Estate planning is one of the most important steps you can take to preserve your legacy and protect your loved ones.
Thinking and conversing about your own death can be difficult to do, but working through the process is just as important as planning for life’s other milestones — going to college, building a family and retiring.
What is estate planning?
Estate planning is creating a plan in advance for what will happen with your assets — your money, possessions and children — when you pass away. An estate plan is a set of legal documents, such as a will, trust, or power of attorney, that will direct how assets should be handled and helps preserve your legacy. It can be a difficult subject because estate planning forces you to face your mortality. Perhaps that’s why more than half of U.S. adults do not have estate planning documents in place. [1]
Help your family avoid emotional stress by preparing ahead of time
If you die without an estate plan, it can push your family into unfamiliar territory. The result can be emotional stress and tension between your heirs as they wrestle with how to divide your estate equally and navigate complicated tax matters.
Estate planning decisions are naturally overwhelming and emotionally charged. But it’s always better that you perform this "heavy lifting" instead of leaving it to your family down the road.
A well-organized estate plan is a reflection of family-first thinking — as you transfer assets to the next generation.
Proper preparation can be a gift to your family and the loved ones you leave behind.
Tailor your estate plan with this seven-point checklist
Every estate plan is unique, because it needs to be tailored to you and your family’s specific needs. When creating or updating your plan, consider following this seven-point checklist:
Consider your personal goals and those of your spouse. What kind of legacy do you want to leave behind?
Estimate the size of your estate for tax purposes, and available assets to fund bequests
Consult a financial professional to help you create a net worth statement and a list of financial assets, including: - Pension or 401(k) plans - Life insurance policies - Stocks, bonds, mutual funds - Savings and checking accounts - Homes - Collectibles
Check into available services through your employer: will preparation, legal services or estate planning resources
Consider significant life changes such as a divorce, marriage, birth or adoption of a child, and death of a close family member
Learn more about special estate planning considerations if you have a child with special needs
Investigate changes to estate tax laws with the help of a tax advisor — both state and federal
Additional estate planning considerations
Your estate’s complexity will dictate what additional things you may need to consider for your estate plan. Here are the most common:
Will: The will is one of the primary elements of your estate plan. It dictates how you want to distribute your assets within the family.
Trusts: A trust can help you minimize estate taxes and protect your assets while giving you more control.
Directives: Healthcare directives and others are used to help tell your family what your wishes are for short-term decisions and medical care.
Life insurance: Make sure each life insurance policy is current.
Beneficiaries: Your beneficiaries should always be up to date.
Guardianship designations: If you have minor children, designate guardians to raise the kids and review periodically to make sure they are up to date.
Consult a professional
As you work through your estate plan, you’ll likely face numerous options and questions, such as should you establish a trust to benefit your heirs and charities, or both? Be sure to consult an estate planning attorney to help you make these important decisions. Contact us if you need help with a referral to an estate planning lawyer.
Estate planning attorneys and other financial professionals can also help reduce the tax impact on your overall estate and determine how you’ll divide property, or plan for the care of a family member with special needs.
Finally, make sure your beneficiary designations are current to avoid probate and benefits are distributed according to your wishes. This also ensures a smooth payment process. That way your beneficiaries avoid any potential red tape — and receive benefit proceeds faster.
[1] Fry, Renee. Estate Planning Is Crucial In The Wake Of The On-Going Huge Wealth Transfer. Forbes, June 3, 2022
This material and the opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual or entity. The tax and legal references attached herein are provided with the understanding that neither TRC Financial, nor M Financial are engaged in rendering tax, legal, or actuarial services. If tax, legal, or actuarial advice is required, you should consult your accountant, attorney, or actuary. Neither TRC Financial, nor M Financial should replace those advisors.
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