Estate planning isn’t just about money. While the financial burdens you leave behind – and the expenses you may encounter in your golden years – are certainly an important part of planning your estate, making sure that the other, non-financial elements are in place is just as important.
Regardless of where your assets or retirement savings may sit, there are plenty of good reasons to sort out who will be responsible for your estate, who will be the decision-maker if you are incapacitated, and who you list as beneficiaries on various assets and insurance policies.
Here are 7 of the most important reasons to plan your estate thoroughly:
1. Health Care
If you are in a situation where you cannot make your own decisions about healthcare, you want to be sure that you’ve determined a trusted individual to make decisions in your stead. This is one of the primary reasons to establish an estate plan. It is essential to not only select and name an individual to be responsible for making medical decisions on your behalf, this decision must also be documented as well – if it isn’t, they simply won’t be able to help you.
2. Staying Out of Court
The more thoroughly you can outline your intentions for any assets, inheritances, etc., the less likely your family members will have to deal with any of your estate through the probate court system. When your estate is put in the hands of the court system, decisions are then made by a judge – who probably doesn’t know you, or have any idea what you would have wanted.
3. Family Feud
Without proper estate planning, there is the unfortunate potential for family members to become contentious over the dividing and disbursement of the property and assets your leave behind. This is a sad path that many families travel when a loved one dies, regardless of the amount of money or total value of an estate (an even when there is no money involved at all!). By planning your estate with care, and determining your wishes in advance, you can prevent your family from fighting over property unnecessarily.
4. Specifying Beneficiaries
You may have assets that simply are not covered by your will. Things like life insurance policies, IRAs, annuities, and some retirement plans will require beneficiary forms to disperse any money upon the death of the policy or account holder. Unless you accurately fill out these forms as a part of your estate planning, your beneficiaries may not benefit from your assets at all.
5. The Young and The Old
If you have dependent children, or are responsible for the care of your elderly parents (or a special needs family member), these are the people that will be most closely affected if you were to pass away. By planning your estate ahead of time, you can ensure that these important people in your life will be taken care of, should something happen to you.
6. Money Management
Will the people you leave behind be capable of managing your assets? If this responsibility seems like too much for your spouse, children, or other family members, you will need to name a responsible party in your estate planning. This is an extremely important part of making sure your assets are properly managed for your family’s benefit down the road.
7. Business Succession
If you are a business owner, having a plan in place will determine the future of your company. Establish who will take over if you are unable to continue, and determine what happens with your ownership shares (if are a traded company) should something happen to you.
Many of these items are still related to the financial preparations you need to make in your estate planning, but the point is to show how many facets of your life will be affected if you do not take the time to get your affairs in order. From family and friends to business and medical needs, your estate planning will help all of the important people in your life, and allow you to rest assured that you are not leaving burdens for your loved ones.
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