- Take an inventory of all assets and debts and create a comprehensive list.
- Write a will to pass your assets to the intended beneficiaries.
- Consider creating a trust to protect assets, minimize taxes, ensure wishes are carried out, and avoid probate.
- Review and update estate plan documents regularly as the financial situation changes.
Many millennials are now reaching the age where they should start thinking about estate planning. By undertaking this crucial process, you can ensure that your assets will be distributed in accordance with your desires, thereby sparing your loved ones from potential legal or financial complexities in the aftermath of your passing.
However, many people do not know where to start with estate planning or what it entails. This comprehensive guide aims to provide millennials with the tools and strategies for proper estate planning.
Start by taking inventory
The first step in proper estate planning is inventorying all your assets and debts and creating a comprehensive list. This list should include everything from your bank accounts, investment portfolios, real estate properties, life insurance policies, and personal belongings. It is essential to keep this list up-to-date as your assets and debts change over time.
Write a will
A will is a legal document that outlines how your assets will be distributed and who will be responsible for carrying out your wishes. It is essential to write a will to ensure that your assets are passed to the intended beneficiaries and that your loved ones’ best interests are protected. If you pass away without a will, your assets will be distributed according to your state’s laws.
Consider creating trust
As a millennial, you might have many financial goals and responsibilities, such as buying a home or paying off student loans. But it would be best to consider creating a trust as part of your estate plan. A trust can help you protect your assets, minimize taxes, and ensure your wishes are fulfilled after you’re gone.
However, creating trust is not something that you can tackle on your own. It’s best to seek the help of a lawyer or financial advisor specializing in estate planning, such as those at Fleeson Gooing Coulson & Kitch L.L.C. They can help you identify the best trust structure for your needs and ensure all legal formalities are handled. Here are the benefits of creating trust:
Protect Your Assets
Establishing a trust can safeguard your assets in the unfortunate event of your passing or incapacity. By creating a trust, you entrust the ownership of your assets to a trustee who will diligently manage them by your wishes and instructions.
This way, your assets are protected from creditors or potential lawsuits that may arise in the future. Whether you’re a high-net-worth individual or have only a few purchases, creating trust can provide an added layer of protection for your purchases.
Minimize Taxes
Estate taxes can quickly add up, consuming a significant portion of your estate. By creating a trust, you can minimize these taxes and reduce the burden on your heirs. A trust can help you make the most of your estate tax exemptions by providing a legal way to transfer assets without incurring taxes. Additionally, certain types of trusts, such as charitable trusts, can provide tax benefits during your lifetime.
Ensure Your Wishes Are Carried Out
One of the most significant benefits of a trust is that it allows you to dictate how your assets are distributed after your death. If you have specific wishes for how your assets will be distributed, a trust can ensure those wishes are carried out. For example, you might want to care for a family member with special needs. A trust can help ensure the necessary funds are available to watch for that individual.
Avoid Probate
Probate is the legal process of validating a will and distributing assets after a person’s death. This process can take several months or even years and is costly. Creating trust can help you avoid the probate process altogether. Unlike a will, a trust does not need to be probated, which means your assets can be distributed to your beneficiaries more quickly and without court involvement.
Review and update your estate plan regularly
Your financial situation will likely change over time, affecting your estate plan. It is crucial to review and update your will, trust, and other estate planning documents periodically. For example, you may need to update your beneficiaries if you marry, divorce, or have children.
Final Thoughts
Proper estate planning is crucial for millennials to ensure that their legal and financial affairs are in order and their loved ones’ best interests are protected. The above-listed strategies provide an essential foundation for proper estate planning. Engaging with an attorney or financial advisor is crucial to ensure that your estate planning goals are met with the most appropriate planning strategies.
