What is Estate Planning

In this blog:

When is the right time for estate planning?

Estate planning is your family’s future roadmap

Understanding estate planning

Estate planning checklist

Estate planning summary

Create your legacy with Legado

Estate planning is misunderstood. Some think that having an estate plan simply means drafting a will or a trust. Others think it’s for people of a certain age. Some say estate planning is “exclusive to wealthy people”, while others say it’s “planning for death.” With so many misconceptions about estate planning, we want to set the record straight.

First, estate planning is for everyone, whatever your age or asset status. Plus, it’s about so much more than ‘planning for death’, it’s also about life. Think of estate planning as the greatest gift that you can leave for your loved ones when you pass away or should you become incapacitated by a health issue. 

Last but not least, an estate plan is your legacy, a carefully considered action-plan that protects your family and friends, while allowing you to pass on more of your estate by transferring assets more efficiently.

When is the right time for estate planning?

Tomorrow is not promised… for any of us. None of us know when our journey on earth will end. And that’s why the right time for estate planning is now. If you’re under the impression that an estate plan is exclusive to wealthy people or only something to think about in later life, this could not be further from the truth.

Adults of any age or asset level can benefit from expressing their wishes for their assets and care should their health deteriorate or they pass away. And no, an email or a draft letter in your junk folder won’t cut it. You need something more concrete.

But, according to a recent CNBC report, while the COVID-19 pandemic has increased awareness among Americans as to the need for a living will or living trust, 67% of people have no estate plan 😱

That means 67% of people are leaving it up to others to decide what happens to their assets, whether it’s money, property or personal possessions, when they pass away or lose the capability to make decisions for themselves.

If you don’t have an estate plan, it means that your loved ones are not only left with the heartbreak of your passing or seeing you suffer a serious health issue, they face not knowing what will happen to your assets.

Whether it’s your money, property or personal possessions, your family and friends could be left to shoulder the burden of trying to find out what happens next or face watching on as the state intervenes.

Imagine your family not knowing how you will be cared for if you become incapacitated or what will happen to your assets if you pass away. This kind of uncertainty can create further  family tensions and anxiety at a time when emotions are already running high. 

We’re sure that’s not the legacy you want to leave for your loved ones. That’s why the right time for estate planning is now, regardless of your age or what you have to leave behind, whether it’s valuable possessions, property, money in a bank account or a vehicle. 

Estate planning is your family’s future roadmap

Think of estate planning as your future roadmap, a way to protect your legacy and your family when it’s needed most, ensuring that your assets are distributed according to your wishes and your loved ones are taken care of.

Equally, you can think of an estate plan as a backup map for your family in case you are not around to guide them.

But at its core, estate planning is so much more than just distributing assets; it’s a thoughtful process that involves making key decisions about your medical care, financial affairs, and even your personal belongings.

Understanding Estate Planning

There are several layers to estate planning, and each layer contributes to creating a customized strategy. The estate planning process will help to determine how your assets will be preserved, managed and distributed when you pass away.

Plus, an estate plan will factor in the management of your properties and financial commitments should you become incapacitated. 

Assets that make up your estate can include:

• Artwork

• Cars

• Debt

• Houses

• Life insurance 

• Pensions

• Stocks

The most basic step in estate planning is to write a will. Other key tasks include:

• Setting up trust accounts in the name of beneficiaries to limit estate taxes

• Naming a guardian for any dependents

• Naming a Successor Trustee (this is like an executor) of your estate to oversee the terms and conditions of your trust

• Creating or updating beneficiaries on plans such as life insurance, IRAs and 401(k)s

• Making funeral arrangements

• Setting up annual gifting to officially recognized charitable and non-profit organizations to reduce taxes on your estate

• Establishing durable power of attorney (POA) to direct any other assets and investments

Estate Planning Checklist

⬜ Make a list of all your assets - include all your physical assets like real estate, precious jewelry, bank accounts, annuities and insurance policies.

⬜ List All Your Debts - record everything you owe, including any outstanding loans.

⬜ Make A List of Your Assets and Debts- if you have multiple beneficiaries, you can distribute your asset and debt lists to each of them. At this stage, you should think about transferring any assets that you do have into a trust.

⬜ Check Your Retirement Accounts - for accounts that have beneficiaries associated with them, this is extremely important. Any accounts with a beneficiary tied to them will automatically pass to them, so it doesn’t matter what your will states.

⬜ Review Your Annuities and Insurance - ensure that your beneficiary information is up-to-date and that all other details are accurate.

⬜ Set up Joint Accounts or Transfer on Death Designations (TOD) - any joint accounts, particularly checking and savings accounts, are not subject to the probate process provided there is a right of survivorship.

This means that such accounts will transfer directly from the deceased to the surviving owner. In a similar way, a transfer of death designation will allow you to name an individual who can take over an account after you pass away, without probate.

However, be aware that creating an account with adult children isn’t a great option because they will have full access to the funds. These funds can be depleted through lawsuits or divorce.

⬜ Choose Your Estate Administrator - you will need someone to be responsible for taking care of your financial matters when you die. Choose someone that you trust. It’s recommended that you don’t choose your spouse as they might not be in the right emotional state of mind to manage your finances.

⬜ Review All Documents - get into the habit of checking any documents relevant to your estate every couple of years to ensure everything is up-to-date and in order.

⬜ Consult a Financial Professional - with so much at stake, the support of an estate planner or financial specialist can help you to review your accounts and make decisions on how to optimize your earnings.

⬜ Consolidate Your Accounts - if you have accounts in different places, consolidate them. It’s always best practice to keep as much as you can in one place. Doing this prevents any confusion for you and your loved ones in the future.

⬜ Get Your Financial Documents In Order - As you get older, there may be other legal and financial documents that you need to complete. For example, consider a power of attorney (POA) for health and finances, living wills, and letters of instruction that outline your funeral wishes and what you want to happen with assets like cryptocurrency.

⬜ Think About Other Savings Vehicles - To help with tax savings on your estate, take advantage of investment vehicles like 529 college savings plans for your grandchildren.

Estate planning summary

There’s a lot to think about with estate planning, but here are the key takeaways you need to remember:

• Estate planning is designed for life, not just death. It will determine how your assets will be preserved, managed and distributed should you pass away or become incapacitated.

• An estate plan is not just writing a will. It’s more strategic and involves setting up a trust, naming executors and beneficiaries, making funeral arrangements, managing charitable contributions, limiting estate taxes and more.

• Your trust and pour-over will are the foundation of your estate plan. It’s a legally binding document that gives instructions on how your property and any dependents should be handled when you pass away.

• Estate planning can be used by anyone, not just the ultra wealthy or people of a certain age.

Create your legacy with Legado

For $2,500, Legado offers everything you need to set up an estate plan that gives you and your loved ones complete peace of mind.

In 4 easy steps, you can secure your family’s future with Legado. Start now. 

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