Financial & Estate Planning
Spending some time with financial and estate planning can make a big difference in the lives of your beneficiaries when you are gone. While many overlook these important steps, it is critical to plan out what will happen to your estate once you are no longer able to watch over it.
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Will
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One of the most basic ways to get your estate planning process started is to create a will. This is a document that will allow you to specify who gets your possessions after you die. If you have small children, this document is important so that you determine who will take care of them if you die. When you die with a will, the probate court in your area will make sure that it is valid and then will oversee the distribution of your assets according to your wishes.
Setting up a Trust
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Another step that you may wish to take is setting up a trust. This is an arrangement that you can use to help your family members avoid going to probate court. You can also have more control over what happens to your possessions than you could with a simple will. With a trust, you can set rules that determine when your assets will be distributed after you are gone. Some trusts also can be used to help lower or avoid estate taxes and keep assets away from creditors.
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Life Insurance
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When you engage in financial and estate planning, life insurance should play a crucial role in this process. A life insurance policy will provide your beneficiaries with a death benefit when you die. This is essential to protect your family members and to solidify your financial plan while you are alive. When you pass away, the life insurance proceeds can be used to pay off any debts so that your beneficiaries do not have to sell assets from your estate to pay them off.
Naming Beneficiaries
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When you set up a will or trust, you will need to name the beneficiaries that will gain access to your possessions when you die. Besides naming beneficiaries for trusts and wills, you may also need to name beneficiaries for other items. For example, if you have a retirement account, you will need to name a beneficiary for the money in it. Other types of bank accounts will also require a beneficiary to be named, as these may not be included in the assets that the probate court will distribute.
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