We have spent many podcasts discussing the importance of Financial Planning and Retirement Planning. Today we want to begin the discussion of Estate Planning, specifically, planning for what happens after we die – whereas our previous discussions have focused on planning for while we’re still alive.
Believe it or not, you have an estate. In fact, nearly everyone does. Your estate consists of everything you own: your car, home, real estate, checking and savings accounts, investments, life insurance, furniture, personal possessions – just to name a few. No matter how large or how modest, everyone has an estate and something in common: you cannot take it with you when you die.
When that happens (and it is when, not if), you probably want to control how those things are given to the people or organizations you care most about. To ensure that your wishes are carried out, you need to provide instructions stating whom you want to receive something of yours, what you want them to receive, and when they are to receive it. You will, of course, want this to happen with the least amount paid in taxes, legal fees, and court costs.
That is estate planning. Making a plan in advance, naming the people or organizations you want to receive the things you own after you die, and, taking steps now to make carrying out your plan as easy as possible later. However, good estate planning is much more than that. It should also do the following:
- Include instructions for your care and financial affairs if you become incapacitated before you die;
- Include arrangements for disability income insurance to replace your income if you cannot work due to illness or injury, long-term care insurance to help pay for your care in case of an extended illness or injury, and life insurance to provide for your family at your death;
- Provide for the transfer of your business at your retirement, disability, incapacity, or death;
- Name a guardian for your minor children’s care and inheritance;
- Provide for family members with special needs without disqualifying them from government benefits;
- Provide for loved ones who might be irresponsible with money or who may need protection from creditors or in the event of divorce; and,
- Minimize taxes, court costs, and unnecessary legal fees, which may include funding assets into a living trust, completing or updating beneficiary designations, or otherwise aligning your assets with your estate plan.
Like Financial Planning, Estate Planning is also an ongoing process and not a one-time event. You should review and update your plan as your family and financial circumstances (and the relevant laws) change over your lifetime.
Stay happy, stay safe, stay well!
The CM Group