A Beginners Guide to Estate Planning

Estate planning isn’t just for the wealthy, as many people assume. Failing to create a thorough plan can leave your assets’ care and the future of your loved ones at risk. This guide shows why it’s important to develop a plan and adjust it over the years.

Do You Need a Will or a Trust?

Today, it’s common practice for people at all economic levels to use both a will and a living trust. The trust is a private document that allows for assets to be passed directly to an individual without going through the probate process. This is especially helpful when you want a specific individual to receive designated assets since the trust ensures the asset won’t be liquidated to pay off creditors or estate taxes.

You will still need a will. The will is useful in choosing guardians for your minor children. If you die intestate or without a will, the state will have to hold a hearing to determine who will be granted custody of your children. In that case, someone you would not have trusted to love and care for your children may be chosen as their guardian. The will is also where you make your wishes known for your funeral and burial arrangements.

Update Your Beneficiaries

Over time, relationships change, and people die, so you may not want to keep the same beneficiaries on your insurance policies and retirement accounts. You should examine these choices on an annual basis and make changes as needed. For example, if you get divorced, you may want to remove your ex-spouse as a beneficiary.

Arrange Your Future Care

Estate planning also involves planning for a situation in which you’re either physically unable or mentally unfit to make decisions for yourself. A healthcare proxy allows you to appoint someone to make medical care decisions for you, while a financial power of attorney chooses someone you trust to take care of your finances. You can also choose a time frame or a set of circumstances upon which these permissions will be ended or revoked, so you can resume these responsibilities in the event you recover.

You’re never too young to start planning for the future. While a will can be drafted simply with a standard form, the other documents discussed here require an attorney’s expertise. Additionally, there may be laws in your state that limit how you can allocate your assets. Professional assistance will help you ensure your estate plan won’t be contested after your death.

The post A Beginners Guide to Estate Planning first appeared on Mike Plumlee Financial Advisor | Financial Planning.

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