At its core, estate planning is an opportunity to ensure that your assets are handled in accordance with your wishes and the people or organizations you love are taken care of.
Estate planning can be a very healthy exercise because it helps initiate a conversation with your significant other or spouse regarding your personal values and the financial impact that you would like to make at some point in the future. It is more than just making plans for who receives your estate. It is a vital part of any solid financial plan, but many people overlook its importance until it is too late.
Without a proper estate plan in place, your assets could get tied up in probate for months or years. Probate is an expensive and public legal process that determines how your estate gets distributed if you die without a trust.
For those who have young children in the home, who do you know that you love, trust, and respect who could raise your children with the same values in the event that you are unable to? An estate plan can help ensure that guardianship provisions are in place.
Key Components of Estate Planning
- Will: Details how you would like your assets divided among heirs and beneficiaries
- Trust: Legal entity that allows your assets to bypass probate, potentially reduce estate taxes, and streamline the settlement process
- Guardianship designations: Name legal guardians for your minor children, both physical and financial
- Beneficiary designations: Specify who and how much your heirs receive from your non-qualified assets owned by your trust
- Power of attorney: Names someone to handle financial/medical decisions if you are incapacitated
- Healthcare directives: Outline your wishes for end-of-life medical treatment
Why You Need an Estate Plan
Avoid probate delays and costs: Probate is public, expensive, and can take over a year to resolve. Proper estate planning lets your assets transfer outside of probate more quickly and at a lower cost.
Minimize potential estate taxes: Federal estate taxes apply to estates over $13.61 million for individuals in 2024 (for married couples this amount is doubled). Some states also have estate/inheritance taxes at lower thresholds.
Provide for your family: Protecting your loved ones is a key reason for estate planning. Your plan can name legal guardians for children and provide an inheritance on your terms.
A Tailored Strategy Is Key
Estate planning needs vary greatly depending on your specific situation, assets, family status, and goals.
Children
You may wish to specify that your children reach a certain age and/or obtain a college degree prior to receiving an inheritance. One often overlooked strategy is to separate the responsibilities associated with the physical and financial guardianship of minor children.
Gifting/Bequests
Proper planning today can help manage your wealth through gifting and bequests that benefit you now and your heirs later. When it comes to giving, many people default to writing checks to their favorite charities, Think about how you typically make donations - to your kids' or grandkids' schools and your favorite charities. What if there is a more efficient way to support these organizations?
There are a variety of strategies that could be beneficial to you while maintaining the same benefit to the organization. Qualified charitable donations (QCDs), donor-advised funds, charitable trusts, or gifting appreciated assets directly either now or through your plan, could reduce your tax burden while the organization receives the same benefit.
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Working with an experienced estate planning attorney is crucial to develop a comprehensive, customized plan. An estate plan that accounts for your unique objectives is key to achieving lasting financial security for yourself and your heirs. To discuss your particular needs, contact the experts at Certus Wealth Management today.
This content is provided for educational purposes only, represents only a summary of topics discussed, does not constitute any personalized investment advice or recommendation, and represents only the views and opinions of the speakers which are subject to change without notice. Investing involves risk including the potential loss of all amounts invested.
This material prepared by Certus Wealth Management, LLC (“Certus Wealth”) is for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Opinions expressed by Certus Wealth are based on economic or market conditions at the time this material was written. Economies and markets fluctuate. Actual economic or market events may turn out differently than anticipated. Facts presented have been obtained from sources believed to be reliable. Certus Wealth, however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Certus Wealth does not provide tax or legal advice, and nothing contained in these materials should be taken as tax or legal advice.
