Estate Planning: Learn the basics. - Blog Popular Bank

02.22.2022 /

Estate Planning: Learn the basics.

This is Part 1 in a three-part blog series that highlights key aspects of the estate planning process.

What is estate planning?

Estate planning is a method for determining how to distribute your property during your life and at your death. It is the process of developing and implementing a master plan that facilitates the distribution of your property after your death and according to your goals and objectives.

Without advance planning, you have no say about which loved ones or family members receive which assets. As a result, more of your property may go to others, like the federal government, instead of your loved ones. If you care about how and to whom your property is distributed (i.e., you want to ensure that your property is preserved for your loved ones), you need to know more about estate planning.

Remember, you will understand the process more easily and implement a more successful master plan if you approach estate planning in an objective, straightforward manner.

Who needs estate planning?

Estate planning is not just for the wealthy. It may be important to individuals with a wide range of financial situations. In fact, it may be more important if you have a smaller estate because the final expenses will have a much greater impact on your estate. Wasting even a single asset may cause your loved ones to suffer from a lack of financial resources.

Your master plan can consist of strategies that are simple and inexpensive to implement (e.g., a will or life insurance). If your estate is larger, the estate planning process can be more complex and expensive.

Implementing most strategies may require you to hire professional help of some kind: an attorney, an accountant, a trust officer or an insurance agent. If your estate is large or complex, you should consult with an estate planning expert, such as a tax attorney or financial planner, before the implementation stage.

In deciding on your course of action, you should consider whether the benefit of the strategy outweighs the cost of its implementation.

The importance of estate planning.

You may need to plan your estate, especially if:

  • Your estate is valued at more than the federal gift and estate tax applicable exclusion amount or your state’s death tax exclusion amount.
  • Your income tax bracket is in excess of 10 percent.
  • You have children who are minors or who have special needs.
  • Your spouse is uncomfortable with or incapable of handling financial matters.
  • You are a business owner.
  • You have property in more than one state.
  • You intend to contribute to charity.
  • You have special property, such as artwork or collectibles.
  • You have strong feelings about healthcare decisions.
  • You have privacy concerns or want to avoid probate.

How to design an estate plan.

Designing a plan is a process that is unique to each estate owner. Don’t be intimidated or overwhelmed at the prospect. Even the most complex estate plan can be achieved if you proceed step by step. The peace of mind that comes with developing a successful estate plan is worth the time, trouble and expense.

1. Understand your circumstances.

Begin the estate planning process by understanding your circumstances, such as your age, health or wealth.

2. Understand the factors that will affect your estate.

You will also need to have some understanding of the factors that may affect the distribution of your estate, such as taxes, probate, liquidity and incapacity.

3. Clarify your goals and objectives.

When your circumstances and the factors that may affect your estate are clear, your goals and objectives should come into focus.

4. Understand the strategies that are available.

With these goals and objectives now clear, you can begin to consider the different estate planning strategies that are available to you.

5. Seek professional help.

Seeking professional help (e.g., an attorney or financial advisor) will help you understand the strategies that are available and formulate and implement your master plan.

6. Formulate and implement a plan.

After following these steps, you can formulate and implement a plan that works for you. Here are a few basic tips:

  • Make sure you understand your plan.
  • Rely on people you trust.
  • Keep your documents and information organized and within easy reach.

7. Perform periodic reviews.

When you have implemented your master plan, be sure to perform a periodic review and, if necessary, make revisions that reflect any changing circumstances and tax laws.

Are you ready to safeguard your future?

Dedicated Private Bankers at Popular Private Client are here to guide you through the basics of estate planning. Connect with a Private Banker today to get started on designing your estate plan so that you can secure a financial future for your loved ones.

Read part 2 of our three-part blog series on estate planning: Estate planning priorities: Take inventory.

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