Estate planning to protect your family and assets

Estate planning is a critical component of financial management that can help you protect your assets long after you’re gone. Estate planning involves preparing legal documents that outline your wishes to distribute your assets and care for your loved ones in the event of your death or incapacitation.

In this guide, we’ll explore the basics of estate planning and why having a plan is crucial. Whether you’re considering estate planning or need to update an existing plan, learn more about some simple steps to take to protect your family and assets.

Draft a will and create a trust

Most people think they need significant assets or wealth to have a will, but this couldn’t be further from the truth. Everyone needs a will regardless of how large or small their estates are. Whether you have $1,000 or $100 million in assets, you need someone to handle your financial affairs after death.

A will stipulates who receives your assets and who is in charge of distributing your assets to your beneficiaries when you pass. If you have minor children, a will also identifies an appointed guardian if you and your partner die before your children are 18 years of age. The guardian will then manage the children’s assets until they are of legal age. You may also specify in the will your preferences for your funeral and burial arrangements.

Having a trust alongside a will secures your estate. Unlike a will, a trust doesn’t go through probate court, minimizes taxes, and the beneficiaries of a trust receive their shares almost immediately after death. If you have a dependent with special needs, it’s advisable to set up a special needs trust (SNT) to avoid compromising governmental assistance like Medicaid.

Assign a power of attorney

A power of attorney is a document that appoints someone else to handle your financial and legal matters on your behalf. It is important to assign someone as your power of attorney agent before you become incompetent. Update your power of attorney roughly every five years, even if there are no changes to make, as some institutions may not accept older forms.

Keep your estate planning documents in a safe place

Once you’ve created all your estate planning documents, it is best to store the original documents with your lawyer or in a fireproof, waterproof safe at home. Make sure that your executor knows where your estate planning documents are, especially your original will.

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