Effective estate planning is a crucial task that often gets overlooked because people are either too busy or too intimidated by the idea of planning for the future. But the reality is that estate planning is something that everyone should take seriously and prioritize. 

It is not just a process of preparing for the inevitable but also about securing a comfortable future for your loved ones and ensuring that your assets are distributed according to your wishes. With that in mind, here are some essential steps in effective estate planning that you should consider.

Step 1: Take Stock of Your Assets and Liabilities

The first step in any effective estate planning process is to take inventory of all your assets and liabilities. This step includes making a list of all your properties, investments, debts, and personal belongings. Doing so will help you develop a solid understanding of your net worth, as well as update your beneficiaries and security provisions if any of them have changed.

Step 2: Create a Will

A will is a written document that outlines how your assets should be distributed after your death. It provides instructions on who should receive your assets, how much they should receive, and when they should receive it. A will is a powerful legal tool that can help you ensure that your assets are divided according to your wishes and minimize the risk of conflicts arising among beneficiaries.

Step 3: Do You  Need a Trust?

This is a frequent question we hear. There are two primary reasons you may want a trust. One deals with how your heirs can access their inheritance. Do you want restrictions? Are they old enough to handle the money? Do they have special needs? Do you want your assets protected in case your surviving spouse gets remarried? These are all reasons to consider having a trust created to handle your affairs at death. This type of trust is often created by your will upon your death.

Another reason for a trust deals with ease of estate administration. When you create a living trust, any assets inside the trust may be transferred more quickly upon your death, and they do not need to be probated.  

Trusts can be highly advantageous for high net worth individuals and those with complex needs. They often allow a greater level of flexibility and control over assets than a will would.

One key element is to understand how your will, trust and beneficiary designations all interact, and connecting all of the dots of which document controls which asset. Please ask us about your estate plan, and we help you coordinate your wishes with your estate planning attorney.

Step 4: Designate Powers of Attorney

Accidents happen, and in the event that you become incapacitated or unable to make critical decisions, powers-of-attorney give someone the right to act on your behalf. Succession planning and asset protection are both critical components of effective estate planning, and designating a power-of-attorney can ensure a smooth transition of authority if needed.

Step 5: Plan for Inheritance Tax

An inheritance tax is a tax paid by the recipient of inherited assets, based on the total value of those assets. In recent years the estate tax exemption has grown to over $13 million per person. However, this exemption amount will be cut roughly in at the end of 2025, and there is always a legislative risk that Congress could make further changes to estate taxes. A good estate plan should provide flexibility for both you and our loved ones to make changes as tax laws progress.

Step 6: Review and Update Your Plan Regularly

Estate planning is an ongoing process that requires regular review and updates. Life events such as marriage, divorce, births, and deaths can all have a significant impact on estate plans. Reviewing and updating your estate plan regularly can help ensure that it is always up-to-date and reflective of your current situation.

Talking to a Financial Advisor

Professional advice can be invaluable when planning for your legacy. A financial advisor can help you navigate the complex world of estate planning and provide guidance on the best route to take for your specific circumstances. 

By talking to a financial advisor, you can be confident in knowing that your estate planning is comprehensive and accounts for all contingencies, providing peace of mind for both you and your loved ones.

Work with us

If you’re looking for an experienced financial advisor, don’t hesitate to reach out to us. At Brogan Financial, we pursue excellence in the delivery of wealth management and comprehensive retirement planning. 

Contact us today and let us help you start preparing for your future!