Estate planning is, by its nature, sort of a morbid thing: It’s all about planning for what happens to your financial assets after you die, and as such it forces all of us to confront our own mortality. Then again, life insurance, long-term healthcare planning, and even basic retirement planning can be similarly focused on the temporal and the finite; they are still good and important things to do. What’s more, estate planning does not have to be gloomy; it can actually be hopeful and empowering, allowing you to consider the ways in which you can leave a positive legacy for your children and grandchildren.
Important and potentially empowering though it may be, estate planning is far too often neglected. If it’s something you’ve never really thought about before, why not make today the day you change that? Why not pause to study up on some of the estate planning basics?
An important thing to understand about estate planning is that it is not just for the old and it is not just for the wealthy. You may be in your early 30s and you may have only a very modest estate, or perhaps very little estate at all. Nevertheless, something could happen to you unexpectedly, and leave some important questions about both your remaining debts as well as your assets. You may feel as though you don’t have many assets to leave, but at the very least you want to avoid leaving a burden for those who survive you.
The bottom line is that estate planning is for everyone—and it is something you really should pursue now, if you haven’t already.
Think About Your Family
A good place to begin is simply by thinking about your family. Who are the people who depend on you? Estate planning requires that you think about them in some detail, and perhaps ask yourself some hard questions.
Who are your dependents—and are any of them minors? What about your parents? Are they aging or in poor health, and do you expect their healthcare expenses to rise? Do you have kids who have special needs, or a spouse with medical concerns? Sketch a picture of your family and all of its various financial requirements, and let that guide your estate planning.
Think About Your Estate
The next step, of course, is to outline your estate. Think in terms of net worth, using the basic formula of assets minus liabilities. Remember that your assets include saving and checking accounts; houses, cars, and other properties that you own; trust assets and business assets.
Liabilities, meanwhile, might include credit card debt, student loan debt, and, of course, outstanding mortgage payments. Also note that you will want to leave your dependents and your spouse or partner enough money to cover your funeral and burial expenses, should it come to that.
Divvying Your Estate
From there, estate planning requires you to divvy up your assets, deciding which assets go to which beneficiaries. This is highly personal. You may wish to divide everything equally, which is totally fine. Then again, you may wish to leave a little bit more to those who have particular healthcare or educational needs. That’s up to you.
Of course, the final step is to enlist the right kind of help. Choose a trustee who will be tasked with handling your estate; a lawyer to help draft a will; and—critically—a financial advisor to help you with the planning aspects of your estate. Stonepath Wealth Management stands ready to assist with this; contact us today to learn more.