As an individual accumulates wealth, the need for a well-thought-out estate plan becomes increasingly important. An effective estate plan can help protect assets, minimize taxes and ensure that loved ones are taken care of if something happens to you.
In this blog post, we will discuss everything involved in estate planning, including risk management, living wills, the medical power of attorneys, and special needs trusts. We’ll explain each one, how it works, why it’s important, and the benefits you can expect from using it.
What’s Estate Planning?
Estate planning is preparing for what will happen to your assets and possessions after you die. This includes creating a will, setting up trusts, and ensuring that your loved ones are taken care of.
Having a good estate plan in place is important because it can help save your family money and stress in the future. It can also help ensure that your wishes are fulfilled after you’re gone.
Why Is Estate Planning Important In Wealth Management?
Estate planning provides a way to manage your assets while alive and determine how they will be distributed after your death. It can also help to minimize the taxes and expenses incurred by your estate.
Estate planning is important in wealth management because it allows you to control what happens to your assets after you die. Without a plan, your assets may be distributed according to the laws of your state, which may not be what you want.
How Can You Get Started With Estate Planning?
Estate planning is not something that should be put off until later in life. It’s important to have a plan in place as soon as possible so that your family knows what to do in the event of your death or incapacity.
Get An Estate Planning Attorney
The first step to getting started is to reach out to an estate planning attorney. This person can help you understand the process and what options are available to you. They can also draft the necessary documents, such as a will or trust.
Gather Asset Information
Once you have an attorney, you’ll need to gather information about your assets. This includes bank accounts, investment accounts, real estate, and personal property. You’ll also need to make a list of any debts that you owe.
Decide On Asset Distribution
After your assets are gathered, you’ll need to decide how you want them distributed after death. This is where a will comes in. A will is a legal document specifying who will receive your assets upon death. It’s important to have a will in place, so there is no confusion about your wishes.
Appoint A Guardian In Case Of Having Children
If you have minor children, you’ll also need to appoint a guardian for them in your will. This is the person who will raise your children if you are no longer able to do so. In addition to a will, other documents can be helpful in estate planning.
The Benefits Of Estate Planning
Estate planning provides a variety of benefits to those who engage in it. By planning, you can:
- Ensure that your assets are distributed according to your wishes.
- Minimize the amount of taxes and other expenses that may be incurred.
- Make provisions for your care if you become incapacitated.
- Provide for your family in the event of your death.
Estate planning is an important part of wealth management and should not be ignored. By taking the time to plan now, you can save yourself and your loved ones a great deal of hardship in the future.
Who Needs Estate Planning?
Short answer. Everyone. Many people believe estate planning only benefits the wealthy. However, this misconception couldn’t be further from the truth. Estate planning is for everyone, regardless of age, assets, or health status. 1157
What’s Risk Management?
In estate planning, it’s important to be mindful of potential risks that may arise; that’s where risk management comes in. Risk management is identifying, assessing, and taking steps to reduce or eliminate exposure to risks. There are a variety of risks that need to be considered when doing estate planning, such as:
- Lack of Funds
- Job Loss
- Law Changes
- Disability
- Inflation
- Etc.
Properly managing these risks can help ensure the stability of your wealth and protect your assets.
How Does Risk Management Work?
The first step is to assess any potential risks. Once the risk has been identified, there needs to be an overview of how likely the risk will occur and the potential impact it may cause if it does. After that, you can take steps to reduce or eliminate the exposure to those risks.
There are many ways to do this, including:
Diversification: This is when you spread your assets out over different investments so that if one investment fails, your other investments will still be okay.
Hedging: This is when you take out insurance policies or use other financial instruments to protect yourself from potential losses.
Avoiding risky behavior: This includes not investing in companies that operate in unstable countries or avoiding investments that are too volatile.
Proper asset allocation: This is when you ensure that your assets are properly diversified and allocated to minimize risk.
What’s A Living Will?
A living will is a document set up to ensure that you’re taken care of in the way you want in case you cannot advocate for yourself at any given time. It typically covers things like whether or not you want to be kept on life support, what kind of medical treatment you do or don’t want to receive, and so on.
Having a living will is important because it can help take some of the burdens off your loved ones during a difficult time. It can also ensure that your wishes are followed, even if they may not be what your loved ones would want for you.
How Do Living Wills Work?
Every state has different requirements of what a living will include; however, they all require that the person is of sound mind when signing the document. The living will goes into effect when an individual cannot make their own decisions regarding end-of-life medical care and treatment.
Although a living will can occur immediately after signing it, Medical teams will prioritize spoken communication as long as the person is sound of mind over a written document.
What’s A Medical Power Of Attorney?
A medical power of attorney can make decisions on your behalf regarding multiple medical decisions- unlike living wills which cover only end-of-life medical decisions.
A medical power of attorney (POA) is a legal document that gives someone else the authority to make medical decisions on your behalf. The person you appoint is your “agent” or “attorney-in-fact.” You can give your agent as much or as little authority as you want.
How Do Medical POAs Work?
You must appoint an agent to set up a medical power of attorney. You can do this by signing a legal document known as a “durable power of attorney for health care” or simply a “medical power of attorney.” Once you have signed the document, it must be witnessed by two other people who are not related to you.
Your agent will have the authority to make medical decisions on your behalf if you cannot do so yourself. This could happen if you are unconscious, have dementia, or are incapacitated.
Your agent can make decisions about any aspect of your medical care, including things like:
- What treatments you receive
- Where you receive treatment
- Who provides your care
- When to discontinue life-sustaining treatment
What’s A Special Needs Trust?
A Special Needs Trust is a type of trust that can be created to provide financial support for someone with special needs without jeopardizing their eligibility for government benefits. This type of trust can supplement government benefits and pay for things like medical expenses, education, housing, and other needs.
Special Needs Trusts are an important tool in estate planning for people with special needs, as they can help ensure they have the financial resources they need to live a comfortable life. Working with an experienced estate planning attorney is important when creating a Special Needs Trust, as many rules and regulations must be followed for the trust to be valid and effective.
How Do Special Needs Trusts Work?
Special Needs Trusts are created by a parent, grandparent, or other relatives of the person with special needs. The trust is then funded with assets from the family member. The trustee of the trust is responsible for managing the assets and ensuring that they are used to supplement government benefits and pay for things like medical expenses, education, housing, and other needs of the beneficiary.
Begin Your Estate Planning
At Nesso Wealth, we understand the importance of estate planning. We can help you create a comprehensive plan that includes all the necessary components to protect your loved ones and assets.
Our Nesso Wealth team provides estate planning and comprehensive wealth management. Our goal is to help you feel secure and pursue your goals. We provide an array of services such as investment management, retirement planning, and more with in-house investment support to help you achieve this. Don’t hesitate to reach out today to learn more about what we can do for you.
