4 minute read

Estate Planning: The Gift That Keeps On Giving

Learn why estate planning is the gift that keeps on giving and how you can make getting started as easy as possible, for yourself or a loved one.

Hanukkah has just begun, and Christmas and New Years are just around the corner. With the holidays in full swing, many of us are thinking about the gifts that we’d want to give to our loved ones, and those that we’d like to receive in return. 

The idea might confuse you at first, but have you ever considered an estate plan as a gift? Most likely not. We’re here to make a case for how estate planning is the gift that keeps on giving, and why it should be on everyone’s wish list this year.

What is Estate Planning?

Estate planning is the act of making legal preparations such that your property will be distributed per your wishes after you pass away. An estate plan consists of a collection of legal documents, such as a Will, a Trust, and a Power of Attorney. You can also include instructions for what should happen in the case you are alive but are incapacitated, such as due to a serious illness or injury. This process helps provide you with the peace of mind that legal failsafes have been put in place, such that your assets remain protected and thus provide the maximum support for you and your family. Wondering when should you start your Estate Plan? (hint: probably now)

Why is Estate Planning a Gift that Keeps on Giving?

When set up correctly, an estate plan will help protect and grow wealth you accumulate during your lifetime for generations to come. It can document your wishes so that your hard-earned assets and property are distributed exactly the way you want. Estate plans can also make sure your wealth is transferred in a way that triggers the least amount of taxes possible. Last but not least, you can implement safeguards to make sure any wealth you decide to bequeath to loved ones is spent responsibly. Investments can remain protected and be designed to benefit your family members for many generations to come.

How to Set up an Estate Plan that Keeps On Giving

Absolutely anyone will be better off with an estate plan. At the very minimum, it gives them the opportunity to express their end-of-life and asset-distribution wishes in a legal framework. However, a strategic estate plan can be immensely powerful. Not only will it help someone protect themselves and their assets during their own lifetime, they can be sure to create a legacy that will positively impact future generations down the line. 

Here is how to set up an estate plan that can keep on giving:

Know Your Documents

Before you begin to set up your estate plan, take a moment to study the possible documents at your disposal. Here are some basic documents that everyone should have in their toolkits:

  • Will

  • Power of Attorney

  • Medical Directive

  • Life Insurance

Wills are the foundational building block of an estate plan, and is a great place to start. It goes into effect when you pass away, and is your means of communicating your end-of-life and celebration of life wishes, instructions for distributing your property, appoint guardians for any dependents, and any other information you want to be known. However, know that a Will goes through the probate process. Any assets that you want to keep out of probate and public records should be placed in a Trust, to be discussed shortly.

A Power of Attorney is a document in which you designate an individual who is authorized to legally handle your affairs (financial, legal, and business) should anything happen to you and you are unable to manage them yourself.

Any medical authorizations and instructions are provided via a Medical Directive, and goes into effect should you become incapacitated.

Although life insurance isn’t technically an estate planning document, the two are closely related. By acquiring a life insurance policy, you are making sure that a payout will benefit your designated loved one should you pass away. Make sure that your beneficiary designations for any insurance policies and retirement benefits do not contradict designations made in any of your estate planning documents.

Consider a Trust

Earlier, we mentioned Trusts as a mechanism for bypassing probate and keeping private matters away from the public eye. Trusts are fiduciary arrangements that enable a third party to manage and later distribute assets on your behalf. Trusts are not an alternative to Wills, rather, they are a sophisticated option that can complement a Will in your estate plan. 

Trusts allow you to control exactly which of your assets you want distributed to whom, how much, and when. They also allow for stipulations, which are certain rules or conditions that must be met in order for assets to be distributed. This is a powerful tool that can give you peace of mind knowing that the legacy you’ve spent years building will be spent responsibly, and will benefit your loved ones in the manner you wish. 

Last but not least, assets placed in a Trust are better insulated from certain taxes, and court fees that are typically applied during the probate process, which can take several months to years. They also help protect your assets from creditors.

Arrange Gifts

Next, consider the option of gifting. Using your estate plan to provide gifts to loved ones, charities, and non-profit organizations is not a requirement, but provides appealing advantages. Some individuals worry, and with good reason, about the future size of their estate. Although estate and inheritance-related taxes vary based on the size of your estate and the state in which you live, the thought that a significant chunk of your hard-earned legacy could be eaten by taxes is frustrating at best. 

Luckily, giving gifts is a solution to decreasing the size of your estate, while still supporting your loved ones and organizations that you support. In addition, your recipients can receive these gifts tax-free. Just be careful not to exceed the gift exclusions for each individual, and for your estate as a whole. 

Set up Investments

Investments are one of the most effective ways to grow your wealth over time. By placing your investments into a Trust, you can ensure that your wealth will continue growing and doling out payouts for several generations. Examples of investments include mutual funds, retirement accounts, and certificates of deposit. 

Make it a Family Lifestyle

Last but not least, spend some time making estate planning a part of your family’s lifestyle. A single estate plan can significantly benefit a family, but the effects can be amplified and multiplied if everyone participates. 

A shocking 70 percent of families lose their wealth in just one generation, and the key reasons behind this include a lack of estate planning, a lack of communication, and a lack of education. As a society, we’ve been conditioned that talk about money and wealth is taboo. Unfortunately, this kind of thinking is hurting us. By creating a family culture around estate planning, the chances of creating a long-lasting legacy are significantly greater.

Add an Estate Plan to Your Wish List this Year

Convinced that setting up an estate plan is a good idea? Consider giving yourself and your loved ones the gift of estate planning this year. At Trust & Will, we’ve created a platform that makes estate planning easy and affordable for every single member of your family. This holiday season, breathe easy knowing that you’ve taken the steps to protect your assets as they are, where they will be as they grow, and secure your family’s future. Get started by exploring your plan options today.

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