Estate planning is one of the most important things that you can do for you and your family. Estate planning can be a complex process, but it is recommended to do it as soon as possible in order to avoid any unforeseen circumstances. Many people think that estate planning is just for wealthy individuals, but it is for everyone who owns money or property, no matter how small it may be.
During estate planning, you will make many important decisions regarding all of your assets. Therefore, you should embark on this type of planning as soon as you can. Estate planning isn’t for senior citizens only; it is for everyone who wants to make their family’s future secure and sound. For estate planning, you need to get your lawyer involved so that you can handle the matter legally and professionally.
Why Estate Planning is Important
For all those who are still not convinced as to why they should take the matter of estate planning seriously, here are a few reasons:
- First, estate planning helps ensure a secure and financially stable future for the family. This can help control financial conditions in the event of a death.
- Second, this could be a good way to preserve your property and assets for your future generations. You will know that your children will be able to take care of the assets that you are leaving behind.
- Moreover, if you do the estate planning during your life, you can designate the assets according to your wishes and there will be no confusion between the beneficiaries.
- You will be in a better position to designate the assets, property, or money to the people you trust.
- If you decide to designate your assets to a charity or a noble cause, then you will be able to do that in your will.
- Also, distributing your estate can be a good way to avoid the tax burden since they will have different owners now.
Preliminary Goal Setting
There are certain things that you will need to go over before you meet with your attorney. Ask these questions first:
- Will your heirs be able to manage the assets they are being designated?
- Who will be the immediate caretaker of your financial assets?
- How do you handle the heirs who are young, and who will be designated to take care of the assets?
- Do you want this distribution to happen within your life, or wait until after your demise?
- Do you have any plans to designate a portion to any charity or a trust?
- How do you want to divide any of the family businesses that you own?
The following are among the things which you should highly consider in regards to estate planning:
- You must have a life insurance plan that is part of your estate planning so that your attempt to secure the financial conditions of your family will be fruitful. Life is an uncertain thing, and you must be ready to face it; effective planning can pull you out of many challenges that life brings with it. Life insurance can be helpful if you owe any taxes or debts.
- You must also include directives about your health care in your estate planning. If you get sick or bedridden, you won’t be able to make any decisions for yourself. It’s better if you plan your health care beforehand so that your money can be utilized for your care when you need it the most.
- You can also include your funeral expenses in your estate plans. Although it may seem a bit gloomy to you right now, having those expenses sorted out is a very prudent step to take. Your planning can make sure that your money is used at the right place, exactly according to your will.
- Always make sure that all your estate planning documents are in the right hands. A trustworthy attorney will be capable of implementing the plan according to your wishes.
Estimating Your Retirement Needs
It is important to have a plan for your retirement, but where should you begin? The first step that you should take is to estimate the income that will be required to fund your retirement. However, it is not as easy as it sounds since retirement planning is not an actual science. Your needs will depend on what your goals and requirements are.
You Current Income: The Starting Point
Your desired annual retirement income is something you should decide on first. It depends on who you discuss it with, but it can be anywhere from 40 to 80 percent of your current income or even more. This approach is quite simple and straightforward since your current income is what sustains your lifestyle. Taking the income that you earn now, and reducing it by a certain percentage will give you an idea if you can afford to retire on that amount given the monthly expenses that you have.
However, there is a problem with this approach as it does not account for your specific situation in the future. It’s good to use your current income as a yardstick, but it is also worth it to go through your current expenses extensively, and think through the changes that these expenses might go through in the future.