Let’s talk about estate planning.
First, we’ll review reasons why an estate plan is important for everyone at every age. Then, we’ll look at some of the common mistakes people make regarding their estate plan. Finally, we’ll outline some steps to take to work up your estate plan.
Why?
An estate plan allows you to make sure that you leave the legacy that you want to leave and that your assets are passed down the way you want them to be. Without a will, your assets will be distributed according to your state’s intestate laws regardless of what you may have wanted.
An estate plan gives you the opportunity to reduce the tax hit to both you and your beneficiaries; to speed up the distribution of your estate; to provide for your children in case you pass before they reach majority; and, maybe most importantly, to head off family disagreements.
Not having an estate plan can leave your family guessing about your final wishes about medical care. A medical power of attorney or healthcare proxy is an important part of the estate plan. Without this, your loved cannot know what actions to take if you are no longer able to advocate for yourself.
What Not to Do
Don’t procrastinate. It can be overwhelming and many people don’t want to think about this final stage of life.
Don’t forget to name beneficiaries. This is a part of your estate plan.
Don’t fail to update your estate plan at life’s major turning points – new child or grandchild, divorce, late-in-life remarriage, even a new job. Don’t forget to update your beneficiaries at the same time.
Don’t name a minor as a beneficiary. A minor does not have the financial experience to manage large amounts of money and the court may appoint a conservator to manage the assets – probably not the same person you would have wanted to mange your money.
Don’t forget about your digital assets. This can include family photos on your computer, intellectual property and important documents as well as crypto.
Don’t forget about taxes. (The federal estate tax for 2026 only applies to estates valued at over $15 million for a single person or $30 million for a married couple.) However, PA does have an inheritance tax that must be paid in certain cases by the receiver of the assets.
Don’t forget about final arrangements. Making final arrangements, setting aside money for a funeral, choosing a burial plot, picking out songs and deciding on a coffin or cremation makes it easier for those you leave behind. Read www.regardingyourmoney.com/Are-You-Prepared-for-the-High-Cost-of-Dying.c10439.htm.
Don’t keep the documents locked up. Don’t procrastinate on talking to your family members and loved ones about your plans and wishes.
How to: Estate Plan
The important thing is to get started, no matter what your age or family situation. Familiarize yourself with the different components of an estate plan – will, trust, medical directives, etc.
Make a list of your assets and liabilities. This includes your home, financial and digital assets and anything else you want to pass down. An example of a liability would be the amount owed on your mortgage.
Write your will. Establish a trust, if needed. Check and update your beneficiaries. Know that a beneficiary designated on an account will override who is listed in the will.
Set up your health care directives and health care and financial powers of attorney.
Ensure you have enough life insurance, if needed. Life insurance would be necessary if you still have minor children that must be provided for.
Organize your paper or online documents. Tell your family and anyone else who needs to know, i.e., the executor of your estate, where the information is and how to access it.
If your estate or life is large and/or complicated, consider hiring a professional to draw up your estate plan.
Update as needed.
Remember: “Always plan ahead. It wasn’t raining when Noah built the ark.” — Richard Cushing.
Please feel free to call (215-836-4880) or email the office (ellend@regardingyourmoney.com) to set up an appointment to discuss any financial questions you have. Or, visit us at regardingyourmoney.com.
Have a Super Financial Day and a Happy New Year.
Sources: ZeroHedge, AAA, Kiplingers