Estate Planning

Estate Planning, Part 1: Get the Facts You Need to Know

July 22, 2021 by Spectrum Credit Union

Right now, enjoying the summer or anticipating an upcoming vacation might be at the forefront of your mind. But while you’re spending time with family and unwinding from your job, it could also be a good time to think about estate planning.

Granted, it’s not a subject that most of us look forward to discussing. And many people tend to put it off as a result. COVID-19, however, changed the dynamic a bit. One out of three people now say that the pandemic caused them to see a greater need for an estate plan, according to the 2021 Wills and Estate Planning Study by

Beginning the learning and planning process — and having meaningful conversations about it — can help reduce stress and provide peace of mind for you and your family. What’s more, with an estate plan in place, you’ll feel confident that your wishes will be carried out should something happen to you.

We’re kicking off our first of two blogs on this important topic with an overview of what an estate plan is — and who should consider having one.

What is an estate plan?

An estate plan is essentially a set of personal and legal documents that spell out in advance how you want all of your assets (your “estate”) to be managed and bequeathed if you become ill or die. In addition to documenting your wishes, an estate plan also specifies who will act on your intentions in your absence.

How does an estate plan work?

A will forms the bedrock of estate planning, and it takes effect after death. But an estate plan goes beyond that core document, and it can address issues both before and after death.

As part of an estate plan, you can appoint a dependable family member or friend to manage your legal and financial affairs if you become unable to do so yourself. Plus, you’ll be able to give someone you trust the authority to make healthcare decisions for you — based on your wishes — if you can’t. Depending on the scope of your estate, there may be other strategies within the estate-plan toolbox that could help ease the transfer of assets to heirs, avoid court involvement and reduce or eliminate taxes.

What happens if you don’t have an estate plan?

If you pass away without a will, the state you live in at the time of your death may decide how and to whom your assets get distributed, and possibly who becomes the guardian of any minor children. Those actions can vary from state to state, and they may or may not reflect your actual wishes.

The court-supervised process of settling an estate and making sure the terms of a will are followed is known as probate, and it can entail paperwork, fees and time. The American Bar Association estimates that an average estate may take six to nine months to complete, but larger estates could take longer — perhaps a year or more. So, one benefit of an estate plan is its potential to minimize probate and the costs, delays and public process that comes with it.

That said, certain types of assets do not require probate. Life insurance proceeds, pensions and retirement plans will pass directly to beneficiaries you name. Also, jointly owned property and bank accounts with rights of survivorship generally go to the surviving joint owner. This is why it is so important to fill out your beneficiaries on these types of assets.

Who should have an estate plan?

Contrary to popular belief, an estate plan isn’t only for the wealthy — nor the elderly. In fact, the poll found that younger adults are now more likely to have an estate planning document than middle-aged adults.

The truth is, most people can benefit from having one, but the scope of your plan may depend on the size of your estate and other factors.

When should you begin thinking about an estate plan?

There’s no ideal age to start considering estate planning, but the need generally coincides with significant life events. All of these events should prompt some thinking and will guide your goals of protecting loved ones and preserving assets:

  • Marriage or divorce
  • Birth or adoption of a child
  • Increase in potential heirs with adult children with spouses and families
  • Move to a new state
  • Change in health
  • Change in finances

Often, the most challenging part of estate planning is answering questions and making decisions on a thorny topic — our mortality. Be sure to start the conversation early with your partner or someone you trust and allow ample time for robust discussion.

Protecting what’s yours

It’s often hard to plan for life’s uncertainties. But an estate plan can ensure that you have the final say about how you — as well as the people and possessions that matter most to you — will be cared for in the future. In Part 2, we’ll focus on demystifying the elements of an estate plan and how to go about creating one.

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