The Major Components of a Healthy Financial Plan: Estate Planning

Estate planning along with having a written cash flow plan are probably 1 and 1a on the list of the major components of a healthy financial plan.  An estate plan is creating a definite plan for your wealth while you are alive and distributing it after your death.  Estate planning is very state specific and legalistic so please consult a planning professional.  There are four main options available for estate planning.  They are 1.)

doing nothing 2.) Joint Ownership of assets 3.) A simple will 4.) Revocable Living trust.

Sadly, doing nothing is the most common form of estate planning.  Approximately 70% have no plan at all!  With no will in place everything passes to one’s heirs upon death, according to state law.  This is unfortunate because taxes and fees will be maximized as well as a complete stranger making important decisions impacting your family.  In addition the process will take the longest possible time.

Joint ownership is each person owning a pro-rated share of the property.  The passing of a joint owner’s interest is decided by the language used to establish the joint ownership.  Joint ownership does not always work out as hoped however and sometimes can lead to awkward property divisions. 

A simple will is a written declaration of intent as to how property is to be distributed upon the owner’s death.  A will becomes a gift to others upon your death because it makes management of your estate clear and easier.  It has no effect until one dies, so it can be rewritten as often as the owner wants it to be.

A revocable living trust is a complete substitute for a will.  It controls your assets during and after your death.  Benefits to a living trust include it being a completely private process, assets immediately going to the beneficiary after death, the ability to avoid probate and taxes being greatly reduced or eliminated.  To get more info on trusts and see if they are right for your situation, please contact an estate attorney.

At a minimum, everyone over the age of 18 needs a simple will.  For those who are married, estate planning will bring up some uncomfortable but necessary discussion such as who will take care of the children.  But after doing this you will both have a clear understanding of what the other wants.  Remember someone will make plans for your family and possessions whenever you die, so it might as well be your decision.

To set up a meeting to talk about estate planning or other pieces of a healthy financial plan please contact us today!

About Jon White

Giving people hope and seeing them win with their finances is something I have a strong passion for. Because of this passion I started JW’s Financial Coaching in the summer of 2010. Financial coaching has allowed me to combine my passions of finances, teaching, and helping others by helping people get on the right track financially. I'm interested in hearing your story so please do not hesitate to interact with me through social media.
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1 Response to The Major Components of a Healthy Financial Plan: Estate Planning

  1. Pingback: The Major Components of a Healthy Financial Plan | JW's Financial Coaching

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