Estate Planning Essentials: Protecting Your Assets and Loved Ones
As a young professional, you may not think much about estate planning. After all, you’re just starting your career and building your assets. However, let me tell you. Having a plan in place to protect your hard-earned assets and loved ones in case of surprising, unwanted events is crucial, no matter your age or net worth. In fact, according to 2019 survey data from Caring.com, only 40% of Americans have a will or living trust in place. And for those aged 18-34, the percentage drops to just 17%. These numbers show that many people, especially young adults, are not taking the necessary steps to protect their assets and loved ones in case of an emergency.
If you’re here, chances are you’re up for making smarter money decisions. I love that! And I’m here to help. So read on and find out what you need to know about estate planning essentials.
Trusts and Will
Trusts and wills are, of course, essential tools to dictate how your assets will be thoroughly distributed after you pass away. A will outlines your wishes regarding property, guardianship of minor children, and more. It’s a crucial document that ensures your assets are distributed according to your desires. On the other hand, trusts offer added benefits by allowing you to pass on assets outside of probate court, providing privacy, and potentially reducing estate taxes for beneficiaries. There are various kinds of trusts available for you depending on every specific need and goal you’ve got. Stay tuned to this blog to learn more about it.
Power of Attorney
Let’s talk about the Power of Attorney, a crucial component of estate planning. This legal document basically allows you to appoint someone you trust to make the ultimate financial decisions on your behalf if you ever find yourself not able to do so yourself. It basically grants them the biggest authority to manage your assets and handle important matters like paying bills or selling property. Having a Power of Attorney in place can provide peace of mind, knowing that your finances will be handled according to your wishes. It’s essential to choose a reliable individual who understands your values and priorities. Keep in mind that there are different types of powers of attorney, each serving specific purposes.
Healthcare Directive
Aside from those two, don’t overlook the importance of a healthcare directive. This legal document outlines all of your wishes for medical treatment if you can’t communicate them yourself. It also allows you to legally appoint someone you trust to make necessary healthcare decisions on your behalf. A healthcare directive can provide clarity and peace of mind during challenging times for both you and your loved ones. By clearly stating your preferences regarding medical care, you ensure that your wishes are respected when you may not be able to express them.
Beneficiary Designations
These designations dictate who will ultimately receive your assets upon your passing, bypassing the probate process. Therefore, experts recommend you to review and update these designations once a year or two, especially after major life events, including marriage, divorce, or the birth of a child. Failing to do so could result in unintended consequences and disputes among loved ones. So, do your best to align your beneficiary designations with your overall estate plan and intentions. Keep track of accounts like retirement plans, life insurance policies, and investment accounts that require designated beneficiaries.
Guardianship Plan
When creating a guardianship plan, consider factors such as values, parenting style, and financial capabilities of potential guardians. It’s important to have open discussions with chosen individuals to ensure they are willing and able to take on this responsibility if needed. Remember that circumstances can change over time, so it’s essential to review and update your guardianship plan periodically. By taking the time now to establish a solid guardianship plan, you can provide peace of mind, knowing that your children will be taken care of according to your wishes.
Estate planning may not be an easy topic to broach, but taking proactive steps now can alleviate stress and uncertainty later on. Talk to legal and financial experts who specialize in estate planning so that you can ensure that everything is set up correctly.
