Estate Planning to Secure Your Peace of Mind

By Jennifer Tucker
February 27, 2024 | 3 Min. Read

Organizing your estate plan may not top your list of things to do, especially if you’re young and healthy. But no matter your age or financial situation, estate planning is an essential step toward gaining peace of mind. It allows you to take control of your financial future, ensuring your family will be cared for and your legacy will be protected.

What is an estate plan?

So, what exactly is an estate plan? Estate planning is the process of arranging for the management and distribution of your assets after your death. It involves creating a plan that specifies who will make decisions on your behalf and how your assets will be managed and distributed.

An estate plan can include different types of legal documents, such as a will, trust, power of attorney, or living will. Working with a financial planner and an estate planning attorney can help you identify which arrangements are best suited for your situation.

What are the benefits of estate planning?

You might be wondering, “Do I need an estate plan?” The short answer is yes. Anyone who wants to ensure their family’s financial security should create an estate plan.

Some of the benefits of estate planning include:

  • Protect your assets. Estate planning allows you to protect your assets and control how they are distributed when you pass. Legal agreements such as wills, trusts, and powers of attorney ensure your assets will be transferred according to your wishes.
  • Minimize taxes and expenses. If you worry about leaving your loved ones with big expenses when you pass, you’re not alone. Taking a proactive approach to estate planning and utilizing a tool like a trust can help you reduce estate taxes, probate costs, and other expenses related to transferring your assets.
  • Security and peace of mind. Estate planning gives you peace of mind by ensuring your loved ones will be provided for, and your legacy will be protected. It can also help avoid family disputes and potential legal battles down the road, saving your loved ones from stress and conflict during an already difficult time.

How do I organize my estate plan?

You might be wondering how to get started with estate planning. The good news is it’s never too early to begin. Whether you’re in your 20s or your 60s, now is the perfect time to put a plan in place.

Follow these 4 simple steps to start your estate plan and secure your peace of mind:

Create a list of your loved ones.

First, create a list of family members and loved ones who should inherit your assets upon your death.

Take an inventory of your assets and liabilities.

Next, list your assets (such as bank accounts, investments, and real estate) and liabilities (such as mortgage payments or other debts owed).

Choose the executor of your estate.

Next, decide who will be responsible for settling your estate plan according to your wishes. This is the executor of your estate.

Get your legal documents in order.

Finally, meet with a financial advisor and estate planning attorney to get the appropriate legal documents in order.

If you’re looking for a comprehensive estate planning checklist, check out our blog: 4 Steps to Get Started with Estate Planning.

Estate Planning: Frequently Asked Questions

What is estate planning?

Estate planning is the process of arranging for the management and distribution of your assets after your death. It involves creating a plan that specifies who will make decisions on your behalf and how your assets will be managed and distributed.

What is the difference between a will and a trust?

Both a will and a trust protect your assets and distribute them to your chosen beneficiaries, but there are key difference between the two types of arrangements. Learn about the advantages and disadvantages of a trust vs. a will.

Should I hire an estate planning attorney?

Thanks to the digital estate planning tools available today, you don’t need to hire a lawyer to organize your estate plan. Using an online tool makes creating, storing, and accessing your estate planning documents simple and cost-effective. However, you may want expert advice on organizing your estate plan, especially if you have significant assets.

What happens if I don’t have a will?

If you don’t have a will upon your death, it is up to the court to determine what happens to your assets. This process varies depending on the state you reside in. Your assets may go to your spouse, descendants, or other family members.  

What is probate?

Probate is the legal process through which your estate is settled and distributed under the supervision of the court. Probate can be a time-consuming and costly process.

If you have a will, the probate court validates it and oversees the distribution of your assets according to the will’s instructions. If you have a trust, your assets typically avoid probate. By transferring assets to a trust during your lifetime, those assets can pass directly to your beneficiaries upon your death.

What is estate tax?

Estate tax is a tax a beneficiary receives on assets they inherit. Luckily, most people don’t need to worry about paying estate taxes. In 2023, the federal estate tax exemption was over $12 million. As long as the amount inherited is below that number, it is not subject to federal estate taxes.

However, it’s important to know that state taxes may apply. For example, the Minnesota exemption amount is $3 million. Wisconsin and Iowa do not levy an estate tax.

How long does the executor of an estate have to pay beneficiaries?

The amount of time an executor has to pay beneficiaries varies depending on the complexity of the estate, state requirements, and any challenges that may arise during the probate process. In general, executors are expected to distribute assets to beneficiaries in a timely manner, and the process is more likely to go smoothly and quickly when a solid estate plan is in place.