surprised to learn what is included in your estate and how planning can provide peace of mind for you and your loved ones.
What You Need to Know to Get Started With Estate Planning
Whether your baby is an infant, a business you’ve grown from the ground up, or a furry soul who likes belly rubs, estate planning can ensure their future even after you are gone. It also serves to affirm that your wishes are followed should you become unable because of disability to make those decisions with regard to your:
- Care and financial management
- Philanthropic goals
- Business succession
- Burial instructions
While you’re feeling healthy is the best time to start estate planning.
What Is Estate Planning?
Planning for what happens to your “estate” after you die or if you become incapacitated is an important part of long-term financial planning. Your estate consists of the assets you own and control. This includes everything from your commemorative spoon collection to the investments in your retirement account. When you die, someone else will own or benefit from your assets. Your estate plan can dictate who each item goes to and how ownership is transferred.
What Is Involved in Estate Planning?
Estate planning involves creating the necessary documentation and directives to ensure your wishes are carried out. Aspects of estate planning include:
- Healthcare Choices & Financial Management- You can make decisions now about what should happen if you become incapacitated and cannot make medical decisions for yourself or manage your own finances. Appointing someone to make medical decisions on your behalf and educating that person about your personal wishes can provide you and your loved ones with peace of mind. Your estate plan will detail the extent of the medical intervention you would want if you could not speak for yourself and who has the power to handle your financial affairs.
- Funeral Arrangements- Dictating your wishes for your final arrangements can alleviate some stress for your loved ones at the time of your death. Estate planning can include making advance decisions about burial or cremation, the location of burial or disposition of ashes, and the type of funeral ceremony. You can even arrange to pay for these services in advance.
- Dependent Support- Someone may have to step in to care for your children, parents, or special needs relatives if you become incapacitated or die. Part of estate planning is arranging to continue the support of your dependents. You will want to designate someone to take over your role as caretaker and assign part of your assets to pay for your dependents’ care.
- Asset Distribution- You have many options for how to distribute everything you own after you die. You can elect to leave money or property to your children, other relatives, or friends. You may have a favorite charity or alma mater you wish to support with a portion of your estate. Making these decisions clear via legal documents will ensure they are carried out after you are gone.
- Business Succession- If you own or manage a business, you will need a plan for how the business should continue if you die or become incapacitated. Your estate plan should clarify who will take over your role or how your ownership interest should be distributed.
Estate planning is not just about deciding who gets your money when you die. It also involves designating people to take over your responsibilities. You may not have many assets now, but that could change over time.
What Happens Without a Plan?
You don’t need to be rich or old to need an estate plan. In fact, planning for your future is a smart financial move. Unexpected illnesses and deaths happen all the time. In the absence of a will or other estate planning documents, the state will decide your affairs. If you are incapacitated and do not leave a directive, the state could take decision-making powers away from your loved ones. In the event of your death, your estate will go through probate. This long and costly process would be hard on your family and friends.
As long as you are over the age of 18, it is a good time to start thinking about estate planning. If you have young children or a business, are nearing retirement, or have strong feelings about your favorite charity, estate planning is the best thing you can do to protect what matters to you. To get started, contact your financial institution for more information about estate planning services.