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What's involved in estate planning?

Estate planning is one of the most important areas of financial planning, but somehow it is also one of the most neglected areas. You and your family will benefit by making it a priority and get peace of mind in the process.

An estate plan ensures your wishes are carried out and you can care for your loved ones even after you are gone. There are several different areas to consider when creating your plan.

Plan for incapacity:

Prepare for a time when you may not be able to handle your own affairs.

  • A personal directive gives direction about your health and maintenance if you are incapable of doing so.
  • An enduring power of attorney appoints someone you trust to look after your financial and legal matters.

Record your personal affairs:

Keeping good records will help you plan your estate and help your executor when the time comes to settle it.

  • Make a record of what you own and where it can be found. Include your property, investments, bank accounts, insurance policies, pension plans, vehicles, jewelry and other personal items. This would also include a business if you own one.
  • List your liabilities, such as mortgages, loans and credit card balances.
  • Let your executor or another trusted person know the location of your important documents such as your will, insurance policies, bank information and mortgage documents.

Prepare a will:

A will makes it easier for your chosen executor to administer your estate.

  • Your will details how your estate and possessions will be handled after your death.
  • You decide who will care for any minor children.
  • You will have appointed your executors.

Pre-plan funeral arrangements:

You may not want to think about your funeral, but imagine how difficult it will be for your loved ones to take on the same task while grieving.

  • Pre-planning your funeral let’s your loved ones know what your wishes are.
  • Pre-paying your funeral expenses takes the burden off your family’s shoulders.

Gift assets during your lifetime:

You may wish to give your beneficiaries some assets while you are still alive so that you can watch them enjoy your gifts.

Settle living trusts:

Look at the special circumstances in your life and establish trusts to care for those needs.

Reduce taxes and fees:

You want your assets to go to your loved ones. A little planning now can reduce taxes and probate and estate fees.

  • There are a few means available to decrease or defer taxes upon your death. Talk to an advisor about proper tax planning.
  • Proper planning can help you arrange your affairs to reduce probate fees and administration expenses.

Review life insurance:

Life insurance provides money to help your loved ones maintain their lifestyle and can help protect your estate.

Plan for the succession of a family business:

Plan how your business will be managed when you are no longer able to do so yourself. You may also wish to begin preparing a person to replace you and carry on with the business – an important step to take in retirement planning as well.

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