Preparing For The Future And Estate Planning For You And Your Family

It is never too early to start planning for the future especially when you have a family. If you want to protect the future of your loved ones by way of an inheritance you need to be thinking about estate planning. Estate planning isn’t something that should be saved for your retirement. Having your affairs in order when you are younger and think you might not need it will help protect you and your immediate family and loved ones should the worst happen. As much as you might not want to think about it, having a legally secured plan is essential. Here are some considerations to make when estate planning.

Draw up a will

Drafting a will is the very first step you can take in terms of estate planning. A will is a legal document that stipulates what you want to happen with your estate and potentially the care of your children in the event of your death. 

Although not a legal requirement to draft a will the importance of having one should not be underestimated. A frightening large percentage of Americans do not have a will and their estate can remain contested and tied up for years. If you do not have a will your estate will be divided up in a probate court. Essentially this means that someone else will be deciding what happens with your estate.

When drafting a will consider whether you want to make a living will. This is essentially a healthcare directive giving instruction over the end of life treatment you would like to receive. 

Healthcare proxy 

As well as a living will you might want to consider instructing a healthcare proxy. A healthcare proxy is someone who is charged with making medical decisions on your behalf should you be unable to do so. Appointing a healthcare proxy is a very serious decision that you need to make with careful consideration and discussion with the proxy you intend to appoint. You need to be satisfied that they understand your wishes and will indeed carry them out as requested.

Power of attorney 

Regrettably if you are unable to make healthcare decisions for yourself and require a healthcare proxy you may also need someone to make financial decisions on your behalf. To ensure the decisions made are in line with your wishes then you may want to consider appointing a durable power of attorney in advance of needing one. By doing this you know that a trusted person is looking after your financial affairs and doing so with your best interest at heart. 

Name your beneficiaries

No matter your age you will need to name your beneficiaries for your 401k and any life insurance that you may have with work. Naming your beneficiaries will also help to avoid your will going through probate and delaying matters.  It is important that these beneficiaries are regularly checked and updated to ensure they accurately reflect your wishes, which may change over the years, should you get married, divorced, or have children and so on.

Consider trusts 

Setting up a trust can be a good idea if either you are leaving a considerable estate or if you have any concerns over the actions the beneficiaries may take when in receipt of any sums gifted to them. A trust will be managed by a trustee you appoint and it can help to protect and even further the interests of the beneficiaries. Setting up a trust can be quite complex, there are several different types of trust that can be set up, with varying tax benefits and there are instances where trust loans for trustees or beneficiaries are required to grow or utilize the trust to its potential. As with every point in this article and because of the complex nature of trusts it is always worth seeking professional advice when estate planning to ensure you are making the right decision for you and your family. 

Gift your assets during your life time

It may be that you do not want to wait until your passing to see your beneficiaries enjoy the gifts you may have intended to leave in your will. If so consider whether you want to gift your estate while you are still living. This may also carry tax benefits with it. If you intend to do this be sure to tread carefully and consider all the implications set out by the IRS. You can currently gift $15,000 per person a year. This is because cash gifts not exceeding $15,000 do not have to be reported. Again there could be future tax implications of gifts if the value of that gift appreciates over time. This is something you will need to consider carefully and take appropriate advice on before gifting your assets.