Estate planning isn’t just for the ultra-wealthy among us. An estate plan helps you prepare for your future, designate your assets, and create security for your loved ones.
While it can be uncomfortable to think about the end of your life now, setting up an estate plan is a future gift to your loved ones. It reduces stress, tension, and confusion for your beneficiaries during an emotional time and helps you leave the legacy you desire.
Simply put, an estate plan is a group of documents that officially state your wishes for the distribution of your assets. A will is an important part of your estate, but a well-crafted estate plan includes much more than that. An estate plan can include:
- Your will and testament
- Beneficiary designations
- Power(s) of attorney
- An advance healthcare directive
- Establishment of a trust
- A living will
While a will takes effect only in the event of your death, there are several pieces of estate planning that can actually protect you and your assets right now. If you don’t have an estate plan in place yet, consider these five benefits.
When you establish an estate plan, the future distribution of your assets is clearly stated. Without one, a probate court must comb through your assets and accounts, making sure that your will is executed, your balances are paid off, and your remaining assets are distributed. This means your beneficiaries could be stuck in legal proceedings for weeks, months, or even years.
To avoid putting your loved ones through the time, expense, and stress of probate court, work with a financial professional to create an estate plan. You can change these plans over the course of your life, but it’s never too early to begin.
When wealth is transferred from one party to another, the IRS imposes specific taxes. When it comes to estate planning, there are three main taxes at play:
- Estate tax
- Gift tax
- Inheritance tax
There are limits to whom you can transfer your assets — and how much you can transfer before incurring taxes. When you work with an experienced estate planning professional, they can help you transfer your wealth while minimizing estate taxes. Often, this is done by establishing trusts, life insurance policies, and educational saving plans.
Your passing will be an understandably emotional time for your beneficiaries. Creating a comprehensive estate plan can support them, eliminating difficult medical and financial decisions. You can also set up policies that protect and prepare them.
If you’re creating your estate plan during a time when you’re still caring for minors, you can include a guardianship plan for them in your documents. You can also protect adult beneficiaries from poor financial decisions by distributing your assets over time instead of all at once.
To prepare your loved ones for the eventual execution of your estate plan, discuss your plan with them in the presence of your financial advisor. During those meetings, your advisor will be able to educate them on the process and answer any questions they may have. In having these conversations, you provide clarity that can reduce the possibility of arguments after your death.
Without an estate plan, your assets may not end up where you’d hoped. No matter how sizable your estate is, it’s important for you to have a plan for your assets. You need an estate plan if:
- You own property, vehicles, or other items of value
- You have an IRA or savings account
- You have any asset you want to transfer to a specific beneficiary
- You want to make informed decisions about your future medical care
An estate plan helps you leave a legacy that lasts beyond your years. Your financial advisor can help you set up philanthropic efforts or charitable giving now, which can also aid with potential estate taxes in the future.
Most importantly, an estate plan can help you contribute to the care and support of future generations. None of us live forever, but we can take steps to create a brighter financial future for ourselves and the generations to come.
Our goal as fiduciaries and financial advisors is to help you find the financial freedom to pursue your dreams—and most of us have dreams that we want to outlive us. When you work with an advisor at Marietta Wealth, you’ll find a trusted expert who wants the best for you.
We can help you with financial planning, investment management, and retirement planning. We can also refer you to other trusted financial professionals who specialize in estate planning, so that your legacy will last.
Start building a clear financial future for yourself and your loved ones. Talk to an advisor today.