Some people think estate planning is only for the wealthy. While it’s true that only the wealthiest among us usually face estate taxes, estate planning is still something everyone should consider. That’s especially true if you have assets that you would like to pass on to your loved ones.
Estate planning is about more than just assets, though. It’s also about protecting your legacy. It’s about making sure your loved ones and those closest to you are protected from risks associated with your death. It may not be pleasant to think about the end of your life, but it’s a task that’s often too important to ignore.
Not sure what your legacy should be or what your estate plan should accomplish? Below are some goals you may want to consider:
Do you want your loved ones to have financial stability?
Providing financial stability for the people you love can be one of the most impactful things you can do with your legacy. You may have loved ones who are dependent on you for financial support. Or perhaps you simply want to help your family live comfortably after you pass away.
Consider who may need financial help after your passing. If you’re married, your spouse will likely need to use your assets to fund their lifestyle. You may have minor children or grandchildren who could use your support. Also think about people who rely on your time and service. For example, if you care for an elderly parent, they may need to hire someone if you pass away. You may need to include your parent in your estate.
Once you know whom you’re leaving your estate to, then you can start thinking about which financial tools you should use to make sure they get as much as possible. For example, you could set up a trust that minimizes probate and gives you more control over asset distribution.
You could also think about purchasing life insurance to increase the amount of money you leave behind. Create a vision for how you want your estate to be used, and then you can take steps to make it a reality.
What financial risks could your estate face?
Most estates will face some form of financial threats. This is true even if you’re not wealthy enough to face estate taxes. One of these risks is probate, which is the legal process for settling one’s estate. This process can greatly delay the time it takes to distribute your assets. It can also generate legal and administrative costs that your heirs may be forced to pay out of your estate.
Another risk to factor in is the cost of end-of-life medical treatment and long-term care. If you incur significant debt related to either of those, your family may be forced to pay it out of your estate. You may want to think about insurance that can cover health care costs you’ll face in retirement, such as supplemental Medicare insurance and even long-term care insurance.
Do you have a plan for incapacitation?
While the bulk of legacy planning is about what happens after your death, you should also think about what will happen in the weeks, months or even years before you pass. It’s not fun to think about, but there’s a chance that, before your death, you’ll become incapacitated. That means you’re unable to make or communicate decisions for yourself.
Incapacitation is usually the result of diseases like Alzheimer’s or Parkinson’s. Without planning, your family members may make choices for you that you wouldn’t have made for yourself. It is possible to create documents such as a living will, a power of attorney or a living trust to manage this risk.
These tools can be used to minimize the financial impact of incapacitation and to protect your estate and health care wishes. A financial professional can help you decide which of these tools are right for you.
Ready to make a legacy plan? Let’s talk about it. Contact us at Foote Financial Group for more information. We welcome the chance to help you analyze any remaining questions and develop a strategy. Let’s start the conversation today.
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