Are you one of the 64 percent of Americans who don’t have a will? That’s according to a 2015 study from Rocket Lawyer. There are many reasons why people choose to not have a will, the most basic element in any estate plan. Some may feel they’re too busy or they may not want to think about their own death. You could be like the 27 percent of respondents who said there’s no urgent need for a will or the 15 percent who said they don’t need one at all.1
If you’re under the assumption that you don’t need estate planning, you may want to think again. Estate planning is important for anyone who wants to leave a legacy for their loved ones or to a favorite charity.
While a will is an important element of an estate plan, it’s not the only element. Estate planning usually consists of various tools to meet a variety of objectives. Below are some common goals found in many estate plans. If you would like to accomplish some of these items, you may want to develop an estate plan in the near future.
Providing financial stability for loved ones.
Many people establish an estate plan simply for the purpose of providing their loved ones with financial stability. This could be especially important if you have minor children or other dependent family members.
You can use a will to direct your assets to the correct heirs. However, if your family is dependent on your income, they may need more than just your existing assets to maintain their lifestyle. You also may want to purchase life insurance so they have financial liquidity to pay bills and live comfortably.
Even if you don’t have dependents, it may be important to you to help your family members financially. Again, a will and life insurance can be effective tools. You also may want to consider a trust, which can offer more control over the management and distribution of your assets.
Minimizing financial threats.
Believe it or not, an inheritance can sometimes create costs for the heirs and beneficiaries. Wealthy individuals may need to plan for estate taxes. However, even if you’re not a multimillionaire, your family could still face some financial threats as a result of your passing.
One is the cost associated with probate, which is the legal process for settling an estate. In probate, the court and your estate executor perform a wide range of tasks, including filing a final tax return, paying debts, liquidating assets, and more. These activities can generate legal and administrative costs. However, you can minimize the amount of assets that go through probate by using estate planning tools such as life insurance and trusts.
Another potential financial threat is debt accumulated through end-of-life care. You may require costly medical procedures or even long-term care provided either in the home or a facility. If that debt isn’t paid before you pass away, it may have to be paid out of your estate. Again, you can minimize this risk by using various forms of insurance, including long-term care insurance.
Planning for incapacitation.
Your estate plan isn’t only meant to address issues that arise after your death. It can also be used to manage end-of-life challenges like incapacitation, which is the physical inability to make or communicate one’s own decisions. Incapacitation is often caused by cognitive conditions like Alzheimer’s.
If you become incapacitated, your family may be forced to make financial and medical decisions on your behalf. They may not make decisions that you would make for yourself. Estate planning documents like a trust, power of attorney, and living will can be used to document your wishes and protect your legacy.
Ready to develop your estate plan? Let’s talk about it. Contact us today at Fenton Financial Services. We can help you analyze your needs and develop a strategy. Let’s connect soon.
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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