You’re probably thinking that 30-40 years old is far too young for planning your estate. In all likelihood, you’re going to live another 40 years. So why bother?
Most of us know the answer, despite how much we like putting off this essential task. The unexpected is, by its nature, not something we truly plan on. But accidental deaths and incapacitations happen all the time. If you want to spare your family and friends unnecessary confusion if this happens, then you will want to do preliminary estate planning now. Here are three important parts of your estate that you might need to plan for.
1. Taking Care of Children
If you have young children, or plan on having children soon, you will probably want to make note of your wishes for them in your will. One option for parents with children is a revocable living trust. Trusts allow you to, instead of leaving lump sums for children, instead have the money distributed into chunks that the child will receive at a certain age. You will need a will in order to establish a legal guardian for your children. It’s advisable to separate who watches the children, from who makes the financial decisions– the two might not always mix well.
2. Necessary Decisions
There are several questions you will need to answer for yourself, in order to plan your estate. You need to decide who will inherit your assets, who will take care of you if you become incapacitated, whether there are specific gifts you would like to leave, who the executor of the estate is, and how you want your assets distributed.
Keep in mind that things like retirement plans and insurance policies are also part of your estate — the funds will be divided and taxed. If you lack sufficient assets to keep your family afloat after your death, you might want to consider investing in term life insurance, which is relatively cheap for your age bracket, assuming fair health.
3. For Business Owners
What happens to your business after you die? Without any agreement in place, your business might easily run into the ground. One thing to consider doing is creating a “buy/sell” agreement. This will allow your business to continue, while also providing for your heirs. These agreements state that, in the event of you dying, someone else is obligated to buy out your interest — whether that’s a person, a competitor, or the company as a whole. You should do this with an estate planning attorney so that you stay true to regulating business laws; otherwise, the agreement might not be legally binding.
How far have you gotten with your estate planning? Let us know in the comments. Continue reading here.