Many individuals put off planning their estate. Perhaps this is due to a misconception that estate planning is only necessary for the wealthy or only involves tax planning, which can be done “later.” Or perhaps people get caught up in the frequently asked questions of estate planning, overwhelmed and unsure what to do first.
The fact is, regardless of your level of wealth and the ultimate tax consequences of your estate, solidifying the future of your family is probably high on your list of priorities. That’s why a well-structured estate plan is invaluable. Through it, you can control the distribution of your assets and possessions, as well as name guardians for your children or plan care for other dependents.
Consider some frequently asked questions about estate planning and important considerations to get started.
How Should You Begin Estate Planning?
When estate planning, your first step should be to assemble a competent, professional estate planning team. Your attorney, financial professional, insurance agent, bank trust officer, and accountant are all possible members of your team, depending on the size and complexity of your estate.
Your estate planning team can help you complete an analysis of your current estate — a look at your financial position as of today. Next, you must analyze your family’s needs (referred to as a “needs analysis”). Some important questions to be answered are:
- Is there a family member who needs special care or medical attention?
- What are the estimated educational expenses when your children reach college age?
- How will your family’s overall cost-of-living requirements change?
- How will estate taxes affect your assets as they are currently held?
What Estate Planning Information Should You Gather?
A thorough estate analysis requires gathering all materials involving current and future income, property ownership, insurance, and legal arrangements already in place. This can include:
- Current income from employment and all investments
- Any expected deferred compensation
- All retirement benefits, from Social Security (including survivors’ benefits), Individual Retirement Accounts (IRAs), pension plans, and profit-sharing plans
- Investment documents, certificates, passbooks, etc.
- Deeds to primary and vacation residences
- A list of all personal property
- Life insurance policies of which you are the owner, the insured, or the beneficiary
- Trust agreements, if any
- Your will, if you have one
- Current and expected debts and obligations, including mortgage and loan balances, real estate liens, taxes payable, consumer debts, and estimates of funeral costs and estate settlement expenses
Once you’ve assembled this information, a complete analysis can begin, giving you the basis for a solid estate plan.
Your Planning Team
The careful planning of an estate requires a great deal of expertise. By surrounding yourself with a professional, supportive team as you begin the process, working through its many stages, and adjusting your plans over time, you — and those you love — can have hope and confidence in a secure future.
For answers to more of estate planning’s frequently asked questions, reach out to a member of our team using the form below.
Adapted from: “Why Plan Your Estate?” FMeX. 2015. https://abm.emaplan.com/ABM/MediaServe/MediaLink?token=37d9a4cc45cf47a9a4f66672faccaff5