This is an article from Kulas Law Group (www.kulaslaw.com) in Port St. Lucie, Florida, that we thought others may find helpful.
Procrastination has always been the enemy of sound planning. It’s been true throughout history, and has often led to dire consequences for those who hesitated to act until it was already too late. In modern times, we see procrastination at work when it comes to estate planning too. While more people have finally learned about the importance of inheritance planning, far too many still fail to create their own plans. In many cases, it’s just a matter of timing, as some wonder when they should start to develop their own inheritance plan. Once you understand the answer to that riddle, you’ll better understand why procrastination is something that you should avoid at all costs.
What Is Estate Planning?
Estate planning is often viewed in terms of its most limited definition, which involves all those things you need to do to ensure that your assets are delivered to the right heirs when you die. In that view, inheritance planning is all about death. In a broader sense, however, it is about life too. It should encompass all those things that you need to do to build and grow wealth over time, protect that wealth, plan for retirement and possible nursing home care, and ensure that your heirs receive their inheritance. That last part cannot happen without everything that comes before, since without those other plans you would have no estate worthy of being passed on to the next generation.
A comprehensive estate plan includes a wide variety of tools and strategies to achieve your life and legacy goals. They include:
- A Last Will and Testament. Everyone should have a will. Yes, there are other ways to distribute your assets to heirs when you die – most notably living trusts, joint tenancy, and similar options. However, there’s usually property that isn’t covered by those tools, so you should at least have a pour-over will to ensure that those assets are dealt with too.
- The trust is a powerful tool that can offer tax benefits, structured inheritances under the control of a trustee, and asset protection in some instances.
- Powers of Attorney and Advance Directives. Incapacity could leave you without the ability to manage your own affairs, and that could put your finances at risk. You need power of attorney to designate someone to serve as your agent and act in your stead during such times.
- Living Will. Your living will can help to ensure that doctors and nurses know which treatments you are willing to accept, and how you want your care managed if you’re ever unable to express those sentiments yourself.
- Financial and Retirement Planning. Think about this for a moment: how good can your estate plan really be if you have no plan to acquire and keep wealth to distribute to your heirs? You need a financial plan to create wealth and a retirement strategy that can grow that wealth over time so that you have a financial legacy to leave to those beneficiaries.
- Medicaid Planning. You could be one of the millions of Americans who eventually needs nursing home care. With those costs rising annually, you’ll need a plan in place to secure the benefits needed to cover those costs.
When Should You Begin to Create Your Plan?
This brings us back to that procrastination issue. You could wait until the last minute to throw together some sort of plan – and many do, but then you’d be missing out on the real benefit of planning early: time. When you begin your estate planning early in life, you get to use long-term financial and retirement planning that can ensure that you maximize the amount of time you get while growing your assets. You also get a chance to protect those assets from potential litigation, creditor actions, bankruptcy, and other threats.
The more time that you give yourself to do all these things, the better the odds are that you’ll have enough wealth later in life to leave behind that legacy you’ve always dreamed of sharing with your children and grandchildren. Sure, you can begin your planning at almost any point in your life, but you can never truly make up for lost time – and that makes early planning the better option for most people.
What is Involved in the Process?
To put a comprehensive estate plan into place, you need to begin with the basics:
- Put together a list of all your possessions. Include financial accounts, your home and other properties, vehicles, art collections, and any other item of value.
- If you have minor children, have a discussion with your spouse to determine who you want to serve as their guardian if you both pass away.
- Make sure that your funeral arrangements are known. Consider purchasing some type of prepaid plan for burial and services.
- Make a list of all your heirs, and decide how you want your wealth distributed if you die.
- Consider whether you want your assets to go through probate. If you have family dependent upon the use of those assets and your income for their monthly support, then you may want to consider a trust or other tool to ensure that they can access those assets quickly.
- Locate an experienced estate planning attorney who can help you get a head-start on your inheritance planning efforts.