By Feby Francois
You don't have to be wealthy to plan your estate.
Your loved ones can be protected from future financial hardships by establishing an estate plan.
An easy place to start is by writing a will.
According to some, the term "estate planning" refers to something only the very rich should be concerned about. Alternatively, it may feel like something to be addressed later in life, once you've accumulated more money and property.
However, anyone with assets of any kind should consider creating an estate plan.
You and the people closest to you may benefit from an estate plan if you own a home, have children, or contribute to a retirement account. Avoiding a host of financial and administrative headaches may prove beneficial to your loved ones.
The plan isn't just about preparing for what happens after you die. Should you become incapacitated for any reason, an estate plan will help protect your family.
Considering (much less planning for) one's demise might not be at the top of the list of fun things to do in life. Organizing the pantry or cleaning the gutters might seem like more appealing ways to spend a sunny afternoon. The truth is, we have no control over the future.
Don't feel alone if you haven't made time to create an estate plan. According to a survey by Caring.com, 57% of U.S. adults do not have estate planning documents, such as a will or living trust.
Transamerica's director of advanced markets, Chris McGovern, says many people think estate planning is something only for the wealthy and costly. McGovern says that most people are reluctant to talk about their own mortality, so it's easy to put it off.
Making an estate plan can be overwhelming - there are certainly complex issues that will likely require legal and tax professionals' assistance. The Motley Fool breaks it down into smaller, more manageable chunks.
Put your wishes in writing regarding who should receive your possessions after you die. Your possessions are not the only thing you should plan for.
McGovern advised parents with children to make a plan for their care as well.
You may need a simple or complex will depending on the value of your estate, types of assets, and where you reside.
A simple will can result in expensive and time-consuming legal processes such as probate (the court procedure to ensure your estate is handled properly in the eyes of the law) for some people, as The Motley Fool points out.
If your assets are documented in a trust, they may end up with your heirs sooner than if they are in a simple will. You can find out if a trust is appropriate for your circumstances by consulting with a financial professional.
Compared to previous generations, Americans live longer. Statistically, today's 65-year-old woman will live until she is 86.5 years old, based on data compiled by the Social Security Administration. A man turning 65 today will live until he is 84 years old.
We are increasingly likely to develop dementia and Alzheimer's as we live longer and longer. In the United States, there are around 5.8 million people with Alzheimer's disease, with the number growing to 14 million by 2050.
As a consequence, you should consider what would happen if you couldn't manage your affairs. Consider advanced healthcare directives and powers of attorney.
As part of estate planning, you should name primary and contingent beneficiaries for your retirement assets. It's a good idea to have a financial professional review your beneficiary designations annually since they supersede your will. The Advanced Markets Group compiled a useful beneficiary worksheet with points to consider.
The amount your heirs receive can be drastically affected by estate taxes, even if they are not a major concern for all. It is stated that "a few mistakes can cost you hundreds of thousands of dollars that you could have given to your children instead of Uncle Sam."
You may be able to reduce or eliminate estate taxes with the right strategy, guided by certified tax and legal professionals.
Things happen in life. You may need to adjust your estate plan as a result of marriage, divorce, and the birth of children. Periodic reviews are a good idea, so make them a part of your daily routine.
When creating an estate plan, there are many things to consider. However, the process can seem overwhelming. But if you act now, you can protect what you've earned - and what you have left behind for those you love.
In its Guide to Estate Planning, Advanced Markets Group discusses a number of critical aspects to consider as you think about your plan.