Like many people, you may have assumed estate planning would only be needed if you were extremely wealthy. However, that’s not the case at all. In fact, planning for the future in terms of asset distribution and other related matters can be extremely important to your family in the years ahead. If you want to make your financial planning a breeze, here are four tips you should implement along the way.
Financial Power of Attorney
One of the most important steps you can take when doing your estate planning is to create a durable financial power of attorney. Should you become incapacitated due to physical or mental illness, the person to whom this power is given will have the legal authority to make financial decisions on your behalf. Since this can have tremendous impacts on you and your family, always choose someone whose judgement you completely trust.
Plan for State and Federal Estate Taxes
If there is one aspect of estate planning financial services that most people don’t think about ahead of time, it is planning for state and federal estate taxes. Should federal estate taxes be due on your estate, they must be paid in cash within only nine months after your death. If your estate is not cash-heavy, assets such as your home may need to be sold to pay the taxes, so keep this in mind.
Always Update Your Beneficiaries
If you have life insurance policies, retirement accounts such as a 401(k), and other related accounts, always make sure you update whom you wish to be your beneficiaries as you conduct your estate planning. This is very important, especially if you have new additions to your family or have gone through a divorce and remarried. If you fail to update your beneficiaries, conflicts could arise among many people in and out of your family after your death. To keep your wealth management plan up to date, consider working with services such as Horan to prevent your financial plans from becoming outdated over time. When working with a professional, consider asking how often your plan should be updated.
Consider Long-Term Care Insurance
Though you may not want to think about it, there is always the possibility you may need to enter a nursing home or other healthcare facility as you get older. Since long-term care such as this can be extremely expensive, consider adding long-term care insurance to your estate plan. Doing so can help preserve your assets, ensuring they will be passed on to your heirs rather than being sold to pay for your end-of-life care.
By working closely with an attorney and other estate planning professionals, you can create an estate plan that will meet the needs of you and your family in the years ahead.