National Estate Planning Month is a reminder to review your estate plan or put an estate plan in place if you don’t have one. If you don’t have a plan in place for the distribution of your assets upon your death, the state intestacy laws will dictate the distribution – which may not be in alignment with your wishes. If you have a plan in place, it is good to review it periodically especially if you have had a change in your situation such as a change in health, death of a spouse, birth of a child or change in financial situation to name a few.
The Importance of Having an Estate Plan
An estate plan is a thoughtful strategy that helps ensure your assets are distributed in alignment with your wishes. A basic estate plan typically consists of a will, a financial and health care power of attorney and a health care directive.
Your will typically spells out how you want your assets to be distributed. It also identifies the executor; the person who will gather your assets and handle the distribution to the named beneficiaries. Your will is also where you typically name guardians for minor children. The financial power-of -attorney document allows you to name someone you trust to step in and make financial decisions on your behalf if you are incapacitated. Similarly, the health care power-of-attorney names someone to make health care decisions if you are unable to do so for yourself. The health care directive outlines your wishes for health care in various situations.
It is important to remember that some assets pass by beneficiary designation such as life insurance policies, annuities and retirement accounts. These assets are not typically directed by your will.
Having a well-crafted estate plan in place can help ensure that your legacy will be handled according to your specific instructions and avoid the uncertainty and potential complications for those you leave behind.
Revisiting and Updating Your Existing Estate Plan
It’s crucial to revisit and review your plan regularly. Life is ever-changing, and significant events such as marriages, divorces, births, and deaths can all have a profound impact on your estate plan.
Ensuring Account Registrations and Beneficiaries Are Up-to-Date
In the hustle and bustle of daily life, it’s easy to overlook the critical task of keeping account registrations and beneficiaries up-to-date. Confirming that all your financial accounts, including life insurance policies, retirement plans like 401(k)s, and other investment vehicles, have the correct beneficiaries listed can be a fundamental step in safeguarding your legacy. By taking the time to review and update these details, you may avoid potential legal challenges down the road for your loved ones.
Gifting Assets to Loved Ones and Charities
National Estate Planning month is an opportunity to think about the kind of legacy you want to leave. Legacy planning goes beyond simple asset distribution. It involves thoughtful consideration on how you want to be remembered and the impact you wish to have on future generations.
Whether it’s gifting assets to your loved ones through an inheritance or leaving a part of your estate to charity, crafting your legacy is a very personal process. By partnering with a financial advisor, you can discover tax-efficient strategies to navigate the complex landscape of gifting, aiming to minimize tax implications and establish gifting vehicles, such as trusts, to help achieve your objectives.
