Having a proper estate plan in place will ensure that your loved ones are protected if you were to pass away. As soon as you have any assets or property it is time to contact your team of professionals to discuss what would happen to those assets if you were not here anymore. Neglecting to do so can end up costing your estate or loved ones in the form of probate costs and potential legal battles. Unfortunately, many people think that they can skip the estate planning process and that it doesn’t apply to them. Below are three of the most common misconceptions about estate planning.
What You Need to Know
1. Estate Planning is for Older People
While is true that older people are more likely to be in need of a solid estate plan due to wealth accumulation and age, there is no right age to start the process. The reality is that it is not uncommon for people to die too early and it is a disservice to your family to not acknowledge this fact. A good rule of thumb is to put an estate plan in place as soon as you have someone who depends on you. Marriage and having children are two major life events that might come to mind.
2. Estate Planning is Only for the Wealthy
Estate planning is important no matter what the value of your assets are. In fact, the less that you have the more of a strain your family may feel when you are no longer around. Estate planning can include distributing your assets but it also involves leaving an income for you family in the form of insurance planning. Having a plan in place will give you the peace of mind that your family will be cared for financially if you were die.
3. A Will is All You Need
While a will is a good foundation, a good estate plan should include so much more. Wills, power of attorney, health care directives, insurance, business succession planning, tax planning, trusts… the list goes on! A will outlines where your assets will go, but it doesn’t necessarily specify how they are going to get there. Transferring assets smoothly takes extensive planning, but your heirs will thank you for it after you are gone.
The Bottom Line
The best time to start considering an estate plan is right now! You should be prepared for the unexpected no matter your age or the value of your assets. Talk to your advisor about different strategies you can use with your investments and insurance to ensure that your assets are as organized as possible and can pass smoothly to your family.
Tom has been building values-based financial plans that integrate insurance and investment planning strategies using tax advantaged products to help people plan for their future financial security since 1988.