Did you know that this week is National Estate Planning Awareness Week? In our line of business, we often hear confusion over the term “estate planning,” and the belief that it is only for those with grand, luxurious estates. That could not be further from the truth! Don’t get me wrong, estate planning does greatly assist wealthy individuals to save taxes by employing creative ideas, but it is useful for anyone over the age of 18. That’s right, anyone!
I say this because estate planning involves many different areas of your life. Your wealth, your assets, your house, your health, your future wishes, your family and more. We do not live our lives in a vacuum. Every action we take has impacts on others in our lives. Mostly, estate planning is you stating your wishes NOW so if something happens THEN, you are prepared. It is making decisions for yourself instead of leaving them for someone else. Because let’s face it, some of the options and decisions we may leave behind for our loved ones can be gut-wrenching, such as deciding to remove life support.
This week we plan to teach you some estate planning concepts so you may decide which steps to take to get your plans in order.
First, let’s start with a little bit more information about who you are. What stage of life are you in? Estate planning is performed best at stages. Below we listed three very general categories and the types of concern people typically feel in each. If you had to choose one, which category below fits you best?
Young People & Estate Planning
- Younger people usually have smaller estates, with the largest being a retirement account.
- Choices involve whether the surviving spouse should get entire estate which may be a windfall due to life insurance, or a “lifetime” interest in income and property.
- If there are no kids, you may consider gifting to you parents if they paid for your college or leaving to a charity.
- For parents, choosing a guardian is usually the hardest part of the equation as you are asking another to take on a long-term role. Also, a trust is usually the best method of leaving assets to your kids.
- As the young family accumulates wealth, the plan changes.
Sandwich Generation-Caught in the Middle
- Caring for aging parents and young family at the same time (i.e., “sandwiched” in between).
- May decide to restrict access to funds to surviving spouse, if there is a chance he/she will remarry. If the survivor has full access to the funds, they may get “diluted” to benefit a new spouse or new children.
- Not always wise to leave assets to parents as they may be heading towards nursing homes and the money would immediately go there.
- You may change the distributions for your children if, say, your 25-year-old has already proven himself/herself financially responsible.
- There may be a divorce or remarriage, blended families and new children.
"Mature" Folks-When to Estate Plan
- Attempting to reduce “wealth” and give gifts to reduce amount of estate.
- Need a seamless transition of assets and to avoid a guardianship, thus, should heavily consider a trust.
- Restrict access of funds to surviving spouse if he/she will be susceptible to pressure from the children.
- Consider benefitting grandchildren or charities if your own children are already set.
Once you decide your general category, you see what other contingencies you need to add to your own individual estate plan. Stay tuned this week to learn more. Remember, if you need an Estate Plan, check out our three Will and Trust Plans comprised of the most popular estate planning documents.
Lori Vella is an Estate Planning and Business Attorney. She works virtually throughout Florida and New York, but has her home office in Tampa, Florida. She is mom to a little boy which ignited the passion for helping other families. She and her son enjoy car rides, playgrounds and taking mini-adventures. They also have an organic garden that surprisingly yields vegetables. Lori considers herself well-versed in Seinfeld and welcomes any trivia!
Disclaimer: The Law Office of Lori Vella’s website contains general information directed to Florida residents. This firm does not intend to give legal advice through its pages and/or blog. If you need legal advice, we encourage you to find an attorney licensed in your state. This language on this website does not create an attorney-client relationship between you and this firm.