Mention estate planning to the average individual and you will likely hear one of these common refrains:
- “I’m too young to think about this.”
- “I don’t have enough assets to worry about a will.”
- “I took care of my will decades ago so I’m all set.”
Statistics from the National Association of Estate Planners and Councils bear out this disinterest, showing that 56 percent of Americans do not have an up-to-date estate plan. Without such a plan in place, families and individuals can experience a variety of hardships – from financial to emotional to legal. The good news, however, is that with some advancing planning, the risk of these hardships can be diminished significantly.
National Estate Planning Week was designed to draw attention to the need for this important aspect of financial planning, and encourage Americans to start developing their estate plans. While no one enjoys thinking ahead to the end of life, estate planning allows you to develop a strategy to maintain your financial security throughout your lifetime as well as ensure the intended transfer of your property and assets at death. Knowing you have established a plan to create and maintain your financial legacy and provide for your surviving loved ones can offer tremendous peace of mind.
In the past, the main focus of estate planning was federal transfer taxes, which applied to estates with assets of $1 million or more. Exemption amounts for 2016 increased to $5.45 million per person and $10.9 million combined. In recent years, federal legislation made portability permanent, which changed the landscape for estate planning since many families fall well under the combined estate threshold.
As a result, the estate planning process now places a greater emphasis on nontax considerations, like:
- Controlling the distribution of assets
- Protecting assets from outside creditors
- Planning for succession in family-owned businesses
- Establishing funds to care for loved ones with special needs
- Addressing marital dissolution or new marriage
- Funding educational legacies for loved ones
- Creating sufficient retirement savings
- Charitable giving
Instead of thinking of estate planning as a chore to be put off to another day, take the time now to visit with a trusted financial advisor or tax professional who can help you take stock of your financial situation and start making decisions about what kind of financial legacy you want to leave.