You may have been considering how you would eventually like your assets distributed among loved ones and charitable organizations—but not have developed a comprehensive estate plan because you think that is necessary only for the extremely wealthy. In actuality, the need for estate planning applies to everyone. A smaller estate requires even more care to avoid unnecessary expenses and retain the maximum amounts for fulfilling your personal, financial, and philanthropic goals. Here are four key reasons why you should establish an estate plan:
1. Defining care for yourself
A health care proxy, power of attorney, and living will define how you wish to be cared for should you ever experience a period of incapacity.
2. Creating financial security
A will allows you to dictate how you want your money distributed and to whom, regardless of the amount. If you don’t have a will, state laws will determine who receives your assets.
3. Naming guardians
If you have children or beloved pets, it’s important to make written arrangements for their care. A will is the only legally recognized way to name a person you would like to entrust with the care of your children or pets.
4. Naming beneficiaries
Your estate plan includes filling out beneficiary forms for assets such as insurance policies and retirement accounts. You should review your designated beneficiaries after major life events. You can also name a charitable organization as a primary beneficiary, cobeneficiary, or contingent beneficiary.
A well-crafted estate plan benefits you, your loved ones, and the causes you care about. Everyone needs to take the four steps described above. Because no two situations are alike, the best course of action is to have your financial advisor and attorney review the specifics with you and help craft your estate plan. By making these important decisions and putting them in writing, you can relax with the peace of mind of having fulfilled both family and charitable goals.