As people mature, they accumulate property, bank accounts and investments of various kinds. Although these items may not add up to significant amounts, they will need to be protected in your later years. Estate planning is not just for the one percent of the population who has accumulated vast amounts; it is for regular people who want to utilize their assets wisely and pass them on to their families.
What’s Involved in Estate Planning?
Estate planning is the methodical organization of your financial assets to ensure the most advantageous dispersal of these funds for you and your heirs. Estate plans also ensure that your wishes about end-of-life matters are honored. A good estate plan takes care of important medical and legal decisions, in case you become incapacitated, so that these matters are not left to your family to decide. Proper planning can save you money and give you and your family peace of mind.
An important part of good planning is preparing the legal documents that are necessary at the end of life. These include a will or trust to disperse your property and possibly avoid probate court; a healthcare directive to determine the type of medical care you will and won’t receive at the end of your life; and a power of attorney to allow someone to make financial decisions on your behalf if you become incapacitated.
Other Planning Issues
It may be to your advantage to put your assets into a trust to ensure that your loved ones are protected from having to participate in the probate process. You also need to review beneficiary designations for your bank accounts and life insurance. If you have a business, an estate planner can help you to determine a succession plan.
Gifting Your Assets
Many older people want to share their assets as an act of love and to help younger family members financially. Gifting can allow you to see the benefits of your generosity while you are still alive and can also help to reduce your tax burden. However, these gifts are subject to a number of rules and tax considerations that an estate planner can explain thoroughly.
Regardless of the amount of money they have accumulated, many people experience fear about having enough money for nursing home care and other expenses. Long-term care insurance can help to offset some of the costs for nursing home care. But there are other planning measures that can help to ensure that you will have appropriate care throughout your life.