When I was a kid, I thought grown-ups had all the fun. They could drive wherever and whenever they wanted, buy stuff, didn’t have a set bedtime, and could choose ice-cream for dinner. (It never made sense to my why they didn’t choose ice-cream. Every single night.) Anyway, by now I’ve figured out that driving is expensive, buying stuff means figuring out where to put it, bedtime is actually the best part of each day, and ice cream for dinner doesn’t feel that great after the fact.
Another thing I’ve figured out about being an adult is that you spend most of your time thinking about other people – how to look after them, feed them, get them to places on time and protect them. Which brings me to Estate Planning and Life Insurance – a topic that every adult needs to think about sooner rather than later; and long before retirement looms. Here are 5 important things you need to know about Estate Planning – which is a good place to start.
1. Every adult needs an estate plan.
An Estate Plan considers your entire financial picture, and who is affected financially by your death. Your will spells out how to disburse assets held in your name when you die, but an Estate Plan addresses how debts will be paid, how assets and taxes will be managed and/or distributed, what provisions are made for a spouse and child(ren) you leave behind. Wills and living wills are typically part of a bigger picture estate plan.
2. The sooner, the better.
We’re all hoping for a long and healthy life. We’re all hoping for many years at a rewarding and lucrative career. We’re all hoping to have decades to save for retirement, put money away for a child’s education, assist our aging parents, develop hobbies, and enjoy life. While we can never be certain about what’s coming next, we can prepare for various scenarios. If anyone at all will be depending on your long and healthy life, your rewarding and lucrative career, your future assistance, then the sooner you prepare a Will and Estate Plan, the better.
3. Cover future income, not just current debt.
Many adults believe that all they need to plan for is to cover the mortgage in the event of their death and feel that leaving their partner debt-free is enough. Estate planning considers a bigger financial picture – life for your family without your income, benefits, and contributions. How will your family manage without your income? Where will funds come from to pay for running the home, school, activities, travel? Covering a loss of income from disability or end of life is one of the important calculations an estate planner will work through with you.
4. You are valuable, beyond your income.
Another common mistake is under-insuring a spouse who works at home. All those activities involved in raising a family and managing the household need to continue if the home-maker dies. While there may not be a change in money coming in, there is an extraordinary change in covering child care, errands, property management, and keeping home and life running smoothly. An estate plan will assign value to all those tasks, and provide means for those tasks to continue.
5. There is a wealth of experience from which you can benefit.
It’s possible to find Do-It-Yourself instructions for almost everything now, including wills and estate plans. Don’t forget, though, that there is a wealth of experience, specialized knowledge, laws, tax and financial minutiae that estate planners can access to your benefit. Talk to an estate planner about protecting your belongings, your assets, and your loved ones. They’ll ask you questions you won’t have thought of. They’ll offer choices you didn’t know you had. They’ll be able to make solid recommendations and useful referrals so you can make your own wise decisions.
That’s part of the responsibility of being an adult: asking for help when you need it so you can make informed decisions. It’s not actually that hard or time-consuming or even uncomfortable to protect the life you’ve worked so hard to create. Work through the details; build a sound plan; protect your future and the futures of those you care about.
Want to learn more about Estate Planning? Book an appointment with a Financial Health Coach HERE.