What You Should Know About Legacy And Estate Planning
The prevalence of estate planning decreased by 25% in 2020 compared to 42% in 2017. People defer estate planning because of a lack of knowledge or the cost of doing it. The good news is that 60% of individuals do believe that it is very or somewhat important to protect loved ones after death, distribute assets legally, and ensure that personal wishes are honored. To better understand the process of estate planning, learning about the different components involved and consulting with a financial expert and lawyer can help you prepare.
Know The Essentials Of A Legacy Plan
One of the main reasons why people never get around to preparing an estate plan is that they do not know where to begin. Understand that there are essentials to estate planning – such as a will – which are a vital part of the process. Your will summarizes your wishes for the assets you own, enabling you to name the recipients of your possessions. You can also include a living trust, allowing you to transfer properties to loved ones after you pass without going through probate court. After the trust is established, no court or attorney fees are involved, which means that you can pass on assets immediately to named beneficiaries after death.
Another critical element of estate planning is a health care directive. This is a legal document signed by you, naming an individual as your healthcare decision maker if you are not capable of making decisions yourself. It can also contain an advanced medical directive for medical care if you are terminally ill or incapacitated, which states your wishes regarding life support or intervention that you may or may not want. Lastly, a durable power of attorney is needed to execute either a healthcare directive or a financial power of attorney. The latter makes financial decisions on your behalf if you are incapacitated.
There will never be a perfect time to plan your legacy, although it is better to start early and at least do something, however small. One way to do this is to talk to family and friends to get an idea of how it is done. People who have lost their parents and have had to deal with their estate afterwards can offer insights, and may be able to refer you to a lawyer or a financial advisor.
Once you meet up with a financial advisor, you can discuss in detail the cost of long-term care, trust insurance, and other matters pertaining to legacy planning. It is also a good idea to consult with a lawyer so that you are informed of the estate laws in your area. Your attorney will guide you in completing the process. He or she will then prepare the estate planning documents, which are legally binding.
Estate planning may not be the most exciting activity, and there’s never a right time to do it. However, by learning about it, and consulting a financial advisor and lawyer, you’ll probably feel much better when it is set-up and have peace of mind knowing that your loved ones are protected after you move on.
Updated: February 5, 2021