If you have a life insurance policy, a retirement account, and a will, you might think that you’ve carefully planned for your retirement and the end of your life. While each of these are important components of your financial well-being, what ties them together? In fact, if this is all you have, there’s a gap in your planning that you may not have considered. Can you see it?
Let’s break it down. While your retirement accounts such as a 401K, pension, or IRA cover your post-employment years and your will and life insurance policies take care of your assets and your loved ones upon your passing, what happens during that time in-between?
Estate planning not only encompasses the components we just discussed; it also addresses the difficult gray area you might find yourself in. That time where you are still very much alive, but you are no longer living the independent life you once did. Proper estate planning ties together that period between active retirement and death by helping you consider and answer the following questions:
- Can my family and I benefit from forming a trust for my assets?
- What are the best succession plans for my business?
- What are my estate tax obligations and how do I reduce them?
- Who are the beneficiaries of my business, property, and investment and retirement accounts?
- Who will make financial decisions on my behalf when I no longer can?
- Who will ensure my healthcare declarations are upheld should I become incapacitated?
- How can I help my loved ones avoid or expedite the probate process?
Now that you know what estate planning covers, you might feel overwhelmed about how to get it done properly. You can always hire a professional to help you sort through it all and make sure no aspect goes unaddressed. However, depending on the level of complexity, you can expect to pay an estate lawyer up to $3000 for the service. Given the reduced stress and future cost savings that are likely to result, this may be a small price to pay.
Additionally, contrary to what you might believe, estate planning is an ever-evolving process. As your live your life, adjustments likely will be required to account for any changes. Maybe you remarry, have more children, or start a new business. All of these events will change the details of your estate plans. What about ensuring that your desires for yourself and your assets are upheld should you become incapacitated or die? Estate planning documents tucked away somewhere in your house might not mean much to a probate court if you haven’t taking the steps to officialize the documents. By all means, get all the free help you need to gather all the information required to inform the estate planning process. However, hiring an estate lawyer can help you avoid all the pitfalls you are trying to proactively address in the first place.
From birth to death, every stage of life presents its own complexities that require careful planning. Use estate planning to establish the protections necessary to make your last transition as smooth as it can be.