Let's Talk: Estate Planning
As we continue to endure the heartaches of the pandemic, we are reminded of the importance of estate planning. Unfortunately, most Americans remain without one. Why is this?
Some Americans feel estate planning is just too confusing and expensive; others tend to avoid the topic completely or feel they do not have enough assets to justify a will. Generally speaking, you should create an estate plan if you own any assets or have any loved ones who depend on you, regardless of your age. You can create one as early as eighteen and then continually update the plan throughout your life. In fact, more young adults are creating estate plans, with some citing COVID-19 as their reason.
With that said, let’s talk about 7 important components of an estate plan to consider.
Creating a Will
A will, or last will and testament, is a legal document that allows you to clearly communicate all your wishes after you pass. This document gives you the ability to appoint an executor, or trustee, to ensure all your wishes are properly dispersed. If you have any dependents, this is where you would appoint a guardian. Also, this is where you would indicate any gifts you would like to leave behind to specified loved ones and leave detailed instructions on how you would like your assets to be distributed.
Future Medical Care
For future medical care, you should include a living will. A living will is a legal document that communicates your healthcare directives if you are unable to make decisions for yourself. If an unexpected long-term care or end-of-life situation does occur, this document will help guide doctors and your loved ones through tough choices that must be made.
Power of Attorney
There are times when people need a trusted person to protect their interests when they cannot. A Power of Attorney authorizes a trusted individual, often a close family member, to make financial or medical decisions on your behalf if you are unable to do so for yourself.
If you were to pass, what financial state would you leave your loved ones in? Life insurance is an important component of estate planning. Many employers tend to offer small life insurance policies; nonetheless, additional coverage is often needed. This additional coverage serves as a lifeline that enables you to properly take care of your loved ones as well as take care of your estate after you have passed. We recommend that you speak with an insurance advisor today to find out what works best for you.
A beneficiary can be a person, charity, or organization. You will need to choose beneficiaries throughout your estate plan in a few places including your checking accounts, savings accounts, investment accounts, insurance policies, and throughout your last will and testament. In most cases, you can designate a primary and a contingent beneficiary. Even though choosing beneficiaries can be tough, ultimately it is completely up to you.
Distributing Your Wealth
There are a variety of ways to distribute your wealth including gifting, direct payments, and trusts. One of the most tax efficient ways to distribute your wealth is through gifting cash while you are still alive. If you choose to distribute your wealth through a trust, it is recommended that you appoint a trustee to handle the account so that the guidelines you set are carried out. For instance, you may want to indicate a specific amount to be paid out to the recipient on a monthly basis versus a lump sum payment.
For a simple estate plan, you can pay as low as $30 or as high as $750 depending on if you choose to draft the will yourself, use an online service, or go through an attorney. However, it is recommended you go through an attorney if you have any dependents. If your estate plan involves trusts, you may end up paying between $1000 to $5000 in legal fees. The costs will vary as every estate plan is unique to your individual needs.
A good estate plan will allow you to continue to take care of the people that rely on you if you pass away or become too sick to do so. Contact our Trust Department today to get started. As always, please know that Gulf Coast Bank & Trust Company is committed to being the bank that cares about you. If you have any topics you would like us to discuss, we invite you to email them to email@example.com with the subject line Let’s Talk.