Many people think that estate planning is for older people only. Well, in fact, estate planning can help young people establish a strong foundation for their financial profile.
Regardless of your age and income level, you can start planning your estate as early as now. To help you out, here’s everything you need to know about the efficient estate planning.
What is estate planning?
Estate planning refers to the process of designating who will inherit your assets and properties after your death.
The goal of this financial planning is to ensure that your assets will be handled carefully and your beneficiaries will receive these assets in the most cost-effective way.
What are the advantages of estate planning?
- Reduce estate tax
- Provide for your family
- Make retirement easier
How to do estate planning?
Doing estate planning may be sound intimidating to you. But if you know the drill, you can easily do it. Here are the steps that you need to do to start planning your estate.
- Take inventory
Start your estate planning by taking inventory of all your assets. Your assets can be categorized as tangible and intangible. Tangible assets may include homes and other real estate properties, vehicles, collectibles, such as antiques and limited edition toys, and other personal possessions. On the other hand, intangible assets include checking or savings account, insurance policies, and investment vehicles like stocks, bonds, and mutual funds.
When you take inventory of these assets, you must estimate the total worth of it. You can know the value of your assets by the current appraisal of your home or statements from your financial accounts.
- Get an insurance
When you already know how much you have, the next step is to protect it. Opt to get an insurance policy. You can choose between term life and whole life. To guide you accordingly, you can seek the help of a financial advisor. In case that you already have, review your current insurance plan. Assess if it is already enough or you need to get another policy coverage.
- Review your beneficiaries
When getting insurance, do not forget to name your beneficiaries. Also, ensure that you name a contingent one. This backup your primary beneficiary in case it dies before you. Furthermore, make time to review and update it, especially if you are single when you get the insurance and get married eventually.
- Seek the help of a professional
To guide you out in creating your estate plan, you can seek the help of an attorney or an estate tax professional. These people can help you determine whether you are in the proper path. Plus, they can guide when there are any changes in your plan in the future.
The secret to any efficient financial planning is to carefully plan ahead. You must have knowledge on the financial path you are taking. You can read financial books or ask for professional help to educate you and guide you accordingly.
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