Plan Ahead to Protect Assets
By Bernard Freeman
Estate planning and creating a will are often misconstrued as tasks reserved for seniors or the wealthy.
The reality is that estate planning is a crucial aspect of financial and personal management that benefits people of all ages. From young adults just starting their careers to established families and retirees, having an estate plan and a will ensures the protection of assets, the well-being of loved ones and the preservation of one’s legacy.
People often hesitate to engage in estate planning because of the misconception that it is only relevant for older adults. However, unexpected events can occur at any age, such as accidents or illnesses, making it essential to have a plan in place.
Estate planning allows you to dictate how your assets will be distributed, who will make decisions on your behalf if you become incapacitated and who will care for minor children if there are any.
Creating a will is a cornerstone of estate planning. A will is a legal document that outlines an individual’s wishes regarding the distribution of their assets after death. It provides clarity and ensures that one’s estate is distributed according to their intentions.
Without a will, state laws determine asset distribution, which may not align with an individual’s desires and may lead to disputes among family members.
Elements of Planning
Estate planning goes beyond asset distribution. It allows people to designate guardians for minor children, specify health care preferences and appoint someone to make financial decisions on their behalf through powers of attorney. These provisions are crucial for individuals of all ages as accidents or health issues can render anyone temporarily or permanently unable to make decisions.
Another aspect of estate planning that is often overlooked is minimizing taxes and expenses. Through various strategies, such as establishing trusts or using gifting techniques, people can minimize the tax burden on their beneficiaries and preserve a larger portion of their assets.
Estate planning professionals can provide guidance on these matters, tailoring the plan to the individual circumstances and goals.
Timing and review
Estate planning early in life offers additional advantages. It allows young adults starting their careers to name beneficiaries for their retirement accounts and life insurance policies, ensuring a smooth transition of assets in the event of an untimely death. It also provides an opportunity to protect assets from potential creditors or lawsuits, safeguarding one’s financial well-being.
Regular review and updates of estate plans are crucial as life circumstances and priorities may change over time. Major life events, such as marriage, divorce, the birth of a child or the acquisition of significant assets, should prompt a reassessment of the existing plan. Staying proactive and keeping the estate plan up to date ensures that it remains aligned with one’s wishes and legal requirements.
Seek professional guidance when engaging in estate planning. Estate planning attorneys, financial advisors and other experts can provide comprehensive advice, taking into account legal, financial and personal considerations. They can help individuals navigate complex legal requirements, mitigate potential risks and tailor the estate plan to meet specific goals and objectives.
Estate planning and creating a will are critical components of responsible financial management and personal preparedness. They ensure that your wishes will be honored and your loved ones are taken care of.