Having a plan for the things you plan to do today, this week, this month, and even next year is not uncommon. In fact, most people would say it is necessary for you to manage all the things you need to do. But sometimes, life happens, and priorities need to be shifted. This is often the case when a significant health issue arises. Whether we want to face it or not, death is an event that requires your attention prior to its arrival, and planning for it is important.
Death is inevitable, yet legacy planning often gets pushed aside. It’s sad to think about, or it seems very far off. This blog will discuss how estate planning is necessary and can remove some of the burden that often comes with death for your loved ones. A well-thought-out plan ensures your wishes are met and the ones you love are cared for at a very emotional time in their lives.
Why is Estate Planning Important?
Estate planning is important because it lets you decide what to do with your estate and assets after passing away. Webster defines estate planning as “the arranging for the disposition and management of one’s estate at death through the use of wills, trusts, insurance policies, and other devices.” There are several parts to estate planning; it includes tools and documents to manage your finances, healthcare, and asset distribution.
Estate Planning is not a new concept; it has been around for a long time. In the past, it was thought to be something that only the wealthiest individuals needed, but it is a great tool for many individuals. It allows you to plan for the things that you value.
Here are some other benefits one can achieve through estate planning:
Protecting Your Legacy: You worked hard to accumulate your wealth, personal assets, and belongings. A well-crafted plan allows your assets to be distributed in the way that you wish. You can leave them to specific family members, a cause you care about, or even your alma mater.
Avoiding Family Conflict: Clear instructions minimize confusion and potential disputes among your family members. This allows your beneficiaries to understand and execute your wishes without added stress.
Peace of Mind: You will be relieved knowing your wishes are legally documented, your loved ones have been considered, and you have a created a plan to take care of them.
Five Common Misconceptions about Estate Planning:
As an estate planning attorney, I meet clients with many misconceptions about this topic. Let’s address a few of the most common ones:
1 “I’m Young and Healthy—I Don’t Need a Will.” The truth is that life is unpredictable, and regardless of age, just about everyone should consider a will. You don’t know, nor can you predict the future; for example, you could get into a car accident and an unexpected illness can occur at any age. Creating a plan (even a simple one) ensures your wishes will be carried out, avoid confusion, and enable your loved ones to make informed decisions and carry out your wishes.
2. “I Don’t Have Money or Assets for an Estate Plan.” You might think that you need to be rich to have an estate plan. But it turns out that being wealthy is not a requirement. It’s not how many assets you have or even how much they are worth. Creating a legacy plan will make sure you create a plan for what happens to the things that matter to you after you are gone. You can designate to whom you want to give your most prized possessions, like your home, your car, and make sure your retirement savings go to the people you care about.
3. “Estate Planning is Too Complicated and Expensive.” Estate planning can be straightforward, especially with the help of an estate planning lawyer. Resources like Checklist for My Family by AARP and The Wallstreet Journal Complete Estate Planning Guidebook are available. Both are books that you can use to get started; however, an estate planning attorney can adequately customize your estate plan to meet your needs.
4. “Someone Else Will Handle It.” Relying on your spouse, parent, or other relative might not reflect your specific wishes. You also run the risk that they may make decisions that don’t have your best interest in mind. Maybe you have a close friend you’d like to inherit a specific item; establishing your own directives ensures your wishes are carried out, and your legacy remains intact.
5. “Preparing your estate strategy is a One-Time Thing.” Life is not static, and neither is your will! As your circumstances change, for example, you get married, have children, or acquire new assets – your estate plan should evolve as well. Having a good estate plan is the best approach. This plan should be updated periodically to reflect your evolving life.
Key Components of an Estate Plan:
Will:
A will is a document that specifies how you wish to have your assets distributed when you pass away. This means you can decide who will receive your house, money, and other possessions. It also provides instructions to your family and friends so they know who to get what. You can also use it to appoint a guardian for your minor child.
Trusts:
A trust is a legal document in which you place your assets under the control of a trustee which can be a person or organization. A trust will lay out specific requirements so that you can ensure your wishes are fulfilled. You can leverage it while you are living or after your death. A trust can provide tax benefits and shorten the probate process, which could tie up your assets for years in courts.
Power of Attorney:
A power of attorney is a legal document that allows you to appoint someone you trust to act on your behalf, as your agent, when you cannot do so yourself. This person can handle your financial and medical decisions. Choosing this person and having contingencies (in the event that you outlive your agent) is very important.
Beneficiary Designations:
If you have financial accounts like IRAs, 401Ks, or life insurance policies, you can designate the person or people you want to receive your remaining assets when you pass away. Beneficiary designations are instructions you provide on financial accounts like retirement plans and life insurance policies, specifying who will receive the assets in these accounts upon your death. It’s important to speak with a lawyer to make sure you understand legal requirements such as:
· Spousal Rights
· Obligations to Dependents
· The Probate Process
If you realize you need a will, today is a good day to start. A simple self-assessment can help you get started. It’s a good idea to talk to an estate planning attorney and a business succession planning expert to get advice that fits your specific needs.
Conclusion:
Thinking about what happens to your belongings after you pass away can be tough and a bit scary. But planning ahead is a demonstration of love and care for your family. Get started today by gathering the information you need and setting up meetings.
It’s also a good idea to speak with an estate planning attorney to get professional advice about your specific needs. At Hampton and Hampton Law, we’re here to help. We specialize in Estate Planning in Atlanta and Chicago, and Alpharetta are here to provide the guidance you need to take care of your legacy.