Should You Start Thinking About Estate Planning Now? Yes!
If you’re either retired or soon to be retired in the Greater Denver Colorado area, should you start thinking about estate planning now? The answer is yes!
Estate planning involves making provisions for your late-life and end-of-life care should you become ill or incapacitated and your desires for the disposal of your assets, via a Last Will and Testament or a Trust.
Estate planning can occur at any time of life – frankly, many financial advisors recommend setting up an estate plan when one first has assets in young adulthood! It’s at that point that you first have assets, such as a savings account and personal property, that one needs a plan to dispose of those assets should they pass. Although no one likes to think of that eventuality, it can happen at any time.
Other milestones, such as marriage or the start of a family, can cause one to start an estate plan as well.
But it’s no secret that few young people or people in their thirties set up an estate plan. No one likes to think of their eventual death, or about a period in which they may be too ill or incapacitated to make decisions for themselves.
Other milestones can also serve as triggers for setting up an estate plan – and retirement or retirement planning before it happens can be among those milestones. Retirement planning involves surveying your assets and how you plan to utilize them through your retirement years, estate planning makes sure these assets are passed in the manner you wish as efficiently as possible when that time comes.
What an Estate Plan Does
Rather than dwelling on eventualities, it can be a good idea to focus on what an estate plan does for both you and your heirs.
Powers of Attorney
A comprehensive estate plan involves setting up two powers of attorney, one for financial affairs and one for medical affairs. (The people named can be separate or the same person, as you prefer.)
The power of attorney for financial affairs will have the power to make financial decisions and transact financial business on your behalf should you become ill or incapacitated. This can range from setting up long-term care and its payment to paying your bills.
The power of attorney for medical affairs will have the power to make medical decisions on your behalf when you are ill or incapacitated and unable to make them yourself. These decisions can be informed by your wishes regarding your medical care and end-of-life wishes.
Both powers of attorney can be revocable (to end when you recover) or irrevocable (permanent).
A power of attorney gives you peace of mind that your affairs will be handled by an individual you trust and that your wishes will be known and followed. It relieves stress both on you and your family.
Wills and Trusts
Both Wills and Trusts provide for the disposition of your assets. A Will leaves provisions for who or what organization you want to receive your assets after your death. A Trust can be set up so that your beneficiaries receive assets while you are still living, via a Trustee.
It’s highly important that you consult with an attorney to make sure that all aspects of either document are executed properly and legally and a tax professional to minimize any estate or other taxes.
Both these documents ensure that your assets go to the individual or organization you want to receive them. If you die intestate (without a Will), your heirs could be without any of your property as your Will goes through probate – a process that can take months or years.
Not only that, but you have no guarantee that your assets will reach the entities you want to receive them if you leave no Will. Even if you leave an informal list or verbally indicate a desire to bequeath certain assets, these methods may not be legally binding. They might not be followed – and people may not even know about them.
A Will ensures the achievement of your wishes concerning your assets and the stability of your assets. A well-thought-out Will or Trust will greatly reduce any chance that family members, friends, or business associates will harbor ill feelings or actually begin to quarrel about the disposition of assets.
Without a will, your assets could be diminished by legal fees and your family, friends and associates may quarrel or even begin legal proceedings that could disrupt any harmony for generations to come.
What To Think About When Preparing a Will or Trust
To start thinking about a Will or Trust, begin to make a list of all your assets. Include real estate, retirement funds, investment funds, personal property (clothing, jewelry, keepsakes) and other types of assets (cars, boats). Take some time to walk about your home to make sure that all your assets are accounted for. If your assets include business assets, do the same with your business.
Then, think about who should receive each asset. Do you want, for example, to divide assets equally among your children? Or are there reasons that an equal division would not be advisable or not in accord with your wishes (marriage versus non-marriage, career, number of children)?
Updating Your Estate Plan
Don’t expect simply to develop an estate plan and leave it. Estate plans should be updated as life events occur. A new grandchild or a divorce in the family, for example, may necessitate new provisions in the Will or a recasting of the Will. New assets, such as a recently purchased vacation home, may also necessitate updating your documents.
Events that may cause you to update your estate plan include:
- New assets
- Changes in assets
- Family events: marriage, remarriage, divorce, children, grandchildren, deaths
- Inheritances received
- Extensive travel (to a new area or out of the country)
- Death of individuals named as power of attorney or beneficiaries of Wills/Trusts
- Changes in your wishes
Reviewing Your Estate Plan
In addition, it’s prudent to review your estate plan at least every three to five years. Are you still comfortable with your plans? Have any life changes occurred that should affect your plans?
The CERTIFIED FINANCIAL PLANNER™ Professionals and Certified Estate Planners™ at The Normandy Group offer comprehensive estate planning for today’s complex world. We can help you achieve your goals. Contact us today for a complimentary consultation.
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