It has been more than 230 years since poet Robert Burns wrote the words “the best laid plans of mice and men often go awry,” yet the phrase remains with us today. While things don’t always go the way we plan, when it comes to your financial and healthcare future, you need to make a plan –and that includes for the time when you pass away, and your assets will be passed on to others.
Estate planning may not be fun, but it is necessary –that is if you want to ensure that the majority of your assets are passed on to your children, grandchildren and any charities you hope to leave money to, instead of having them lost to taxes. Beyond ensuring that your assets are protected, you need to safeguard against the arguments and estrangements that often result within families when an individual’s wishes are not clearly spelled out before they have passed away. Outlining your estate plans and making them known to the people they involve are important.
Equally important is outlining your wishes for healthcare in your later years and what you want to happen –everything from a living will to your living situation preference if you need assistance, such as caregivers or a retirement home.
The overarching goal of estate planning is to avoid probate, the often lengthy process where the court system will determine what will become of your assets if you haven’t already done so clearly through your will, trusts or any other documents involved in estate planning. Creating an estate plan is also good because it gives you an idea of the overall value of your combined assets, from investments and retirement accounts to your home or any other valuable items you own. Since there can be many factors involved in protecting your assets, your best bet is usually to hire an experienced financial advisor to help you.
Following are a few items to keep in mind when writing an estate plan:
- If you hire an estate planner, make sure that you understand everything they are doing and why. Don’t be afraid to ask questions about anything you are unclear about.
- Periodically sit down and review your estate plan and make any updates that are needed. Regardless of what your will might say, the beneficiary designation forms linked to retirement accounts are what will ultimately be followed.
If power of attorney is part of your estate plan, ensure that you have one for finances and another for your healthcare. Keep these documents up to date and to ensure that those you have assigned power of attorney to remain those with whom you are close, you trust and have your best interest at heart.