The process of estate planning can be confusing and time consuming and because of this you may be tempted to put it off indefinitely. This procrastination could cause unnecessary taxes, fees and stress to your loved ones should you pass away before a plan is put into place.
Here are some tips to getting started if you have been planning for your families' financial future:
● Hire a financial planner or estate planning attorney
● Invest in an estate planning kit or guide
● Take it one step at a time
Not updating your plan
So you have a plan in place...congrats! Unfortunately the work to protect your estate doesn't stop there. You will need to periodically update your plan as life events and changes occur.
● The death of a loved one
● The addition of another child
● A significant change in finances
● Move to another state
Not coordinating beneficiaries
The beneficiaries named in your will need to match those on your bank and retirement accounts, life insurance policies and annuities. A lack of coordination could mean your estate will not be divided the way you wanted.
● If you put your sibling as the primary beneficiary in your will but designate your uncle as the primary beneficiary with your bank, your uncle will inherit the money in that account.
Not considering Healthcare
When it comes to estate planning, most of us think in terms of our assets. But future healthcare needs should be included as well. You could one day lose control over your own medical decisions. On top of that, your healthcare expenses could cost a fortune.
● Long term care insurance
● Disability insurance
● Healthcare power of attorney or proxy
Not considering taxes
Taxes can eat away at your estate.
While federal estate taxes only apply to large estates, this doesn’t mean you shouldn’t consider taxes. For starters, certain states levy estate or inheritance taxes. You should also look at your current tax burden. If you can reduce your liability now, your heirs can inherit a greater amount in the future.
Examples of accounts can help you reduce taxes:
● Qualified retirement accounts (IRA’s and 401K)
● Life insurance policies
Additionally, your heirs will likely inherit the death benefit tax-free. (In rare cases, a death benefit can trigger estate taxes) This death benefit can provide much needed funds to loved ones following your death. It can be used to cover everyday expenses, college tuition, and even your burial.
If you’re thinking about getting life insurance, or adding additional coverage, Ethos makes life insurance easy. Check out their free online application process which takes about 10 minutes, and you’ll only have to answer a few medical questions (medical exams aren’t required for most).
To get started with Ethos today: https://agents.ethoslife.com/invite/d809