No one likes to think about it, yet estate planning is necessary for everyone in California. Although everyone’s situation is unique, with some tools working better for you than the next person, all estate plans have primary considerations in common. Here are the general components you should include in your planning.
Key planning strategies to protect you and your estate
The wealthier you are, the more critical estate planning becomes. The five components of a sound estate plan are:
• Powers of attorney
• Life insurance
• Charity advantages
• Beneficiary cognizance
Power of Attorney documentation often gets overlooked. You’ll need two types, one to designate someone to manage your financial affairs and the other for healthcare should you become unable to make your own decisions. The latter sometimes comes with end-of-life directives. Trusts, in various forms, are a significant component of wealth protection and should be done in conjunction with a financial planner. Complementing trusts are life insurance policies that can protect your family against risks. In addition, high-worth individuals should consider giving to charities to reduce their tax liability while still alive. Another vital issue is to review beneficiaries as circumstances can and often change periodically. Estate planning is fluid and should reflect your current needs.
Thorough plans cover every stage of life
One of the most common estate planning mistakes involves younger individuals who think they don’t need to have these documents in place. However, if you suddenly die and don’t have a will, you have died intestate, meaning your assets will have to go through probate, and the courts will decide who gets everything. So it’s never too early to start a primary estate plan.
Beginning early in life will give you peace of mind. Elements like guardianship and trust for minor children will endure the future of your beneficiaries.