Estate planning is a crucial process that can help protect and preserve your assets. Read on to find out how to go about it.
Many people often think that estate planning is only for the rich. But this is far from being the truth. Everyone has an estate. Estate doesn’t necessarily mean pricy things like your mansion; it can be your savings accounts, life insurance, investments, and personal items like jewelry.
But one sure thing about your estate is that you won’t take it with you when you die. That’s why you must ensure that you put in place measures on how these things are distributed when you are no longer there. If you fail, the state will do it for you, and it may not be according to your wish. This is where estate planning comes in. It allows you to have full control of how your estate will be given to the people or organizations of your choice.
But what exactly is estate planning? What are the steps involved in it? And how can a financial advisor help you with your estate planning?
What is Estate Planning?
Estate planning is making essential arrangements of how your possessions, or “estate,” will be handled if you become incapacitated or die. Without an estate plan, you won’t decide who will receive your possessions. An estate plan typically gives you control over how your assets are divided among your kin. It also organizes your affairs and leaves a written record of your wishes and intentions.
If you don’t plan all these when you are still able and alive, state law and probate courts will do it on your behalf after your passing. Chances are that the results are less likely to reflect your wishes or favor your family’s needs. Fortunately, you can avoid all these by making your estate plan with the help of an attorney or financial advisor now.
What are the Steps Involved in the Estate Planning Process?
Here are the steps involved in estate planning.
1. Establish Your Estate Planning Goals
The first thing you need to do before you start your estate planning is to take your time and come up with the goals you want to achieve with your estate planning. Is it to ensure financial support for your family? Do you want to choose the beneficiaries of your estate? Is it to name guardians for any of your dependents? Or do you want to dictate the future management of your business?
Remember that estate planning is more than just creating the Last Will and Testament. And understanding fully what you want your estate plan to achieve can help you create goals that align with your wishes.
2. Create an Inventory of Your Assets
Once you have established the goals you want to achieve, the next step is to know what you are working with. You can achieve this by documenting all your assets and debt to know how much of your estate you can leave to your kin.
You can start by creating a list of all your debts. Debt is money you owe other people or parties. If you have any outstanding debt, your assets will be used to clear them before they can be passed on to your kin. That’s why it is important to keep your debt in mind when determining how much you can leave to your loved ones. Your debt can be credit card balances, vehicle loans, mortgages, student loans, etc.
You can then create a list of your assets. Assets are things you own that have financial value. You can leave your assets to your family, friends, and charities in your estate plan after your passing. Your assets can be tangible such as land, houses, vehicles, and personable. There are also intangible assets, including bonds, stocks, retirement plans, life insurance, etc.
3. Make a Will
The next crucial step is to create your Last Will. The Last Will allows you to communicate and control how to distribute your estate. The Last Will is typically the document with the most authority in your estate plan. The probate court uses your Last Will as a guide when distributing your estate. In your Last Will, you can appoint a guardian if you have minor children.
4. Create a Power of Attorney
A power of attorney is a document that gives one or many people the authority to make property and financial decisions on your behalf while acting in your best interest. The person you pick to handle your finances is known as an attorney-in-fact, and he/she can handle things such as your banking, sign checks from your account, buy or sell real estate for you, etc.
5. Store Your Plans and Inform Your Representatives
The final step of estate planning is to provide copies of your documents, including the Last Will, trusts, insurance policies, etc., to your attorney-in-fact and representatives. When storing these essential documents, make sure you store them in a safe place such as a safe deposit box, bank, or a trustee company. Ensure you provide your representatives with the combinations or codes to access these documents.
How Can a Financial Advisor Help?
To ensure that estate planning is failsafe, you should consult your financial advisor. He or she can offer professional guidance in financial and estate planning matters. At TruNorth our financial advisors have extensive experience in handling estate plans. We strive to ensure that the financial future of your family is secure and that your property will be distributed according to your wishes. Moreover, working with an experienced financial advisor can minimize mistakes that come with estate planning, which can be costly.
Estate Planning in North & South Carolina
If you are looking for assistance with estate planning, we are here to help you. At TruNorth, we understand that it is important to protect and preserve your assets, just as it is equally important to create a Will or Trust professionally. Our financial advisors aim to give you the necessary guidance to develop an effective estate plan. Contact us today, and we will gladly help.