Are you one of the 64 percent of Americans who don’t have a will?1 If so, you could be exposing your assets and your family to substantial risks. A will is a simple and effective way to overcome many estate planning challenges.
A will doesn’t solve every issue, though. Even if you do have a will, you or your loved ones could face a number of challenging problems near the end of your life or after you pass away. Fortunately, many of these issues can be resolved with a little advanced planning.
Have you put off creating an estate plan? If so, now may be the time to reconsider. Most estate planning tools are simple and relatively affordable to implement. By putting the right planning pieces in place, you can save yourself and your family a lot of grief during an already difficult time. Below are three common challenges that can be resolved through basic estate planning:
At its most basic level, a will is a document that tells the court and your executor how to distribute your assets to heirs. Without that guidance, the court will make its own decisions. It may make choices that you wouldn’t have made for yourself.
Your estate plan should also address accounts and assets that have beneficiary designations, such as life insurance, annuities and retirement accounts. These accounts aren’t covered by a will. If you forget to update your beneficiaries after a major life change, there may be little your loved ones can do to correct the issue after you pass away. Beneficiary designations usually can’t be challenged in court.
Even if you do have a will, many of your assets may go through probate, which is the legal process for settling an estate. During probate, the court and your executor pay off debts, file tax returns and notify potential heirs. The process can last for months and can generate substantial legal and administrative expenses that may erode your estate.
You can minimize the impact of probate by utilizing accounts with beneficiary designations. You can also use a simple trust. All the assets in the trust are distributed per the trust document, and they avoid probate completely. That may allow your loved ones to get their inheritance faster and avoid unnecessary fees.
Estate planning doesn’t just tackle issues that arise after you die. It can also be used to manage end-of-life difficulties. Many of those difficulties can occur if you become incapacitated, a state in which you are physically unable to make or communicate decisions. Incapacitation is often caused by strokes, Alzheimer’s, Parkinson’s and other issues.
You can use tools such as a living will or power of attorney to provide your family and doctors with guidance should you become incapacitated. That can ensure that your wishes are met with regard to medical treatment. Advanced planning can also protect your assets and make sure that a responsible individual handles your financial matters.
Worried that your estate plan isn’t sufficient for your needs? Let’s talk about it. Contact us at Nicky Derouen Financial Services. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
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