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What Do I Need to Know about Estate Planning?

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What Do I Need to Know about Estate Planning?
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Expert tips on why starting your estate plan early, choosing beneficiaries, and thinking about how you want to transfer your wealth to the next generation are critical for your financial future.

Your idea of planning for the future may include vacations and visits to family and friends—estate planning, not so much. However, it should, advises Real Simple in the article “Everything You Need to Know About Estate Planning—and Why You Should Start Now.” Estate planning concerns decisions about distributing your property when you die, and while that’s not as much fun as planning a trip to an adventure park, it’s become increasing important for adults of all ages.

A survey by caring.com found that the number of young adults with a last will (ages 18-34) increased by 63 percent since 2020. Many tough lessons were learned through the pandemic, and the importance of having an estate plan was one of them.

An estate plan is more than documents for when you die. There are also documents for what should happen, if you become disabled. The last will is one piece of the larger estate plan. An estate plan is also an opportunity to plan for wealth accumulation and building generational wealth, at any level.

Estate planning is for everyone, regardless of their net worth. People with lower incomes actually need estate planning more than the wealthy. There’s less room for error. Estate planning is everything from where you want your money to go, to who will be in charge of it and who will be in charge of your minor children, if you have a young family.

It may be rare for both parents to die at the same time, but it does happen. Your last will is also used to name a guardian to raise your minor children. With no last will, the court will decide who raises them.

If you’ve filled out 401(k) and life insurance paperwork at work, you’ve started estate planning already. Any document that asks you to name a beneficiary in case of your death is part of your estate plan. Be certain to update these documents. Young adults often name their parents and then neglect to change the beneficiaries, when they get married or have children.

For single people, estate planning is more important. If you have no estate plan and no children, everything you own will go to your parents. What if you have a partner or best friend and want them to receive your assets? Without an estate plan, they have no legal rights. An estate planning attorney will know how to plan, so your wishes are followed.

Estate planning includes planning for disability, also known as “incapacity.” If you become too sick to manage your affairs, bills still need to be paid. Who can do that for you? Without an estate plan, a family member will need to go to court to be assigned that role—or someone you don’t even know may be assigned that role. Your last will names an executor to manage your affairs after you die.

Work with an experienced estate planning attorney to have your last will, Power of Attorney, Medical Power of Attorney and other parts of your estate plan created. The court system and processes are complex, and the laws are different in every state. Trying to do it yourself or using a template that you download, could leave you with an invalid last will, which will cause more problems than it solves.

Reference: Real Simple (May 12, 2021) “Everything You Need to Know About Estate Planning—and Why You Should Start Now”

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