April is Financial Literacy Month! We want to help you grow your knowledge by focusing on two major ways you can strengthen your financial future:
- Estate Planning
- Maximizing Income
Creating a Comprehensive Estate Plan
You know you need an estate plan, but where to begin? An effective estate plan can provide you with a measure of control over your future, as well as the future of your estate and your family’s financial well-being, even after you’re gone. Building that estate plan, however, can be overwhelming, but it doesn’t have to be.
Step 1: Prepare a Will
- Perhaps the foremost and most basic component of estate planning is to prepare a detailed, comprehensive will.
Step 2: Draft a Power of Attorney
- Drafting a Power of Attorney (POA) is a vital step in your estate planning process. This document appoints a trusted “agent” of your choosing to make financial and legal decisions on your behalf in the event you are unable to make these decisions for yourself.
Step 3: Create an Advance Healthcare Directive
- Advance healthcare directives are also legal planning documents that are an important piece if this process. These directives are written instructions about your medical care and wishes in the event that you can no longer make your own decisions or communicate your preferences.
Step 4: Utilize Gifting
- Incorporating giving into your estate plans has different advantages. It allows you to express your philanthropic and financial values, for one. But, it can also provide a way to reduce estate taxes while staying within state tax laws.
Step 5: Minimize Estate Taxes
- One of the main advantages of estate planning is that you can structure the transfer of wealth so as to minimize the impact of taxes on your legacy. By employing strategic measures, establishing trusts and leveraging other applicable tax exemptions, you can potentially reduce the tax burden on your estate.
Step 6: Leverage Trusts and Other Transfer Vehicles
- Trusts are a common legal mechanism for defining how money or property will be distributed, transferred, and/or managed for named beneficiaries, including underage children and beneficiaries with special needs. There are a number of strategies and types of trusts you could leverage.
Step 7: Incorporate Professional Help
- There are all kinds of professional services that can help support you through the process of estate planning. Most obviously, you may need legal guidance as you navigate the many legalities of your estate plan.