The Importance of Estate Planning
There are several advantages to creating an estate plan. Having an estate plan means your family knows what to do when the unthinkable happens. With a trust or will in place, your beneficiaries will have a clear direction on what happens to your assets, which can reduce lengthy court battles. An estate plan also includes a living will to determine what should happen if you become incapacitated.
Creating an estate plan can help your heirs avoid probate and reduce the wait times associated with probate court. It can also reduce estate taxes, which will allow your heirs to keep more of their inheritance.
The Components of Estate Planning
Having an estate plan is an important part of financial planning. We can help ensure that your estate plan considers your financial situation and needs. Here is a list of components that you might include in your estate plan:
- A will or a trust distributing your assets
- A living will or medical directive in case you become incapacitated
- A care plan for minors or dependents
- Provisions for family members with special needs
- A plan to minimize estate taxes
- Information about important documents, files, and passwords
- Updated list of beneficiaries for retirement accounts and life insurance policies
- Financial or medical power of attorney
A comprehensive estate plan needs to cover all relevant aspects of your life. Besides deciding what happens to your asset, your estate plan should also provide information on your last wishes, your preferences regarding medical decisions for yourself, and a plan to reduce taxes for your heirs.
What You Need to Know about Wills, Trusts & Beneficiaries
The difference between a will and a trust is about who has control over the assets. A will or last testament is an official written document that disposes of your property according to your wishes. Anyone who inherits from you through a will immediately takes possession of those assets. A trust also allows you to distribute your assets among your heirs, but the trustee keeps control of the assets. When you keep certain assets in trust, the beneficiaries may receive their inheritance later or in installments.
Wills, trusts, retirement accounts, and life insurance policies all have beneficiaries. For your retirement account and life insurance policy, the named beneficiary supersedes your will. Therefore, it’s important to keep the beneficiaries up to date to ensure they’re in line with your wishes. If your beneficiaries predecease you or you don’t have any named beneficiaries, then your life insurance and retirement accounts may become part of the estate.