Not having a will can be a significant risk to your assets and to your family. And while a will is a fairly straightforward and effective tool for estate planning, 64 percent of Americans still haven’t created one.1
However, a will isn’t a silver bullet that lets you avoid all the risks associated with estate planning. There are still a number of estate issues that you and your loved ones can face. With a little advanced planning, though, it is possible to mitigate these issues.
It’s never too late to start planning, and most estate planning tools are simple and relatively affordable to implement. With a good plan, you can save yourself and the people you care most about a lot of time and trouble. Below are three risks you can avoid with a basic estate plan:
Having a will lets the courts and your executor know how you want your assets to be distributed. If you don’t have a will, the court will make these decisions for you. And they may not be the decisions you want.
Asset distribution is about more than your will, though. Life insurance, annuities and retirement accounts typically are not covered in your will and rely on you to designate beneficiaries. If you haven’t checked who your beneficiaries are, now might be a good time to update them. Beneficiary designations normally can’t be challenged in court, so if you forget to add someone or remove someone, your loved ones may have little recourse.
Probate is the legal process that settles estates. And even with a will, chances are your assets will have to go through the probate process. Things like paying off your debts, filing final tax returns and notifying potential heirs are all part of probate. The process can be expensive and time-consuming, and it also has the potential to eat away at your assets.
There are, however, ways to minimize the impact of probate. Using beneficiary designations is one way. Another way is to set up a simple trust. The assets in a trust are distributed per the trust document, and they avoid probate altogether.
A good estate plan entails more than just what happens to your assets after you die. You can also use it to manage end-of-life difficulties. While it’s not fun to think about, you may become incapacitated at the end of your life and unable to express your wishes to loved ones and doctors.
Tools such as a living will and power-of-attorney documents can help provide your family and caretakers with instructions should you become unable to communicate your financial and medical wishes. With some advanced planning, you can make sure a responsible person is handling your affairs.
Worried that your estate plan isn’t sufficient for your needs? Let’s talk about it. Contact us at Sprouse Financial Group. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
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