Financial Planning

Estate Planning, What You Need to Know

Published by Bob Gustafson

Estate Planning, What You Need to Know

No one likes to talk about estate planning. Many people may feel they don’t really need it or they are too young and feel they have a lot of time to plan. Or you may feel a simple will is enough, right? Not really.

There is a difference between an estate plan and a will. A will simply dictates where your assets will go after you die. It can also define who cares for your children and who becomes the executor of your estate. Without a will, dividing up your assets after you die can become quite complicated.

An estate plan is a more complete plan for your assets that may apply during your life as well as after your death.

What is estate planning?

The definition of estate planning is the preparation of tasks that serve to manage an individual’s asset base in the event of their incapacitation or death. A goal of doing this planning in advance is to ensure beneficiaries receive assets in a way that minimizes estate tax, gift tax, income tax and other taxes.

Your estate includes everything you own. Your estate can be any size and taking time to plan for what happens to it is well worth it.

Thinking about Estate Planning Puts You Ahead of the Game

What’s the first thing you need to know when working on your estate plan? We’ll start by complimenting you! The fact that you’re thinking about estate planning puts you at an advantage because many people don’t want to think about it. Therefore, they put it off indefinitely, which is problematic. Why? Because estate planning is critical if you want to have a say in how your estate is divided up after you’re gone. 

If you’re married, you need to have the hard conversations with your spouse. Talk through what each of you want individually and as a couple. Envision how you want to leave your estate when you’re gone. Then, develop a written summary outlining what your plan looks like. 

Take inventory

You may think you don’t have enough to justify estate planning but in reality, you do need to account for these assets. Consider both tangible and intangible assets. Tangible assets include real estate, vehicles, collectibles and other possessions including furniture and antiques. The intangible assets in an estate include your bank accounts, retirement savings, insurance policies, health savings accounts, investment portfolio and business ownership.

As we accumulate both tangible and intangible assets throughout our lives, we may forget some of what we have. Spend some time taking this inventory and putting a value against each item. Value can be both monetary value and the value your heirs may apply to a particular item.

Share Information with Your Spouse

In most marriages, there’s usually one person who handles the finances. It’s important the other spouse isn’t left in the dark. It’s critical for both spouses to know the financial situation and be able to locate online passwords, etc. to handle bills and the like in case the other isn’t able. 

Contact an Estate Planning Attorney

Once you’ve thought through how you want your estate plan to look, next contact an attorney. If you don’t know a reputable estate planning attorney, you can call your financial advisor for a referral. Financial planning organizations work with many types of attorneys on a regular basis. So, we can set you up with a competent attorney who will manage your estate plan properly. 

The key to choosing an attorney is to hire a specialist; one working in the field you need. For example, since you require estate planning expertise, look for an attorney who specializes in estate planning. If your personal situation is straight forward, you could get away with using a general attorney. But if it’s not and your situation is more complicated, then your best bet is to hire an attorney who focuses on estate planning.

When meeting with the attorney, bring the plan you’ve developed about what you want to accomplish and your inventory of tangible and intangible assets. Also include a list of charities you may want to include in your estate plan. The attorney will help you create legal documents outlining your wishes to ensure when you’re gone everything happens the way you’ve planned.

Revisit Your Estate Plan

Finally, don’t forget to revisit your estate plan periodically after it’s done. This is especially important if you create it when you’re younger. Sometimes, during the retirement years, people move to places down south like Florida. Different states can have different laws affecting your estate plan. So, just make sure you contact an expert in the state where you reside.