Estate Planning may seem intimidating, but it’s a necessary step in your financial planning process to protect your loved ones. Depending on the amount of your assets and other factors such as ownership in a business, estate planning can be simple
The first, and most basic, step you can take is to create a will. According to Legal Zoom this can include:
- Deciding who gets your property and cares for minor children.
- Helping loved ones avoids delays and court costs after you die.
- Specifying health care wishes and who can carry them out.
- Naming who handles your financial affairs if you can’t.
Passing away without a will means that a person’s assets will be distributed according to state law. This differs from state to state. In general, most of the estate will go to the spouse and in equal shares to the children. This may seem fair, but you’re still leaving your assets available without a plan or any consideration on your part.
A complete estate plan not only considers your belongings and property but also your relatives and loved ones. By planning ahead, you can minimize future stress on those closest to you and help ensure your wishes are considered. Legal Zoom recommends that you make sure to locate insurance policies; statements for financial accounts such as investments; and documents such as mortgages, deeds, and titles.
Tax Exemption Options
In a recent article, Vincent Cucuzza, a financial advisor and Kathleen Cassidy, a vice president in the Barnum Financial Group, noted that in 2022 the federal estate and gift tax exemption is $12,060 per person, or double that for a married couple.
This means that everyone can give away during life, or leave at death, up to $12,060 without incurring any federal estate or gift tax. Under current law, if Congress doesn’t act between now and 2026, that number will be reduced by half. The likelihood that the exemption will be reduced, whether in 2026 or before, means that people with large estates have some motivation. They can $12,060 exemption while they have the chance, by making gifts to the next generation or to trusts for their descendants.
As you put your estate plan in place, you may also want to consider life insurance. Estate planning is about planning for the future after you pass away, but a premature death can upset carefully laid plans. Even younger people are interested in life insurance. In a 2021 survey from LIMRA and A Better Way, 45% of millennials said they are more likely to buy life insurance because of COVID-19. They have more years of income to protect, are more likely to have children, and may still have large balances on their mortgages or even student loans.
No one is pretending that estate planning is an easy conversation to have. Why do I need to think about this now? Why is this so important? Here’s why:
Because you have minor children…
Parents who neglect to put an estate plan in place are leaving the ultimate choice of guardian up to a probate judge and inviting family disputes. They’re also giving up the chance to create a trust to hold the kids’ inheritance. That means taking the risk that a child will receive a check for their entire legacy as an eighteen-year-old high school senior.
Because you have a child or grandchild with special needs…
Even a small inheritance, without the protection of a special needs trust, can ruin the heir’s eligibility for SSI, Medicaid, or other valuable government benefits, and result in the rapid depletion of assets.
Because you want one child to get more than the other…
Intestacy – dying without a will – means that a person’s assets will be distributed under the scheme determined by state law. This differs from state to state, but in general most of the estate will go to the spouse and in equal shares to the children. If you want anything other than that default distribution, you must plan for that in advance.
Because you’re in a second marriage…
Couples who have children from previous relationships should consider how assets will be distributed among the surviving spouse and both spouses’ kids. Estate planning techniques are available to ensure that the interests of your loved ones are protected.
MetLife, its agents, and representatives are not authorized to practice law or to provide legal, accounting or tax advice. It is important that you work with your independent tax and legal advisors regarding the specifics of your situation. The drafting of your documents and the implementation and ongoing review and potential updates of your particular estate plan. L1014393941[exp1015] [CT,MA,NH,NJ,NY,RI]
Listen to you. Learn about you. Deliver advice and solutions that help you achieve the future you want. Put your best interests first. This is the Barnum promise. If you’d like to learn more, contact us today.