Estate Planning to Protect Your Loved Ones
There are many variables to consider when planning for your family’s future. Your plan should consider your goals and your specific circumstances. In general, life insurance, and a will or trust that directs how to distribute your assets, are useful tools in the estate planning process.
Life Insurance
Life insurance provides a designated amount of money for your loved ones after you die. Your family may use the money to pay off debts or funeral expenses or to replace your income.
There are multiple types of life insurance you can purchase depending on your needs. The most common is term life. Keep in mind, however, that term life eventually expires. Whole life gives you a lifetime benefit but will cost significantly more, though it does come with more options. The cost of a life insurance policy depends on several factors like your age, gender, medical history, and tobacco use.
Wills
A will names the individuals who will receive your assets after your death. In the will, you’ll name an executor or a person in charge of carrying out your wishes. If you have children, you’ll appoint a guardian to care for them and manage any financial assets left to them.
If you don’t have a will in place, the court system will divide your money, property and other assets among your heirs. This could result in your assets being divided in a way that goes against your wishes.
Trusts
A trust allows a third party (a trustee) to manage your assets on behalf of your surviving family members.
There are two primary types of trusts, revocable and irrevocable trusts. The main difference between these two trusts is the amount of control the creator has over the assets within them. With a revocable trust, the creator can make changes or cancel the trust completely, while with an irrevocable trust, the creator gives up control over the assets and cannot make changes to the trust. Revocable trusts are commonly used for estate planning, as they allow the creator to keep control of their assets during their lifetime and ensure that they are distributed according to their wishes after their death. Irrevocable trusts are often used for asset protection and tax planning, as they provide certain tax benefits.
Other types of trusts can be helpful in specific situations. For example, some trusts provide for a loved one with special healthcare needs or for children from prior relationships.
When Should You Start Planning?
Many people think about estate planning when a major life event occurs. Marriage, the birth of a child, or a health scare are common events to either begin the process or to make changes. For example, as you have more children, you may want to increase the amount of your life insurance coverage. Or, if you start earning a higher salary, increasing coverage would allow your family to maintain their lifestyle if something were to happen to you.
Regardless, you don’t need a large amount of money to begin the estate planning process. The important thing is putting a plan in place, so your family is protected.
Take the Next Step
Estate planning may seem overwhelming, but it starts with a simple conversation. Wealth Management by CommunityAmerica is here to help you prepare for your family’s financial future. We will help you find the best solutions for your family, giving you financial peace of mind today and for years to come.
Explore Insurance: Our insurance agency helps you protect what matters most. Our knowledgeable insurance agents will guide you to the product that’s right for your family. Get a quote for life insurance or give us a call at 913.905.7795 to discuss your needs.
Begin Building Your Estate Plan: Talk to one of our Wealth Advisors to help plan for your legacy. We will analyze your estate and consider ways to allocate your assets in a way that protects your family and carries out your wishes.
Latest Podcast: Listen to our podcast below to learn more about building an estate plan that protects your family.
Neither Wealth Management by CommunityAmerica nor its associated persons are attorneys or tax advisors and cannot offer legal or tax advice. Consult with an attorney before making any changes to your estate plan and speak with a qualified tax professional for tax advice.
