Creating an estate plan is a thoughtful and important step in securing your family’s future. Whether you are just starting out or thinking of updating your estate plan, here are five key considerations to keep in mind as you embark on this journey.
Define your goals and wishes
Clearly outline your goals and wishes for the distribution of your assets and the care of your loved ones. Consider who you want to inherit your belongings, who will manage your affairs if you cannot and any specific wishes you may have regarding medical care. This helps ensure that your estate plan reflects your unique values and priorities.
Choose your decision-makers early
Selecting the right people to carry out your wishes is crucial. Be sure to designate:
- An executor to manage your estate
- A power of attorney for financial decisions
- A healthcare proxy for medical decisions
Ensure that these individuals understand your intentions and your wishes, and most importantly, confirm their commitment to following through with your desires and preferences.
Probate is the legal process that verifies your will and distributes your assets, but it is only one way of distributing your assets. There are other ways to distribute your assets without going through the courts, like creating a revocable or living trust, but it is not always avoidable.
Understand why people try to avoid probate (cost, time, and privacy) and discuss with your estate planning counselor if it makes sense for you to create a strategy in which you avoid the process of probate altogether.
Consider taxes and beneficiary designations
Be mindful of potential taxes that could affect your estate. In Pennsylvania, there may be inheritance taxes to consider. Review and update your beneficiary designations on accounts like life insurance policies and retirement plans to ensure they align with your current wishes and family structure.
Regularly review and update your plan
Life changes, and so should your estate plan. Major life events such as marriage, divorce, births and deaths can affect your plan. Regularly review and update your documents to reflect these changes and ensure that your wishes remain current.
Crafting an estate plan is an act of love and foresight that can provide peace of mind for you and your family. Defining your goals, choosing trustworthy decision-makers, understanding probate, considering taxes, and regularly updating your plan ensure you are prepared.
In addition, it enables you to create a comprehensive and effective estate plan that safeguards your legacy and ensures that you feel confident about your decisions and have a plan in place to honor your wishes.