Most middle-class people believe in the myth that estate planning is only for the rich. The truth is that it is more important for the average American to plan the inheritance for his or her family. Almost everyone can benefit from an estate plan. All people from any walk of benefit from basic planning. It is not as complicated as you think it is. It is not only about large businesses and inheritances but also about who inherits your assets.
Studies show that nearly 60% of Americans have not written a will. 29% have the notion that they do not have enough money to need estate planning. This is a fallacy as it is important to save what you have from the clutches of inheritance tax and probate. You do not have a will or a trust, the state becomes the default guardian of your estate. It may so happen that your family may be unable to afford the lifestyle they like due to the court restrictions. It is a smarter move to make a proper estate plan to make the transition seamless and painless.
Start Early With Your Estate Planning
Start early if you want to stay safe and tax efficient. Your life situation should be the guide of what your strategy towards estate planning is. It is imperative to have a plan in place if you marry and have a home or other property and assets. It becomes important that you have a will that encompasses all your fixed and liquid assets.
You should have a power of attorney in place to take decisions for you in case you are ever incapacitated or too sick to take your own decisions. A medical power of attorney should also be a part of your plan, as there may be harsh directives to follow. Retirement benefits from your employer, investments and insurance are all a part of your strategy. The strategy should be an integral part of your complete financial strategy.
Hire A Professional
A professional estate planner can be a lifelong friend. The financial planner can be like a coach who makes your goals clear. If you have multiple assets the professional you hire may need the help of a tax attorney to iron out the details. The absence of an estate plan may leave the court may be the default guardian of your assets and the transfer of the same may take years.
Your first step is to take stock of your assets, property, and investments. The list should be comprehensive. The next one is to draft a will that includes all your assets. You can keep some assets out of the loop of probate by creating an irrevocable trust. The trust can be used to seamlessly transfer your assets to your legal heirs after your demise. There are many small legal details that may change over a period of time. It is important that someone who has a good knowledge of law and finance should be in charge of strategizing the plan.
It Is Important To Review The Estate Planning Strategy
Life does not remain static. Your life is in a constant state of flux. You start with no responsibilities and keep adding to your estate every day. The plan that you created at 20 is not a good one to follow at 30 and you need to rethink at 40 and so on. As the years go by your assets become more convoluted and complicated.
There are many small details that are intricately woven in your family life. Your spouse may remarry once you have passed. Your children may go through a divorce and property rights may come under the lens under marital law. These contingencies may change the way you want to settle your estate. A little long term planning may help you protect your loved ones and your assets too.
A regular review every year or so may help you keep in touch with your needs and necessities. Take the easy way out and ask your financial planner to help you assess your current valuation. Then you should evaluate whether you want to change the inheritance pattern and beneficiaries. As your family grows you might want to add new members to your plan. On the flip side, you might also want to remove people you are no longer close to. Estate planning is a necessity for every economically independent person today. Start your journey towards peace of mind today!